Chinese lithium processor Ganfeng Lithium has been forced to issue a profit warning in the face of slumping demand for its products in the world’s biggest electric vehicle market.
With Beijing having slashed public subsidies for electric vehicles since June – in a shock reminiscent of that given to solar project developers a year earlier – demand for lithium has fallen back dramatically.
Xinyu-based Ganfeng today told the Hong Kong Stock Exchange its anticipated net profits for January to the end of September would now be 55-65% lower than it stated in its half-year figures a month ago. The new nine-month profit forecast is now RMB387-498 million ($54.8-70.4 million).
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The company blamed a big loss in fair value – the estimated, most up to date value of a product – amounting to RMB175 million on its lithium products, some RMB164 million of which it attributed to a fall in the stock price of its Pilbara investment.
Ganfeng acquired an AU$50 million (RMB239 million/US$33.8 million) slice of Australian lithium producer Pilbara Minerals Ltd in March to secure more lithium raw material spodumene as part of its pre-existing offtaker arrangement.
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I don’t think I would be running down the road yelling FIRE quite yet. Let us keep in mind that with VWAG and other “Legacy” Car & Truck makers are now scrambling to go electric and the demand for batteries & their related materials is high. Just because the USA is furtling about on electrification of transport, the rest of the world is not, even if China is slowing down it’s subsidies.