MinRes, Ganfeng attempt to keep lithium JV alive

[Redator]

Australia’s Mineral Resources (ASX: MIN) is expected to inject A$150 million ($98M) into its troubled Mount Marion lithium operation as it battles a prolonged slump in lithium prices.

Its Chinese joint venture partner, Ganfeng Lithium, announced in a filing to the Hong Kong Stock Exchange last week that it will match the cash infusion with a collateral-free A$150 million loan.

The bailout comes after Mt Marion posted a A$44.6 million ($29M) loss in 2024, with operations still in the red through the first quarter this year. Ganfeng said the joint decision aims to keep the West Australian operation afloat as lithium prices show little sign of recovery.

“Decisive action to lower costs ensures our two largest lithium sites remain well-placed to continue to operate through the cycle and to capitalize when prices rebound,” MinRes said in a statement to the Australian Financial Review.

The cash into Mt Marion comes as MinRes struggles with A$5.8 billion ($3.8B) debt and a market cap that has sunk to A$4.6 billion ($3B).

Lithium has led the decline among battery metals. Spodumene prices fell 19.1% in May to $612.50 per tonne in China, down 30% since January. Lithium carbonate prices slid 10.3% in May, down over 20% year-to-date. Spodumene spot prices have now dropped below $580 per tonne, according to S&P Global.

While electric vehicles sales remain strong, oversupply has weighed heavily on lithium markets. “The weakness in lithium prices is about oversupply,” William Adams, head of base metals research at Fastmarkets, said in a recent report.

Temporary production cuts had previously helped stabilise the market, but persistently low salt prices in China have squeezed processor margins, pushing sellers to offer deeper discounts. Analysts warn that prices may need to fall further to trigger another round of output cuts.

Analysts from Citi and Adamas Intelligence have noted that Greenbushes—Australia’s largest lithium mine and a joint venture between Albemarle, IGO and Tianqi— is currently the only domestic asset generating positive cash flow at prevailing prices.

MinRes, which also operates the Wodgina mine in partnership with Albemarle and recently shuttered the Bald Hill mine, has faced setbacks beyond commodity prices. Founder and former CEO Chris Ellison was recently found to have engaged in “profoundly disappointing” conduct, further clouding the miner’s governance record.