MELBOURNE, Jan 18 (Reuters) - Lithium prices are set to
surge again in the June half, spurred by a jump in China's
production of electric vehicle batteries and project delays due
to COVID-19, Australian lithium miner Allkem said on
Tuesday.
Allkem, with mines in Argentina and Australia, predicted
that lithium carbonate prices would rise by about 80% in the six
months to June from the December half year to around $20,000 a
tonne at its export point.
Lithium prices soared last year amid supply constraints, as
automakers around the world began investing billions of dollars
to transition to cleaner modes of transportation because of a
global push to cut carbon emissions.
The strong outlook sent Allkem's shares up as much as 5.4%
to a record high of $11.97.
Armed with strong cash flows, the top-10 lithium producer
formed late last year from the merger of Orocobre and Galaxy
Resources, is racing to bring new projects on line.
"Moving production as quickly as we can is the name of the
game," Chief Executive Martin Perez de Solay told analysts after
a quarterly operations report.
In the December quarter alone, China's production of
lithium-ion batteries rose 40% from the previous quarter and
more than doubled from the same quarter a year earlier, driving
lithium carbonate prices to record highs, Allkem's chief sales
officer Christian Cortes said.
Allkem executives played down analysts' concerns that
lithium prices could suddenly drop with carmakers outside China
constrained by broader supply issues.
Perez de Solay said there was no sign of a build in battery
stock anywhere.
"It's a very, very tight supply market and as a result of
this we're seeing this very rapid increase in pricing," Cortes
said.
A surge in Omicron-related COVID-19 cases globally is also
affecting Allkem's operations and development activity.
First production at its Sal De Vida mine in Argentina has
been delayed by nearly a year to the second half of 2023, mainly
because government staff involved in issuing permits for the
project were hit by the pandemic, Perez de Solay said.
The company's Mount Cattlin mine produced 52,225 dry metric
tonnes (dmt) of spodumene concentrate in the quarter, bringing
total annual production to 230,065 dmt, exceeding its previous
guidance by 4.5%.
Output at Allkem's flagship Olaroz mine for the quarter
slipped 2% to 3,644 tonnes from last year.
(Reporting by Sonali Paul in Melbourne and Indranil Sarkar in
Bengaluru; Editing by Karishma Singh and Richard Pullin)