World’s biggest lithium mine gets downgrade on ‘systemic issues'
Shares in Australian miner IGO tumbled as much as 14% after the company delivered a major downgrade to production guidance for Greenbushes, the world’s biggest hard-rock lithium mine.
The company slashed expectations for full-year output to between 1.38-million and 1.43-million tons, compared with 1.50-million to 1.65-million tons expected previously, which marks a 13% reduction at the top end. The company said there were “systemic” issues at the site that would take time to address.
“Performance has been challenged across a number of metrics including safety, feed grade, recoveries, maintenance execution and plant reliability,” IGO said in its quarterly earnings statement on April 24. The share slump early on the day was the biggest intraday decline since September last year.
Greenbushes accounts for around a fifth of the world’s lithium output and has low costs compared to other hard-rock lithium miners, according to Bloomberg Intelligence. However, its ramp-up has proved unsteady in recent years, even as the global lithium market recovers from a long drop.
Stronger lithium prices helped cushion the blow, and IGO’s underlying earnings before tax and other items rose to A$119-million, or $85-million, from A$30-million a year earlier.
“This was a Greenbushes-driven miss, and more importantly, a reset in expectations rather than a one-off shortfall,” analysts from Royal Bank of Canada wrote in an emailed note. “This is a material negative skew," it added.
Greenbushes is owned 51% by a joint venture between IGO and China’s Tianqi Lithium Corporation, with the balance held by Albemarle Corporation. Tianqi’s Hong Kong shares were little changed onApril 24 in Hong Kong.
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