Event overview: on January 18, allkem (the new company after the merger of orocobre and Galaxy resources) released the 2021q4 business activity report. The total revenue of Q4 was US $107 million and the gross profit exceeded US $70 million. At the same time, it guided the selling price of 6% grade lithium concentrate in 2022q1 of mtcatlin mine as high as US $2500 / ton, The average sales price of lithium carbonate in olaroz Salt Lake in the first half of 2022 will reach US $20000 / ton.
Mtcatlin: the output of 2022h1 has declined, but the price has increased significantly, and the global supply of lithium concentrate bulk cargo may be further tightened. 1) Volume: the output and loading capacity of 2021q4 lithium concentrate were 52225 tons and 38071 tons respectively, down 23% and 58% month on month respectively. The reason for the decline in loading capacity is that the remaining 23000 tons will be shipped in January 2022. However, a total of 230000 tons of lithium concentrate will be produced in 2021, exceeding the previous guideline value of 220000 tons. 2) Price: the average sales price of Q4 lithium concentrate was USD 1595 / dry ton CIF, and Q3 was USD 796 / dry ton CIF, up 100% month on month. 3) Guidance: the company has signed orders of 45000 tons in 2022q1, and the average sales price is as high as 2500 US dollars / ton. It is expected that mtcatlin mine will produce 80000-90000 tons of lithium concentrate in 2022h1, which is significantly lower than 120000 tons in 2021h2. Mtcatlin is one of the only two mines in Western Australia that can supply bulk lithium ore. we expect that the decline in its production will further tighten the global lithium ore supply.
Olaroz: the production and sales volume will maintain growth, and the sales price will increase significantly in 2022. 1) Volume: the output of 2021q4 lithium carbonate was 3644 tons (51% battery grade), with a month on month increase of about 30%, and the sales were 3293 tons (65% battery grade), with a month on month increase of about 26%. 2) Price and cost: the average selling price of Q4 was US $12491 / ton, up 34% month on month and 4% higher than the guidelines; The cash cost was $4336 / ton, down 9% month on month. 3) Guidance: it is estimated that the average sales price in 2022h1 will reach US $20000 / ton FOB, and most of them are long-term single customers.
The projects under construction are progressing steadily, but they are delayed due to uncontrollable factors such as epidemic situation. 1) Olaroz phase II is expected to produce 2022h2 for the first time; 2) Saldevida Salt Lake is expected to produce 2023h2 for the first time, and the production capacity of phase I is expected to expand from 10700 tons to 15000 tons; 3) James Bay lithium mine is expected to start construction in 2022h2 and put into operation in 2024h1. The expansion of the company’s green space project is also the epitome of the expansion of the global lithium industry. After 2023, the growth of lithium supply will mainly come from the green space project. We believe that under the influence of epidemic situation, uncertain commissioning climbing, application of new technologies and other factors, the future lithium supply may be lower than expected, and the global lithium resource supply will be more and more tight.
The adjustment of overseas long order pricing mechanism indicates that the scarcity of global lithium resources has increased. The original pricing mechanism of the company’s products is adjusted quarterly, and about 1 / 3 is the fixed price, 1 / 3 is the linked contract index, and only 1 / 3 is the linked spot price. The fixed price annual contract in 2022 will be adjusted to be linked to the index price, and the price adjustment cycle is 2 months.
Investment suggestion: it is expected that the tight supply of global lithium resources will continue for a long time in the future, and the high lithium price center will be the norm of the industry in the future. Under the current lithium price, the valuation price performance of the sector is prominent, and the two main lines of high resource self-sufficiency rate and high performance are grasped. Recommend Qinghai Salt Lake Industry Co.Ltd(000792) and focus on Yongxing Special Materials Technology Co.Ltd(002756) , Tibet Mineral Development Co.Ltd(000762) , Tianqi Lithium Corporation(002466) and Ganfeng Lithium Co.Ltd(002460) .
Risk tips: the sales volume of electric vehicles is lower than expected, the price of lithium falls sharply, global macroeconomic risks, etc.
