Monsters of Rock: Lithium's rough and tumble reporting season, manganese miner shows its consistency

Lithium miners’ ink flows red, with more than $1bn of cumulative losses reported in the half-year and full-year results season
Arcadium bucks the trend, with long-term contracts supporting prices
Jupiter Mines surprises analysts to the upside with half-year payout

As expected, it’s been a torrid earnings season for the battery metals sector, with lithium companies reporting losses across the board.

Overall the six active lithium producers listed or dual-listed on the ASX who have reported thus far racked up some $1.05 billion of cumulative losses* for their half and full-year results this month.

(We don’t have accounts yet for Liontown Resources (ASX:LTR), which only opened its Kathleen Valley mine in WA last year, while Wesfarmers’ (ASX:WES) 50% share of Covalent Lithium JV is buried dwarfed by earnings from its Kmart and Bunnings retail chains.)

It shows how far the industry has been cowed by oversupply and weak prices, with a number suspending expansions or putting the handbrake on existing operations to save cash.

To give a sense of the magnitude and pace of the downfall, two years ago Pilbara Minerals (ASX:PLS) alone raked in over $1.24bn in net profit after tax at its FY23 half-year results.

Oh, how the mighty have fallen.

While impairments suffered on its Kwinana lithium refinery by IGO (ASX:IGO), which made up close to $800m of the sector’s losses, were a key factor, other reporting today highlighted the industry’s struggles but also its rare bright spots.

Arcadium Lithium (ASX:LTM) turned out a US$14.2m after tax loss, a touch shy of $23m Australian for the quarter but US$103.2m in net income ($165m) for the full year, thanks to enjoying favourable pricing terms from its long-term lithium carbonate and hydroxide customers.

While spot prices in Asia are hovering between US$9000-10,000/t for lithium chemicals, the company’s flagship brine assets in Argentina pulled in US$15,700/t across the fourth quarter and US$17,200/t on average for the full year.

“Our strong customer relationships and commercial strategy of securing long-term contracts helped us to achieve higher realised pricing during the year than we would have under a fully market-based pricing approach,” boss Paul Graves said.

“Additionally, at our Investor Day in September we outlined an attractive plan to deliver significant growth over the coming years, leveraging the size and quality of our portfolio of assets and expansion projects.”

This is all relatively immaterial to shareholders, given Rio Tinto (ASX:RIO) has emerged as the company’s white knight, lobbing a $10 billion cash takeover last year that now has all key approvals and is expected to clear in the coming month.

Rio has the muscle to invest in the growth projects Arcadium was set to put on the backburner, with earnings from its iron ore and copper assets providing a bullwark to let it grab market share at a loss if the mining giant so chooses.

Not so joyful in Canada

One of those expansion limbs is in Canada’s James Bay region, where the Rio/Arcadium tie-up is planning to be among the first movers in a lithium scene that saw a flood of exploration interest in 2023.

But Sayona Mining (ASX:SYA), the majority owner of the sole operation lithium mine in Quebec, is continuing to run up losses.

Soon to be merged with its 25% minority JV partner in the North American Lithium operation, Sayona sold 115,027t of 5.3% spodumene concentrate at an average price of $1060/dmt in the first half, some 35% down on the same period in 2024 and way below unit operating costs of $1303/dmt.

While higher volumes led to a 3% jump in revenue, EBITDA swung 490% from +$9m in H1 FY24 to -$37m in H1 FY25.

Loss after income tax rose 96% to $64m.

SYA still has $110m in the bank, ahead of a merger with Piedmont supported by Aussie mining fund Resource Capital Funds.

LTM shares were largely unchanged while Sayona’s fell 2.3%.

*This looks a little worse if you only take earnings from the third and fourth quarters at LTM, when it posted net income of US$16.1m followed by a net loss of US$14.2m.

From one battery metal to another

Well, kinda. Manganese is a significant component of the nickel-cobalt-manganese chemistry cathodes used in the lithium ion batteries in long range EVs like Tesla Model 3s.

But the high-purity manganese sulphate market is a small and well-supplied corner of the overall manganese game.

In reality the vast bulk of the bulk commodity heads into steelmaking.

And that’s been lucrative for South African miner Jupiter Mines (ASX:JMS), which offered a 0.75c per share dividend to holders today after reporting a $14m profit after tax.

JMS’ key asset is its 50% stake in the Tshipi mine in South Africa, which has proven a solid operation capable of riding out the commodity cycle.

The divvie came in 50% higher than the estimates of Argonaut analyst Jon Scholtz, returning $15m to investors’ pockets.

That brings cumulative returns since the company listed on the ASX seven years ago to $410m, JMS said today.

Argonaut has a 27c price target and buy on the stock, which was down 6% today despite the dividend, which came in above analyst expectations but shy of last year’s 1c (unfranked) interim payout.

“Despite depressed manganese prices in the half, Tshipi and JMS continue to be cash flow positive,” Scholtz said in a note to clients.

“The financial results were largely in line with our expectations. A key positive was the resumption of the dividend which was 50% higher than our forecasts.

“We have forecast dividend yields of 7% in FY25 and >10% in FY26 and FY27 forecast. Manganese price rebound and M&A speculation remain catalysts in the near-term.”

The ASX 300 Metals and Mining index fell 3.57% over the past week.

Which ASX 300 Resources stocks have impressed and depressed?

Making gains 🚀

Arafura Rare Earths (ASX:ARU) (rare earths) +17.2%

Predictive Discovery (ASX:PDI) (gold) +6.2%

Sims Metal Management (ASX:SGM) (steel recycling) +4.2%

Regis Resources (ASX:RRL) (gold) +4.2%

Eating losses 😭

IperionX (ASX:IPX) (titanium) -16.2%

Mineral Resources (ASX:MIN) (lithium/iron ore) -12.4%

Iluka Resources (ASX:ILU) (mineral sands/rare earths) -12%

IGO (ASX:IGO) (lithium/nickel) -10.7%

Arafura gained as rare earth prices lifted in response to Chinese draft regulations that will give it more control over supply from key players. While Chinese production quotas have seen prices pull back, killing non-Chinese investment, its own producers are also believed to be under water.

While a weak set of financials in light of the price drop have kept industry bellwether Lynas’ (ASX:LYC) shares at bay, its boss Amanda Lacaze this week noted the draft regulations could support prices, while also lobbying the US to look at Australian producers as their non-Chinese source of rare earths in lieu of a proposed Trump deal for possibly illusory rare earth minerals with Ukraine.