An exotic metal company is pinning its struggling performance on being overly dependent on China, leaving it with no choice but to axe dozens of staff weeks before Christmas.
Pilbara Minerals has cut loose 40 employees mainly due to weak Chinese demand that is impacting the “entire lithium raw metals industry”. The proponent also cut mineral production, shut down the processing plant and instead sold stockpiled ore and product.
“Despite difficult decisions having to be made, the response of management and the board to the challenging market conditions
ensures that value is maintained in the Pilgangoora [Lithium-Tantalum Project] asset for the long term and we can respond as market demand improves from here,” Pilbara Minerals managing director and CEO Ken Brinsden said in a statement to the Australian stock market.
Limited options exist to export elsewhere since the communist-ruled nation represents practically the whole buyer market for spodumene concentrate.
“The slower uptake of the Chinese subsidy regime, which now supports higher nickel content batteries, has resulted in persistent weak market conditions for lithium chemicals,” the company said.
“While electric vehicle (EV) production is still growing in China, the relative pace of growth has tempered over approximately the last 12 months, resulting in lower demand for lithium chemicals thereby impacting price. This, in turn, has impacted the spodumene concentrate market.”
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Although there is speculation the Chinese market could improve in the long-term, the proponent is taking no chances and vows to continuously assess future production based on “customer demand and market conditions”.
“Both mining and processing capacity was curtailed resulting in mining activity, processed tonnes and ultimately shipped concentrate being well down on prior quarters,” the company said.
QMEB can reveal the restructuring cost about $5 million.