The Paper's reporter Sen Ning
The global lithium industry continues to flourish.
Recently, the world's fourth largest lithium mining giant, Pilbara Minerals Limited (Pilbara Minerals, ASX: PLS, hereinafter referred to as "Pilbara"), held the fifth spodumene concentrate auction of the year. The final transaction price was FOB $6,350/mt, up 2.6% from the last auction price on July 13, unchanged from the June auction price and back to an all-time high. Compared with the first auction in 2021, the transaction price increased by $5100 / ton, an increase of up to 408%.
This round of Pilbara's auction of 5,000 tons of ore, with a refining grade of 5.5%. According to the SC6.0 CIF China price, the lithium concentrate auction price is about 7017 US dollars / ton (about 47,000 yuan / ton), and the auction lithium ore equivalent to lithium carbonate cost price is about 450,000 yuan / ton.
"The lithium concentrate auctioned by Pierara is expected to be delivered in mid-September, and after considering the logistics cycle, the product will enter the market from November to December," Dawei, an analyst at Shanghai Nonferrous Network, said in an interview with the surging news reporter.
The surging news reporter learned that from July 2021, Pierbara began to auction part of the loose lithium concentrate through the BMX electronic trading platform in addition to the long-term order. Among the world's top five lithium mining giants, the only Pilbara family that conducts lithium mine auctions. According to industry analysts, its purpose is to promote the auction pricing of lithium concentrate and try to compete for the pricing power of lithium concentrate. Since the past business model of lithium concentrate was dominated by long-term negotiated prices, the price increase of lithium concentrate often lagged behind the change of lithium salt prices, and the price increase was lower than the market lithium price fluctuation. The introduction of the auction system is conducive to changing this situation.
Since the 8 auctions, the auction price of lithium concentrate in Pilbara has gradually become a bellwether for the global trend of lithium concentrate and lithium salt prices. It is worth noting that the lithium concentrate of Pilbara has been auctioned at auction at a price that has greatly exceeded the current market price. For example, in May 2022, the lithium concentrate (concentrate grade 5.5, FOB Port Hedland benchmark) was auctioned at $5,955/tonne and in June 2022 at $6,350/t (concentrate grade 5.5, FOB Port Hedland benchmark).
In contrast, the Company's average selling price of lithium concentrate in the second quarter was $4,267/mt (concentrate grade 6.0, CIF China benchmark), up 61% from US$2,650/mt (concentrate grade 6.0, CIF China benchmark) in the previous quarter. The company also said that the average price of lithium concentrate in the second quarter, including the price of a batch of 20,000 tons of goods, was originally scheduled to be delivered in March, but was delayed in April due to port restrictions. Excluding this shipment, the average cif price of spodumene concentrate with an accuracy of 6.0 in the second quarter was $4523/ton.
Regarding the gap between the auction price and the market price, Fu Dawei explained, "Due to the delay in the delivery date, the auctioned product is equivalent to the nature of futures, and its transaction price reflects the market's bullish expectations for lithium ore and lithium salt prices." ”
"Especially in the fourth quarter, the domestic new energy industry chain will be in a situation of grabbing equipment and goods, and the shortage of lithium ore raw materials will continue." Fu Dawei said.
In addition, due to the small size of each auction of Pilbara, the auction creates a sense of scarcity, easy to bid higher prices, and has contributed to the rise in lithium ore prices.
Dongguan Securities said that overall, the co-price of the Australian spodumene concentrate in the first quarter was 2600 US dollars / ton - 3000 US dollars / ton, and the australian mine long co-price in the second quarter was 5000 US dollars / ton - 5500 US dollars / ton. After the end of the auction transaction for a period of time, the lithium ore market price also appeared obviously with the upward trend, according to the current long-term price of each factory, the auction price will guide the future lithium concentrate and lithium salt prices continue to rise.
The latest data provided by Shanghai Nonferrous Metals Network shows that since the beginning of this year, the price of domestic lithium carbonate has risen from 364,000 yuan / ton in early February to 503,000 yuan / ton in mid-April, and has remained at a historical high of 471,000 yuan / ton since August, and lithium hydroxide battery-grade micropowders have risen from 305,500 yuan / ton in early February to 499,500 yuan / ton in mid-April, and have maintained a historical high of 475,500 yuan / ton since August.
The expansion of production will not stop, and the annual lithium concentrate production will reach 377,900 tons
Prior to the auction, Pierbala announced the company's financial and operational announcements for the second quarter of 2022. The company's spodumene concentrate volume and price increased in the second quarter, showing strong production and sales performance. The company said it will increase production of spodumene concentrate from the Pilganggoora project in response to continued growth in global demand for lithium raw materials.
In addition, the Company appointed Dale Henderson, an executive in the Mining and Resources Division, as the new General Manager and Chief Executive Officer, replacing Ken Henderson, who formally resigned on July 30, 2022. Ken Brinsden.
