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MarketScreener Homepage  >  Equities  >  SHENZHEN STOCK EXCHANGE  >  Tianqi Lithium Corp    002466   CNE100000T32

TIANQI LITHIUM CORP

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Albemarle declines to participate in LME lithium contract

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06/11/2019 | 05:29pm EDT
Vice President, Corporate Strategy and Investor Relations of Albemarle Corporation, David Ryan, speaks during the lithium industry's annual conference in Santiago

SANTIAGO (Reuters) - Albemarle Corp, the world's largest lithium producer, said on Tuesday it will not participate in the London Metal Exchange's plan to launch a new contract for the white metal, depriving it of a key source of pricing data.

The move reflects a view by some that lithium, used to make electric car batteries, is a specialty chemical rather than a basic commodity, and should be priced on a contract-by-contract basis.

"An exchange contract tends to support a commodity market, and that's not what we believe this (lithium market) is," David Ryan, Albemarle's head of corporate strategy and investor relations, told the Fastmarkets Lithium Supply and Markets Conference in Santiago.

The LME, owned by Hong Kong Exchanges and Clearing Ltd, on Monday chose Fastmarkets to provide a reference price for the contract.

"At this point our intent is that we will not be providing price information to the index," said Ryan.

The LME said in a statement to Reuters that it respects the right of companies to operate in whatever ways best suit their needs.

"The LME continues to work with a supportive group of industry participants to develop solutions for the lithium industry, and will launch a contract when those participants are ready to use it," spokeswoman Bianca Blake said

Unlike for copper or other metals used to make electric cars, there has not been a traded price for lithium, leaving the industry's investors, customers, analysts and executives without a full sense of the global market.

Ryan spoke on a panel presentation alongside executives from rivals SQM and Tianqi Lithium Corp, which agreed that lithium is not a true commodity.

"The challenge of the index is to try to have very good representation of the market, which I really feel is not possible today because of how the lithium industry works," Pablo Altimiras, SQM's vice president of lithium and iodine, told the conference.

An SQM spokeswoman did not respond to multiple requests for comment on Tuesday when asked after Altimiras spoke if the Chilean company plans to participate in the LME contract.

Tianqi President Vivian Wu had said on Monday that the contract is "going to be helpful for us" and should bring more clarity to the market.

Charlotte, North Carolina-based Albemarle operates across Chile, Australia and the United States, providing lithium used by Panasonic Corp to make batteries for Tesla Inc and other electric automakers.

The company sells nearly all its lithium on long-term contracts, not spot deals, which would be the most influenced by a LME lithium price.

Many long-term supply contracts are already referencing an LME price, an anticipatory step designed to set future deal parameters, industry investors have told Reuters.

(Reporting by Ernest Scheyder; Additional reporting by Dave Sherwood; Editing by David Gregorio and Lisa Shumaker)

By Ernest Scheyder

Stocks mentioned in the article
ChangeLast1st jan.
ALBEMARLE CORPORATION -2.58% 70.88 Delayed Quote.-8.03%
HONG KONG EXCHANGES AND CLEARING LIMITED -0.76% 260.4 End-of-day quote.13.91%
SOCIEDAD QUIMICA Y MINERA (A SHARE) End-of-day quote.
TIANQI LITHIUM CORP End-of-day quote.
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Financials (CNY)
Sales 2019 6 356 M
EBIT 2019 3 154 M
Net income 2019 1 427 M
Finance 2019 3 472 M
Yield 2019 0,65%
P/E ratio 2019 20,97
P/E ratio 2020 14,07
EV / Sales 2019 4,02x
EV / Sales 2020 3,04x
Capitalization 29 019 M
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Number of Analysts 15
Average target price 37,9  CNY
Spread / Average Target 49%
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Wei Wu General Manager & Director
Wei Ping Jiang Chairman
Qing Yang Chairman-Supervisory Board
Jun Zou Director, Chief Financial & Accounting Officer
An Qi Jiang Director
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