Another sales hit at Orocobre

LITHIUM brine producer Orocobre expects its sales for the June quarter to land at just 1600 tonnes generating US$4015 per tonne (free-on-board) as COVID-19 restrictions limited the ability of its Olaroz operation in Argentina, and its customers, to complete sales.
Another sales hit at Orocobre Another sales hit at Orocobre Another sales hit at Orocobre Another sales hit at Orocobre Another sales hit at Orocobre

Orocobre's warehouse has struggled to ship product.

Haydn Black

Reporter

That follows a 30% plunge in sales for the March quarter to 2518t at an average $4810/t. The cost of sales last quarter was reported at $3972/t meaning its margins are tissue-thin.
 
The company said most logistical issues have been addressed, but delivery of product was yet to return to normal as customers have delayed shipments due to lower production and excess inventory.
 
Battery and electric vehicle makers worldwide have cautiously resumed production since lockdowns ended in recent months, because they are unsure what the economic impact of COVID-19 will be on consumer demand for EVs and portable electronics with European new car sales down 74% between January and April.
 
While there is short-term supply chain pressure, the global pandemic has accelerated investment in some jurisdictions which will have medium and long term benefits, Orocobre said.
 
"European governments have expressed a clear intention to utilise electric vehicle investment and support as a platform to stimulate their respective economies," it said. 
 
"Germany has doubled previous incentives and now provides up to €9000 for purchasing an EV while France, the United Kingdom and other European countries are all implementing specific programs to support the manufacture and use of EV and hybrid vehicles."
 
Provincial subsidies have also increased in China, with a modest improvement in EV sales reported, the lithium producer said.
 
It hopes sales will increase globally as new EV models are introduced to the market, and continuing battery cost reductions should to be passed on to consumers through lower EV prices.
 
That will take time, so Orocobre is bringing forward a $1 million a three-week shutdown and maintenance program.
 
The producer said production would be matched with expected shipments for the foreseeable future. 
 
The company can operate Olaroz at much lower output levels, and has the space to build inventories as required.
 
Work continues at the Naraha lithium hydroxide plant in Japan and on the Olaroz stage two expansion.
 
Despite the bad news, Orocobre shares were up almost 2% to $2.61 today.