The announcement shows that Pilbara's spodumene concentrate production in the second quarter was 127,000 tons, up 56% from 81,400 dry tons in the first quarter of 2022, and year-to-date production increased by 30% over the same period last year.
At the company's second-quarter results briefing, the company's new general manager, Dale Henderson, said that mining in the second quarter increased by 1/4 from the previous quarter, reaching a total of 7.3 million tons. It is expected that the annual production of spodumene concentrate in fiscal 2022 will reach 377,900 tons, which is at the upper limit of the annual production guidance range of 340,000-380,000 tons.
Previously, in November 2021, the company announced that the annual lithium concentrate production guideline for fiscal 2022 was 460,000-510,000 tons, and in March this year, the company lowered the indicator by 120,000-130,000 tons. In this regard, Dale Henderson explained that during the expansion process, the company encountered difficulties such as the new crown epidemic and labor shortages, so it lowered the production guidelines, but raised the capital expenditure budget.
In the second quarter, Pilbara spodumene concentrate shipments were 132,000 tonnes, up 127% from 58,000 mt in the first quarter of 2022. This includes approximately 20,000 tonnes of product, which was scheduled to start at the end of March 2022 and eventually from April 7, 2022. Annual shipments are expected to be 361,000 tonnes in FY2022, up 28% from 28.1 tonnes in FY21.
The significant increase in sales volume was due to the adjustment of the company's production and marketing strategy. In response to growing customer demand, Pilbara maximized sales by downgrading target product grades to optimize product yields, the company said. The average grade of spodumene concentrate products sold during the quarter was 5.4%, and the average product price was $3900.
With volume and price increases, Pierbara's cash balance at the end of the second quarter increased significantly by $589.3 million from the end of the first quarter to $874.2 million.
The company's chief financial officer, Brian. Brian Lynn said at the investor conference that the company's operating profits are also satisfactory due to the successful implementation of the pricing strategy. Production is mainly concentrated in two plants in the Pilgan and Ngungaju projects. The Plgen plant produces 98,000 tonnes and earns more than $3,000 per tonne.
In the second half of this year, the focus of Pilbarra's work will be on the renovation of the Pilgangoora project to further increase production.
It is understood that Pyrgangola is one of the largest lithium deposits in the world with largest resources. In September 2021, Pierbala announced that the total resources of the Piergangola project were 308.9 million tonnes at a grade of 1.14% lithium oxide, equivalent to 8.7 million tonnes of lithium carbonate equivalent.
Dale Henderson said that the transformation of the Pyrgangola project will be divided into two sub-projects, P680 and P1000. During the P680 project phase, the company will invest $103 million to increase Pyrgangola's spodumene concentrate from 580,000 tons/year to 680,000 tons/year. During the P1000 phase, the company will invest approximately $194 million to introduce ore sorting technology and replace the existing crushing equipment with a larger, owned crushing plant with a target capacity of 1 million tons. After the transformation, it is expected that from the fourth quarter of 2023, the lithium concentrate production of the Pyrgangola project will reach about 640,000-680,000 tons, while the Pyrgen project will reach 460,000-480,000 tons.
In addition to expanding the production of lithium mines, Pilbara has also extended the industrial chain to the production of lithium salts and batteries in the middle and lower reaches. In midstream, Pierara signed a binding memorandum of understanding with Australian technology company Calix Limited (ASX:CXL) last year to form a joint venture to build a demonstration plant in Pyrgangola to produce and commercialize lithium phosphate and other lithium salts. It is expected that in the third quarter of 2022, the two companies will sign a formal joint venture agreement. Currently, the Australian Government is providing $20 million in grants to support the further development and demonstration of the project.
Downstream, in April 2022, Pierbara Mining Company and South Korea's Posco established a joint venture, and Pierara subscribed for an initial 18% stake in the joint venture, which is expected to increase to 30% in the future.
In the future, the joint venture will construct and operate a 43,000 tons/year lithium iron phosphate battery-grade primary lithium hydroxide chemical processing facility in Gwangyang, South Korea. At present, the initial site works of the factory, including roads, have been basically completed. Pierbara will provide the joint venture with a long-term supply of 315,000 tonnes of lithium concentrate, covering essentially the lithium concentrate feedstocks required for the project.
Looking ahead, the company is very optimistic about the prospects of the global lithium market in the medium and long term. "On the one hand, we are seeing strong demand, with more than 500,000 electric vehicles sold in China in June. On the other hand, the high price increase reflects the gap between lithium salt production capacity and raw material shortages. Overall, we feel very optimistic. At the end of the performance briefing, the company's general manager Dell. Henderson said, "Pierara is well positioned in this environment. We look forward to delivering more raw materials to the market. ”
Editor-in-Charge: Kang Yimei