Tianqi Lithium: Lithium carbonate capacity to reach 120,000 mt in 2021

SHANGHAI, Mar 12 (SMM)—Tianqi Lithium's share prices had surged from April 2020 amid development of new energy vehicles (NEVs), but dropped rapidly after the Chinese New Year (CNY) holiday.  Share prices finally closed up 2.25% at 40.06 yuan per share on March 11 after falling for many days. 

As the largest lithium battery new energy core materials supplier in China, Tianqi Lithium holds the most advanced technology. It produced more than 70,000 mt of lithium carbonate in 2020, and the figure is expected to reach 120,000 mt in 2021 and 180,000 mt in 2023. 

In addition, the company is one of the few companies in the world that simultaneously deploys high-quality lithium mines and salt lake brine mines. These abundant resources provide the company with low-cost lithium concentrates as raw materials for production of lithium carbonate and lithium hydroxide.

Recently, domestic demand for lithium battery materials has continued to improve. On March 10, many lithium carbonate companies including Sichuan Rongli Technology and Qinghai Zhonghong Mining also raised their product prices. 

In response to whether the rise in lithium prices can alleviate the huge debt, Tianqi Lithium responded that it is stepping up its demonstration of various equity financing tools that can help reduce the company’s debt leverage, with a view to fundamentally optimizing the company’s structure of assets and liabilities and improve profitability and cash flows.

According to its previous performance forecast, the company's net profit loss attributable to the parent company in 2020 stood between1.36 billion yuan and 2.27 billion yuan, and non-net profit loss came in between 860 million yuan and 1.665 billion. Operating income fell sharply from the previous year to 3 billion-3.4 billion yuan in 2020. 

Falling lithium chemical products during Q1-Q3 and lower exports resulted in the decline in the income. 

In addition, affected by factors such as SQM stock price and Libor interest rate fluctuations, the fair value changes generated by the SQM 2.1% B-share collar option business in 2020 and the investment income generated by the hedging business led a decrease of approximately 500 million yuan in the company's net profit attributable to shareholders of the listed company, down 346.8% from 2019.

On March 11, Tianqi Lithium (002466) issued an announcement stating that it had received a payment instruction from the Supreme Court of Western Australia a few days ago, ruling that the company’s wholly-owned subsidiary TLK to pay MSP arrears for the project within 7 days, and the total amount of principal and interest is A$38,881,500.

The brokerage research report believes that as lithium prices rise, the corporate value of lithium resources companies will be revalued. Considering the company’s long-term competitiveness as a global leader in lithium resources, it is expected to come to the fore after the debt problem is resolved.