The company said in a statement on Wednesday April 8 that its main focus is to preserve its cash position by reducing investments against the backdrop of uncertainty surrounding the global economy and raw material markets.
In February, the company already announced that its pilot lithium project in Argentina was on hold because it had not met the launch requirements yet.
The pilot plant – which operated for four months under real conditions – will continue activities to finish gathering the process results before being mothballed.
The company said that the decision to halt the project will cost €150 million ($163 million). This will include an asset impairment charge and cash outflows of around €90 million for the current year, it said.
Nevertheless, the company considers the Argentinian lithium ore deposit a high-potential asset in its portfolio which will offer great potential in the years ahead.
“The positioning of the process is competitive as it ranks in the first quartile of the cash-cost curve of the lithium industry, with large scale drainable resources of nearly 10 million tonnes of lithium carbonate equivalent,” the company said.
The move came alongside announcements from other lithium miners recently of a slowdown in capacity expansions due to low lithium prices and further headwinds caused by the global spread of the coronavirus.
For instance, North American lithium producer Livent announced in February a slowdown of its planned capacity expansion project in Argentina by six months due to current low lithium prices and to align additional supply with expected future demand growth.
Lithium carbonate is a critical component of electric vehicle (EV) batteries. Although long-term sentiment for lithium compounds is bullish due to government and social pressure to switch to cleaner energy vehicles, such as EVs, oversupply of lithium in recent years have weighed on prices.
Fastmarkets assessed the lithium carbonate, 99.5% Li2CO3 min, battery grade, spot price at $8-9.50 per kg on a cif China, Japan and South Korea basis on Thursday April 2, unchanged over the past 16 weeks, but down by around 28.6% from $11-13.50 per kg on April 4,2019.
French mining and metals group Eramet will put on hold the construction of its Argentinian lithium production plant for an indefinite period due to the economic uncertainty sparked by the Covid-19 pandemic.