Core Lithium Halts Operations at Grants Open Pit Owing to Decline in Prices

Core Lithium (ASX: CXO) has suspended its mining operations at Grants Open Pit at Finnis Lithium Operation near Darwin. This development took place because of the slumping price of Spodumene concentrate. Spodumene is a material from where Lithium is extracted. Lithium is then further used to make batteries 

Additionally, this has also led to an odd 300 jobs being lost in the Darwin region, from where 90 km ahead the Grants Pitt was located.  The uncertain market trajectories and conditions led to this move, and the company which is the only Lithium miner in Northern Australia will ramp up production once the market conditions are feasible for better returns and they can get a worthwhile value for their Spodumene concentrate. Here's a more in-depth analysis of the story. 

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Core Lithium suspends mining at Grants Open Pit 

Core Lithium, the only Northern Lithium Mining Company, and only Australian Lithium Mining Company outside Western Australia, has suspended operations at the Grants Open Pit because of Spodumene, a metal used in extracting Lithium’s price fall. This was not the first incident of the company suspending operations of mining, it has done the same with BP33 mine citing tough weather conditions and construction hurdles. In an announcement on December 2023, Core Lithium pointed out that it is trying to save additional costs required to make mining and construction better in bad weather, along with other factors of soil erosion, damp weather etc. 

The company is closely monitoring the market sentiment and will reinitiate digging once they see a good pricing of the raw material. Until then, Core Lithium has a reserve of 280,000 MT (metric tonnes) till 31st December 2023 which will be enough to accomplish needs for mid-2024. They are also working on the infrastructure upgradation of their BP33 mine so that they can start mining there as the market shows stability and puts out better prices.

Core CEO (Chief Executive Officer) Gareth Manderson stated that they are doing this including shutting shop at BP33 as they plan to use their stockpile ores as of now to supply the demand. 

Gareth also reiterates the role of NT Govt here and their support has been a show of strength for him. But he rejected claims of Govt having any role in this. This decision was undertaken under the current market conditions of Lithium.

Downfall of Spodumene’s Prices

Lithium markets forayed into a bloodbath dropping 80% from last year. Fastmarket’s analysts said the current trading price of Spodumene is $950 per tonne compared to early years prices being $8000 per tonne. The supply line as of now is filled with Lithium carbonate, so much so that the top producer China is expected to see a 30% downfall in Lithium’s price.

According to UBS (Union Bank of Switzerland), the Lithium supply as of now is set to outpace by 40% to 1.4 million tonnes in 2024. UBS also mentioned that the Lithium supply will be up by 22% and 29% in Australia and Latin America, Africa will also see a doubling of growth especially due to the new projects in Zimbabwe. China will see a rise in 40% supply of the metal as it is in operations with the CATL project in Janxi Province.

Due to plunging prices, Core Lithium is not the only company struggling, several other companies are facing tough calls of spending mining operations. Arcadium (ASX: LTM) Mt Cattlin Mine is facing a spree of losses and the producer is considering shutting shop for a while until the markets recover. 

Mineral Resources Limited’s (ASX: MIN) Bald Hill Mine and Mount Marion are facing tight margins and the company is considering shutting operations for a while. Pilbara Minerals’ Pilgangoora operation and Wodgina mining operations co-owned by Mineral Resources and Albemarle (ASX: ALB) are facing tight margins and they are suspending mining operations as well.

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Govt confident of Core Lithium restarting mining operations

Northern Territory’s  (NT) Mining Minister, Mark Monaghan expressed positive trajectories in the coming time. He said in a statement to ABC News, that the world is keen on orienting towards a greener and cleaner future and that others will be needing their Lithium for that. He also told to ABC, if for any reason Core Lithium shuts shop other mining operators are welcome to take the reigns. Mark also states that the job loss that has happened due to this unfortunate incident, all the miners, and technicians can be transferred to other mines requiring such additional labour.

The Opposition Leader from NT Lia Finnochiaro suggested that they cannot fall short of suspending operations, There is more that needs to be done to expand mining operations. Putting all our bets to mine by one player won’t serve good results. The leader also drew attention towards other important issues like a tedious regulatory framework that discourages exceptional businesses from coming to NT to start their plants.

Conclusion

Core Lithium suspends Spodumene concentrate mining at the Grants Open Pit at Finnis. This comes in the wake of the downfall in Spodumene’s prices. The company is set to restart operations in both Grants Pitt and BP33 mines that they had worked on to extract Lithium as soon as the market improves. Due to massive supply in comparison to demand, Spodumene’s prices have lowered by 80%. This has happened globally even to the top producer of Lithium, China. In this piece, I have talked about all facets of this development.