Lithium miner Galaxy Resources (ASX:GXY) posted on Thursday a net loss for the first half of the year of almost $172 million, mostly due to a non-cash impairment charge at its flagship Mt Cattlin mine in Western Australia, joining a long list of battery metals producers hit by slumping prices.
In early August the company flagged the upcoming write-off following a review of the mine’s inventory of lithium concentrate, the costs it attributed to the acquisition of the project from previous owner General Mining and tax losses.
An ongoing avalanche of lithium supply, coming mostly from Australia, as well as cuts to China’s electric-vehicles (EVs) subsidies have caused prices for lithium carbonate, which is typically used by suppliers to the battery industry, to be halved from mid-2016 levels.
Lithium concentrate spodumene prices have also slumped from $850-925 per tonne last year to $585-650 at the end of July, according Fastmarkets.
Market weakness weighed on Galaxy’s results for the six months ended June 30, posting a net loss of 171.9 million, compared with a profit of $11.5 million a year earlier.
Barring one-off charges, the company reported a net profit of $4.9 million. Revenue, however, fell to $28 million from $88.4 million.
The lithium miner recently became the major shareholder in fellow Australian miner Alita Resources, by buying the company’s debt for $31.1 million, including interest, fees and costs.
While many market players continue to forecast long-run prices in the mid-teens, based on bullish forecasts for sales of EVs and energy storage systems, most analysts remain unconvinced. Commodity research group (CRU) said this month it expected lithium prices to remain in the single digits for longer than expected, as “hype” has met “reality”.