BEIJING (Reuters) - China’s biggest lithium producer, Ganfeng Lithium Co (002460.SZ) (1772.HK), saw its first-half profits plunge 59% as rising supply of the material used in batteries for electric cars caused a slump in prices.
Ganfeng, which supplies lithium used in rechargeable batteries to electric vehicle (EV) maker Tesla (TSLA.O), had flagged last month that it expected a sharp decline in first-half earnings. On Wednesday, it said its net income totaled 295.8 million yuan ($41.70 million) for January to June, versus a restated figure of 725.3 million yuan a year earlier.
Revenues rose 21% to 2.82 billion yuan thanks to bigger sales volumes, Jiangxi-based Ganfeng said, but slumping lithium prices meant the company was unable to cash in.
Prices of lithium carbonate, a chemical used in EV batteries, have dropped nearly 20% this year to around $9.25 per kg amid an “avalanche” of supply, consultancy CRU said last week.
Last week Ganfeng’s rival Tianqi Lithium (002466.SZ) reported an 85% plunge in net profits for the first half.
Still, Ganfeng said abundant supply and falling prices of spodumene, a mineral mined for its lithium content, “can greatly reduce raw material costs” for the company, which converts the spodumene into lithium chemicals, and “buffer the impact” of low lithium prices.
Ganfeng has interests in mines in Australia, Argentina and Canada and around 70,000 tonnes of lithium carbonate equivalent of annual conversion capacity in China.
It said last month that it expected first-half profits to fall by 45-65%, saying it would record losses of 119.14 million yuan from changes in fair value as a result of fluctuations in shares it holds.
In the second quarter alone, Ganfeng’s net profit totaled 43.1 million yuan, according to Reuters calculations. That marks Ganfeng’s worst quarterly result since the fourth quarter of 2016, when it made a 21.4 million yuan loss, Refinitiv Eikon data shows.
Reporting by Tom Daly; Editing by Susan Fenton