- Galaxy Resources is joining other ASX-listed lithium miners in slashing production rates at one of its major projects
- A weak lithium market has seen the likes of Pilbara Minerals and Syrah Resources scale back production in recent months as prices of the element continue to drop
- Galaxy said in its quarterly report today that it plans to cut production from its Mt Cattlin project by roughly 40 per cent
- Shareholders seem unalarmed by the news, with Galaxy up 0.59 per cent in mid-afternoon trade and selling shares for 86 cents each
A weak lithium market will see Galaxy Resource slash production from its major Mt Cattlin project by roughly 40 per cent.
The company announced the scale-back in its September quarterly report today, citing the need to preserve mine life and maintain balance sheet capacity as key drivers for the production are cut.
However, Galaxy is still in the process of reviewing Mt Cattlin operations, so this decision is not final.
The lithium market has been in decline for the better part of this year, with global lithium prices down almost 10 per cent through 2019.
This has seen other major producers like Glencore, Pilbara, and Syrah all heavily reduce production in the past few months, and even Chinese producer Tianqi Lithium recorded its first loss since 2014 over the September quarter this year.
Galaxy shareholders are still backing the lithium miner today, however, with shares seeing a small spike in early trade and managing to stay above the red throughout the day. At 2:29 pm AEDT, Galaxy was up 0.59 per cent and selling shares for 86 cents each.
This bout of confidence is perhaps due the production stats from Mt Cattlin overshadowing the upcoming cut.
In the three months leading to September, roughly 468,000 wet metric tonnes (wmt) of lithium ore were mined from Mt Cattlin — topping both previous quarters and bringing total ore mined to just under $1.3 million tonnes for 2019 so far.
On top of this, the average grade of 1.19 per cent lithium oxide for 2019 has exceeded the company’s expected 1.15 per cent.
In terms of company costs, the company produced lithium concentrate for an average cash cost of US$387 (A$565) per tonne free-on-board.
According to Galaxy, this makes Mt Cattlin one of the lowest-cost lithium concentrate operations in the globe.
Today, Galaxy said in its report to the Australian Securities Exchange that the weakness of the lithium market is short term.
Medium to long term demand fundamentals are largely unchanged in the face of the global switch to electric vehicles.