Lithium miners seek strategic sales of investment shares for more liquid cash flow

On 21 February 2024, two major transactions underscored the lithium industry's current financial repositioning amidst a global downturn of 83% drop in lithium prices in the past year, as SMM Spodumene Concentrate (cif China) Price Index suggests.

Piedmont Lithium has agreed to sell 1,152.2 million shares of Sayona Mining, which translates to approximately US$39.4 million for Piedmont. Earlier this year, Sayona Mining announced the plan to conduct an operational review of its Canadian lithium project to optimize cost structure. On 6 February, Piedmont Lithium announced a 27% workforce reduction and more measures for cost-cutting. Following this transaction, Piedmont will not hold any shares of Sayona, but it will not impact on Piedmont’s joint venture or offtake position with Sayona Quebec, according to sources.

Concurrently, in Australia, Mineral Resources has a US$230 million share sale at a 7.6% discount to the bid price for Azure Minerals, a junior exploration company.

These transactions reflect a strategic move by major lithium players to liquidate portions of their investments. Resonating this sentiment, the executives of Albemarle (who also recently sold its 4% stake in Liontown in January 2024) have also stressed the importance of reassessing their investment portfolios in the earnings call, recognising the current lithium price has led to significant valuation adjustments in the sector, and thus can not drive capital-intensive lithium project investment and expansion at this time. SMM expects more frequent liquidating transactions to appear in 2024, as the industry grapples with immediate financial pressures and companies push for more cost-efficient strategies.

Author: Hongqiu Su | Battery Metals Analyst Associate | London Office, Shanghai Metals Market

Email: lilysu@smm.cn