MinRes blames ‘manipulation’ for fall in lithium prices
Mineral Resources says lithium markets are being manipulated to suppress prices in a sector still dominated by battery chemical makers in China.
Falling prices have not deterred Chris Ellison from moving to secure the Bald Hill lithium mine from receivers.
MinRes has suffered a plunge in lithium prices as it jostles with Gina Rinehart and the world’s lithium giants and hopefuls for more ground in Western Australia to mine the key battery ingredient.
The company said there was nothing fundamentally wrong with demand, and that “market manipulation” was a factor in softer pricing in an analyst call on Wednesday.
“There’s a lot of paper trading in the [lithium] market right now,” MinRes executive general manager of corporate development James Bruce said.
Mr Bruce declined to elaborate when asked if prices were being accurately quoted by the metals information providers. He said: “We supply to our customers based on those indices and so it’s a negotiation between us and our customers.”
Mr Bruce’s comments come after the Guangzhou Futures Exchange started offering futures contracts on lithium carbonate supply in July. Many market participants believe the Guangzhou futures have undermined sentiment around lithium prices.
The Chris Ellison-led MinRes reported a near 30 per cent fall in the price of spodumene concentrate in the September quarter, and an equivalent fall in the price of lithium processed into battery chemicals.
Spodumene slips
The market woes have not deterred its billionaire managing director from moving to secure the Bald Hill lithium mine from receivers and building stakes in up-and-coming lithium explorers.
MinRes received $US1870 ($2939) a tonne for spodumene concentrate from its Mount Marion mine owned in partnership with China’s Ganfeng in the September quarter, down 28 per cent on the three months to June 30.
That has more than halved from the $US3772 a tonne it was fetching a year ago. MinRes shipped 64,000 tonnes at an average grade of 3.7 per cent spodumene concentrate in the September quarter.
The current spot price for 6 per cent grade remains above $US2000 a tonne.
The price for lithium hydroxide marketed by New York-listed Albemarle on behalf of MinRes fell 16 per cent to $US34,036 a tonne in the September quarter. MinRes and Albemarle are co-owners of the Wodgina mine, and MinRes will take over responsibility for its marketing under the latest reset of their partnership.
Albemarle opted not to go ahead with a $6.6 billion takeover offer for lithium hopeful Liontown Resources on October 16 after Mrs Rinehart’s Hancock Prospecting emerged with a 19.9 per cent stake.
Mr Bruce said the MinRes-Albemarle relationship was strong and that Mr Ellison and Albemarle boss Kent Masters “talk all the time”. The partners were set to make a call on a $320 million expansion at Wodgina, he said.
He bristled at the suggestion of tension after MinRes pulled out of a $1 billion investment in Albemarle lithium hydroxide plants in mainland China.
“I think Albemarle are economically rational, and they look at the opportunity [to expand Wodgina] in the same way that we do,” Mr Bruce said. “I think there’s strong alignment.”
Mr Ellison said at the time he did not want capital trapped in China, which he deemed high-risk.
RBC Capital analysts said the September-quarter result was stronger than expected. Mining service volumes and iron ore production beat forecasts. MinRes shares closed 4.6 per cent higher to $60.09.
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