Arcadium Lithium has announced plans to suspend or defer two of its four current expansion projects amid the ongoing global lithium downturn.
The year of 2024 has seen a global lithium and nickel downturn primarily caused by a supply surplus caused by increased lithium and nickel supplies from the likes of Indonesia and China.
As a result, lithium and nickel miners have had to weather storms from all angles.
Arcadium Lithium is no exception, with the company pausing investment in its Galaxy lithium project in Canada and is exploring opportunities to recruit a partner interested in providing capital for the project in exchange for a long-term strategic investment.
The US lithium giant has also revised the sequencing of its lithium carbonate projects at the Salar del Hombre Muerto in Argentina.
Instead of executing Fénix Phase 1B and Sal de Vida Stage 1 simultaneously, Arcadium Lithium will complete each project sequentially.
As a result of these changes, the company will reduce its capital spending and plans to spend approximately $500 million less over the next 24 months.
“Despite where lithium market prices are today, we still see a strong long-term growth trajectory for lithium demand and expect a return to healthier market fundamentals over time,” Arcadium Lithium president and chief executive officer Paul Graves said.
“However, the market is clearly indicating that the industry does not need to add supply at the same pace as previously expected. We have therefore decided to defer investment in two of our four current expansion projects.
“While we remain fully committed to developing our highly attractive portfolio of expansion opportunities, each of which is expected to be amongst the lowest cost lithium operations globally when completed, we will seek to do so on a timeline that is supported by both the market and our customers.”
During the June 2024 quarter, Arcadium Lithium achieved an average realised pricing of $17,200 per product metric tonne for its combined lithium hydroxide and carbonate, contributing to $255 million in revenue.
The company also achieved an attributable GAAP (generally accepted accounting principles) net income of $85.7 million, or seven cents per diluted share, and $99.1 million in earnings before interest, taxes, depreciation, and amortisation.
Arcadium Lithium saw a slight increase in total volumes compared to the previous quarter, with higher carbonate and hydroxide sales partially offset by lower spodumene concentrate sales due to reduced production at the Mt Cattlin lithium mine in Western Australia.
The lithium major said the average realised pricing was higher for spodumene concentrate but lower across other lithium products due to factors such as lower market prices for lithium chemicals and the delay of price indices on some of its carbonate and hydroxide volumes.
“We continue to focus on leveraging our low-cost, high quality operational footprint and a commercial strategy of securing long term contracts with strategic customers to navigate through all market environments,” Graves said.
“Similar to last quarter, this approach helped us to achieve higher realised pricing in the second quarter than we would have under a fully market-based pricing approach, and to deliver strong underlying profitability.”
Arcadium Lithium is projecting a 25 per cent increase in combined lithium hydroxide and lithium carbonate sales volumes for 2024 compared to 2023.
It is also anticipating a further 25 per cent increase in 2025 compared to 2024, with both increases driven by already-completed expansions in Argentina.
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