Arcadium Lithium’s Mt Cattlin going on ice won’t ease pressure on MinRes and Pilbara Minerals, says analyst

Africa is pumping out more and more lithium, meaning supply being switched off from the Mt Cattlin mine will do little to turn the tide for Australia’s struggling miners of the battery ingredient, according to a prominent mining analyst. By early Friday afternoon Chris Ellison’s Mineral Resources share price haemorrhaged another 4 per cent, Pilbara Minerals lost 4.1 per cent and Liontown Resources was down 4.8 per cent. MinRes is now at a nadir not seen since November 2020, while Liontown and Pilbara were last at these lows in 2021 and 2022 respectively. Arcadium Lithium on Thursday revealed it would mothball the Mt Cattlin lithium mine in WA’s Goldfields region by the middle of next year, marking the second Australian domino — and first in WA — to topple from the battery metal’s current price downturn. The move will remove about 15,000 tonnes of lithium carbonate from global supply and comes a week after the embattled MinRes wound back the expected output from its Mt Marion lithium mine in the Goldfields by about 27 per cent. But Citi analyst Kate McCutcheon believes the supply curtailments will not support a price rebound. “The impact to the conversion part in China is unlikely to be as meaningful as the previous downcycle, since China is diversifying its upstream resources in the past quarters,” she said in a note to clients. “Australian spodumene made up 62 per cent of total spodumene imports in July 2024, versus 94 per cent and 80 per cent in 2022 and 2023, respectively, losing share to African spodumene.” The prevailing lithium price was more than $US3000 a tonne a year ago but is currently languishing around $US770/t. Short sellers are also keeping their foot on the throats of Australia’s lithium cohort. Pilbara remains the most shorted stock on the ASX with more than 20 per cent of its shares in the hands of detractors, Liontown holds fourth place with 10.8 per cent, and MinRes is at 7.7 per cent — but the latter’s shorting interest has more than doubled over the past year. Lithium sentiment has been gloomy all year but deteriorated even further over the past month. Arcadium’s Mt Cattlin decision came less than a month after the Nasdaq-listed company’s Australian head of operations, Liam Franklyn, told The West Australian that lights would stay on at the site for the foreseeable future, but that looking at care and maintenance was on the cards. “Really what changed over the last month was we as an organisation got a bit more of an acute view of the supply chain . . . and that’s a view that’s not uncommon,” he said on Thursday. “We don’t think prices will support the ongoing mining, which is the open pit expansion.” The decision to mothball Mt Cattlin impacts about 300 workers, about two-thirds of who are employed by ASX-listed contractor NRW Holdings. NRW has declined to comment. Mt Cattlin is near the town of Ravensthorpe and less than eights months ago First Quantum Minerals decided to switch off its Ravensthorpe nickel mine, wiping out 530 jobs. More than 8000 jobs in the WA mining sector have now been lost since last year as the State grapples with ailing nickel and lithium demand, on top of an iron ore price trending in the wrong direction. The bulk of the job losses have occurred this year.