Australia’s lithium junior Lake Resources N.L. (ASX: LKE) plans to start laying off most of its staff and selling assets over the low price of lithium, a lack of investors and slim customer pickins. The battery metal’s spot price has plummeted by over 80 per cent in the past year.
Lake currently employs about 180 people but will trim that number down to around 20, a source told Reuters. The company’s been struggling to attract interest for its flagship Kachi lithium project in Argentina’s Catamarca province.
Lake will retain its primary operation with optimism for the market’s future but will sell four lithium-rich properties it holds elsewhere. “The standard price of lithium needs to be a lot higher for projects to move forward,” chief executive David Dickson said recently.
Lake’s joint venture partner at Kachi, the lithium extraction tech developer Lilac Solutions, is remaining optimistic about its future too. Lilac agreed to invest about C$68.5 million into the operation in 2021 to help showcase its technology and hasn’t given up hope on it. First production, about 25,000 tons, remains scheduled for 2027.
Dickson hired Goldman Sachs to find a worthwhile customer or investor for Kachi last year and says it is taking longer than anticipated. He provided an update on Kachi and discussed his views on the industry climate last month.
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Majors and others retain optimism too
This was apparent at the 16th annual Fastmarkets Lithium Supply and Battery Raw Materials Conference in Las Vegas. The event concluded on Thursday. Fastmarkets is an agency that reports on the price of commodities like lithium and other materials produced by the mining industry. It keeps tabs on other sectors as well.
“We’re not scared off by low prices and we’re not drawn in by high prices,” Patrick Howarth, head of Exxon Mobil Corp’s (NYSE: XOM) lithium division, said at the event. Howarth announced plans for Exxon to accelerate its rate of lithium production in Arkansas.
Eric Norris, a representative from Albemarle Corporation (NYSE: ALB), said the world’s largest lithium producer isn’t concerned about the industry’s future long term either.
“For those of us that are worried about the market sentiments at this moment in time, keep your eye on the long-term trajectory,” Pilbara Minerals Ltd (ASX: PLS) chief executive Dale Henderson added.
This long-term optimism among several prominent operators is important for an assortment of companies operating in Argentina like Lithium South Development Corporation (TSX-V: LIS) (OTCQB: LISMF) (Frankfurt: OGPQ), Galan Lithium Limited (ASX: GLN) and several others.
Lithium South Development Corporation is a sponsor of Mugglehead news coverage
rowan@mugglehead.com
