Mineral Resources delivers record output from Wodgina but prices take a hit on ‘market manipulation’

Shipping problems and plunging prices have taken the gloss off a new spodumene production record from Mineral Resources’ Wodgina mine during the September quarter. The Chris Ellison-led miner said on Wednesday that shipments from Wodgina over the three months had been hit by unplanned port maintenance and congestion. MinRes was also stung by a weak lithium price, with the average realised spodumene concentrate price dropping 28 per cent to just $US1870/t, down from $US2589/t three months earlier and less than half the price it achieved in the same period a year earlier. MinRes executive general manager of corporate development James Bruce told an analyst call following the release of its quarterly results the short-term lithium pricing environment was being impacted by “market manipulation”. “A lot of paper-trading is going on right now in the market,” Mr Bruce said. “There’s nothing wrong with the market fundamentals for lithium...we are still seeing strong end-user demand.” Wodgina pumped out 45,000 tonnes of spodumene concentrate in the quarter, up 10 per cent on the previous period, with shipments of 25,000t. An additional shipment is scheduled for this month. Lithium battery chemical production from the project reached 4794t, with sales of 4273t achieving average realised revenue of $US34,036/t — down from $US40,484/t in the previous quarter MinRes’ share of production from the Wodgina mine south of Port Hedland — one of the biggest hard rock lithium deposits in the world — increased this month following a rejig of a joint venture deal between the company and US chemicals conglomerate Albemarle. Under the terms of the new arrangement, MinRes’ interest in Wodgina has jumped from 40 to 50 per cent and Albemarle has now taken full control of the partners’ lithium hydroxoide facility in Kemerton near Bunbury. MinRes’ Mt Marion lithium operations produced 64,000t of spodumene concentrate in the September quarter, up 7 per cent from the June quarter, while shipments rose 5 per cent to 64,000t. The company produced 1.9 million tonnes of iron ore from its Yilgarn operations, down 3 per cent on the prior period, while shipments dropped to 1.7mt, down 13 per cent, due to haulage availability. It said haulage volumes were expected to increase in coming quarters as additional road trains were brought online. Its Pilbara iron ore project turned out 2.9mt, up 16 per cent, with shipments of 1.2mt due to temporary port constraints. RBC Capital said in a research note that the September quarter result was “stronger than expected” thanks to mining service volumes and iron ore production beating forecasts. RBC has put an $82 price target on the stock and said the quarterly result “bodes well for FY24”, with more fresh ore being fed into the plants at both Mt Marion and Wodgina. It also believes the port congestion impacting Wodgina will be made up for during this month. In a note to clients, Ord Minnett said MinRes’ Pilbara mining and production figures were strong, driven by the successful transition of mining operations from the central to north east pit at Wonmunna and higher contribution from Iron Valley’s central pit. MinRes remained tight-lipped on the production timeline for the Bald Hill lithium operation, with the company expected to finalise its acquisition of the shuttered mine near Kambalda next month. The Bald Hill mine was owned by a subsidiary of Alita Resources, which was placed into administration in December 2020 after the first lithium price boom screeched to a halt. Shares in MinRes closed Wednesday trade up 4.6 per cent to $60.09, making it a sector leader on a day where strong share price gains were experienced broadly across the mining space.