MinRes, Ganfeng Work to Sustain Lithium Joint Venture
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Australia’s Mineral Resources (ASX: MIN) is poised to inject A$150 million (approximately $98 million) into its struggling Mount Marion lithium operation as it faces a protracted downturn in lithium prices. In a recent filing with the Hong Kong Stock Exchange, its Chinese joint venture partner, Ganfeng Lithium, announced it will match this cash infusion with a collateral-free loan of A$150 million.
This financial support follows a significant loss of A$44.6 million ($29 million) reported by Mount Marion in 2024, with operations continuing to operate at a loss into the first quarter of this year. Ganfeng stated that this joint decision is aimed at keeping the West Australian operation viable as lithium prices show minimal signs of recovery.
“Decisive action to lower costs ensures our two largest lithium sites remain well-positioned to continue operating through the cycle and to capitalize when prices rebound,” MinRes mentioned in a statement to the Australian Financial Review.
The investment into Mount Marion comes as MinRes grapples with a substantial debt of A$5.8 billion ($3.8 billion) and a declining market capitalization that has fallen to A$4.6 billion ($3 billion).
Lithium prices have been particularly hard-hit among battery metals. In May, spodumene prices plummeted by 19.1% to $612.50 per tonne in China, marking a 30% decrease since January. Meanwhile, lithium carbonate prices fell by 10.3% in May, down over 20% year-to-date. Current spodumene spot prices have now dipped below $580 per tonne, according to S&P Global.
Despite robust electric vehicle sales, the lithium market is experiencing significant pressure from oversupply. “The weakness in lithium prices is primarily due to oversupply,” stated William Adams, head of base metals research at Fastmarkets, in a recent report. Although temporary production cuts had previously helped stabilize prices, persistently low salt prices in China have squeezed processor margins, leading sellers to offer deeper discounts. Some analysts warn that prices may need to decline further to prompt another round of production cuts.
Analysts from Citi and Adamas Intelligence have noted that Greenbushes, Australia’s largest lithium mine, a joint venture between Albemarle, IGO, and Tianqi, is currently the only domestic asset generating positive cash flow at prevailing prices. MinRes, which also operates the Wodgina mine in partnership with Albemarle and recently closed the Bald Hill mine, has encountered challenges beyond commodity pricing.
The company’s founder and former CEO, Chris Ellison, has recently been implicated in “profoundly disappointing” conduct, further complicating the miner’s governance record.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/minres-and-ganfeng-collaborate-to-sustain-mount-marion-lithium-joint-venture-amid-price-decline/
