Lithium
Market

It remains the Company’s view that short-term market fundamentals remain strong.

The supply side remains tight with new supply of spodumene concentrate from hard rock producers in Australia being delayed, or in one very recent case, direct shipping ore (DSO) has been supplied. The DSO will require more processing in China in order to produce a suitable spodumene concentrate, and the acceptance of this lower grade form further illustrates the strong demand for lithium and impact of supply delays of high grade concentrate from hard rock operations and lithium carbonate from brine operations.

The Chinese domestic spodumene and lepidolite market was equally tight in recent months as the cold weather hindered production.  With a lack of raw material from imported and domestic sources, lithium carbonate producers in the Qinghai province reportedly shut down and/or decided to prolong maintenance periods (Asian Metals, March 2017).

While Chinese domestic spodumene concentrate is expected to become increasingly available as the weather warms up in China, recent annual production has not exceeded 10,000 tpa lithium carbonate equivalent (LCE).  China’s minimal domestic supply and the slow ramp up of imported materials, mean any new conversion capacity is unlikely to be well utilized until supply improves.

Lithium Market

Market Growth

Research, development and the rapid expansion of lithium-powered products supports the views of customers that there will be significant growth in the battery market over the next few years which will be a key demand driver for lithium carbonate and hydroxide.

Lithium carbonate from the Olaroz Lithium Facility is sold to a range of markets across a spread of geographies. It is Orocobre’s intention to continue to cultivate a diverse customer base, end use and geographic sales base. However, the pace of growth of the battery market is expected to increasingly impact on our customer mix in the future, particularly once the purification circuit approaches design production rates and the planned lithium hydroxide plant is operational in Japan.

Lithium Market

Market and Sales

Lithium carbonate sold in the March 2017 quarter totalled 3,142 tonnes, a 5% increase on the December 2016 quarter.  Lithium carbonate prices increased to US$10,211/tonne (FOB1) for the quarter, an increase in excess of $US1,000/tonne to the weighted average price achieved in the December quarter (US$9,004/tonne FOB 1). The price achieved is a result of higher pricing in short term contracts, and an increased price moving into CY2017.

Undersupply of Lithium Carbonate

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