Adds details on lithium demand, pricing pressure
Oct 24 (Reuters) - Australian lithium miner Galaxy Resources Ltd GXY.AX said on Thursday it will scale back operations at its Mt Cattlin mine, as the sector faces pressure from weak pricing and lower than expected demand from China.
Galaxy said in a statement it is reviewing operations at Mt Cattlin, its most important mine, and expected to reduce the amount of material mined by about 40%.
The U.S.-China trade dispute and weaker than expected growth in China has hurt the overall economic outlook and short-term sentiment in the electric vehicle and lithium-ion battery market, the miner said.
"A soft quarter in Chinese new energy vehicle manufacturing production, as well as subdued deliveries in the USA were core contributors to the weakness in lithium demand during Q3 2019."
Australian lithium producers have been cutting supply amid plummeting prices in recent months.
In June, China cut electric vehicle subsidies, having raised the standards for new energy vehicles that qualify for subsidies and reduced the amount provided.
Galaxy said the review would help it ensure Mt Cattlin continues producing positive operating margins and enable the company to extend its mine life, it said.
Galaxy trimmed the upper end of full year production guidance to as much as 193,000 dry metric tonnes of lithium concentrate, down from a previous upper limit of 210,000 dmt.
During the quarter ended Sept. 30, the miner shipped a total of 58,278 dmt of lithium concentrate, against 29,439 dmt in the preceding quarter.
Despite the current pricing pressure, Galaxy said it was confident in the long-term outlook, with support expected from growth in electric vehicle markets and higher penetration of lithium-ion batteries for electrified energy storage.
(Reporting by Rashmi Ashok in Bengaluru; Editing by Lincoln Feast and Richard Pullin)
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