Tianqi Lithium posts $101m net loss in H1 as prices plunge

Tianqi Lithium posts $101m net loss in H1 as prices plunge

Lithium carbonate prices in China are down around 20% this year near their lowest in seven years, having been in freefall since 2018 amid oversupply.

We don't think this oversupply will last long. 

Investors are to buy low and sell high - a good way of doing this in the resource sector is to pick up shares and positions when commodities prices are low. 

Gold and silver are great examples of this - stocks have been surging along with the rise in the underlying metal prices. 

Lithium isn't going anywhere and after an increase in mine supply came online, prices have plunged - we believe prices will begin to stabilize and lithium should be a commodity investor start looking for ways to add exposure.

Tianqi Lithium Corp, one of the world’s top lithium producers, on Sunday posted a hefty half-year loss as the coronavirus outbreak weighed on prices for the commodity used in electric-vehicle batteries.

The Chinese firm, which is struggling to repay a $3.5 billion loan taken out to buy a stake in Chilean miner SQM in 2018, said in a filing to the Shenzhen Stock Exchange it made a 696.57 million yuan ($101.47 million) net loss in January-June.

That compared with a net profit of 193.41 million yuan a year earlier and means Tianqi has now racked up losses of 6.87 billion yuan, or $1 billion, over the last four quarters, company filings and Refinitiv Eikon data show.

The first-half result was near the lower end of the guided range for the loss, however, and implies a loss of 196.27 million yuan in the second quarter – smaller than the roughly 500 million yuan Tianqi lost in January-March.

First-half revenues fell 27.4% to 1.88 billion yuan as the coronavirus pandemic hit lithium demand and weighed on prices.

Sales volumes and prices of lithium chemicals, as well as the sales price of lithium concentrate, “decreased significantly compared with the same period of the previous year, resulting in a decline in operating income,” said Tianqi, whose president Vivian Wu left the company earlier this month.

A decline in SQM’s performance led to lower investment income, the Chengdu-based firm added.

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