Australian lithium miners break out of doldrums as EV demand booms

Beleaguered Australian lithium miners showed the first signs of optimism in nearly three years this week, boosted by a recovery in electric vehicle (EV) demand led by China's coronavirus response, company quarterly updates showed.

Record sales and an influx of customer inquiries suggest that the downtrodden Australian sector that accounts for around half of the world's lithium supply may finally be emerging from its extended funk.

Producers are now watching for market signals to restart production shuttered when prices were low, they said.

Pilbara Minerals and Galaxy Resources on Thursday reported record shipments for the three months ended on Dec. 31 because of high demand and cited an uplift in lithium chemicals pricing in China in December benefiting sales.

Pilbara said the trend has continued into 2021, adding that it expects spodumene concentrate's prices will rally in the second half as the lithium ore mineral is a key ingredient for EV batteries.

Galaxy said it was sold out of spodumene for the quarter and would wait before agreeing on the pricing for the next three months because it expected prices would continue to climb.

Spodumene prices ticked up this month to $430 per tonne from as low as $380 late last year, having been locked in a one way downtrend from $980 in early 2018.

Investors have been banking on a recovery in demand since China began boosting EV production in the second half of 2020.

Shares in Galaxy and Pilbara have rallied between 20% to 30% this month, recovering partly from last year's lows.

China's auto industry rebounded swiftly in the later half of last year from the COVID-19 downturn, while EV sales in Europe rose to meet new emissions targets, prompting battery suppliers to expand supply and source more lithium-related raw materials.

Global lithium supply and demand at the end of last year was nearly even, according to data from Benchmark Mineral Intelligence, a turnaround from a deep demand slump in the first-half of 2020 because of the coronavirus pandemic.

Higher prices may open the way for supply that had been shuttered because of low prices to come back.

Pilbara and Galaxy's peer Mineral Resources said on Friday it was monitoring market conditions before resuming spodumene concentrate production at its joint venture with Albermarle Corp which has been shuttered for over a year.

Pilbara is also considering the best path to restart the operations of Altura Mining Ltd, which it acquired last year, and expects the capacity to provide the "first major step-up" in spodumene concentrate production.