Orocobre Limited [ASX:ORE], one of Australia’s fastest growing lithium miners, has today made back some gains on its share price after the company released their end of year earnings report for 2018.
Their overall share price managed to claw back 0.308% this morning, though is currently sitting at a slight decrease $3.24 at time of writing.
Orocobre has a primary focus on lithium and borax mining operations throughout Argentina, with the aim of producing high grade lithium for batteries, storage and other products.
How Orocobre’s share price faired in the December quarter?
While production of both borax and lithium resources continue to generate improved sales, the report revealed a weaker than average price of lithium carbonate than initially expected, with a 28% drop from the first quarter average of US$14,699 a tonne. The second quarter average came to US$10,587.
The company has largely attributed this fall to ‘softness’ in the Chinese market:
‘Steady growth in Chinese lithium product exports in the earlier months of CY18 accelerated throughout the December quarter as large Chinese converters targeted the markets of Japan and South Korea.
‘Japan and South Korea also experienced an increased volume of imports from Chile while the volume exported from Chile to China decreased.’
The report also underlined the headache from China’s policy changes regarding electric vehicle production and high-grade materials, saying that ‘…the lack of transparency and guidance from Chinese regulators regarding future EV policy direction has contributed to cautious buying behaviour amongst customers.’
What’s on the horizon for Orocobre?
Despite concerns surrounding the price of lithium, as well as China’s economic and market conditions, Orocobre management view the current shortfall ‘as a short-term correction following three to four years of high growth…’
Following the unprecedented period of oversupply in lithium during 2018, investors in Orocobre (and their rivals) are unsurprisingly wary of investing given the number of projects and long-term supply.
But according to analysts, it isn’t a question of if lithium demand kicks in again, but when — as lithium technology develops further, long-term growth is predicted to remain intact.
For Markets & Money