Finance Associated Press, October 30th (Reporter Zeng Chuchu) dragged down by the fluctuation in lithium prices and the year-on-year decline in the performance of its associate company SQM, tianqi lithium corporation (002466.SZ) incurred a loss of 5.7 billion in the first three quarters of this year. The impact of the decline in lithium prices and the misalignment of pricing mechanisms continues, resulting in a loss in Q3, but a reduced loss compared to Q2.

tianqi lithium corporation announced tonight that in the first three quarters of 2024, the company achieved a net income attributed to shareholders of the listed company of -5.701 billion yuan, compared to a profit of 8.099 billion yuan in the same period last year, a year-on-year change from profit to loss. Among them, Q3 achieved a net income of -0.496 billion yuan, compared to a profit of 1.646 billion yuan in the same period last year; a loss of 1.309 billion yuan in Q2, and a reduced loss in Q3 compared to Q2.

tianqi lithium corporation stated that the main reason for the decline in performance was a significant decrease in the average selling price and gross margin of lithium products compared to the same period last year. At the same time, according to Bloomberg's forecast, the performance of the company's associate company SQM is expected to decrease significantly year-on-year in the third quarter of this year, with a substantial decrease in the investment income recognized by the company in the reporting period from this associate company.

The company also stated that due to the mismatch in the time period of the pricing mechanism for chemical-grade lithium concentrate of its controlling subsidiary Talison Lithium Pty Ltd (referred to as 'Talison') and the pricing mechanism for the company's lithium chemical products, there was a temporary loss in performance.

Finance Associated Press reporters noted that since the fourth quarter of last year, this is already the fourth consecutive quarter of losses for tianqi lithium corporation. However, looking at the losses of 3.897 billion yuan and 1.31 billion yuan in Q1 and Q2 respectively this year, tianqi lithium corporation is gradually reducing its losses quarter by quarter.

In response to this, tianqi lithium corporation also mentioned in the announcement that in the first three quarters of 2024, the market price of chemical-grade lithium concentrate decreased, and the price of lithium concentrate newly purchased from Talison also decreased accordingly. With the gradual entry of newly purchased low-priced lithium concentrate into inventory and the gradual digestion of inventory lithium concentrate, the cost of chemical-grade lithium concentrate consumed in the production costs of various bases of the company is gradually approaching the latest purchase prices, and the temporary mismatch in the pricing mechanism of lithium concentrate is gradually weakening, resulting in a reduced loss from Q2 to Q3 in 2024.

As for the gross margin, tianqi lithium corporation's gross margin in the third quarter was 44.13%, a decrease of 48.22 percentage points year-on-year, dropping to the lowest level in nearly four years. However, in the first three quarters and the third quarter of this year, the production and sales volume of lithium compounds and derivatives both achieved year-on-year and quarter-on-quarter growth. Among them, from January to September 2024, the sales volume of lithium compounds and derivatives increased by 67.71% year-on-year, and in the third quarter of 2024, the sales volume increased by 24.69% compared to the second quarter.

According to data from shanghai ganglian e-commerce holdings, in Q3 of this year, the price of lithium carbonate decreased from 0.1005 million yuan/ton at the beginning of June to 0.0765 million yuan/ton by the end of September, a decrease of 23.88%.

Regarding the future price trend, Li Pan, an analyst at the new energy division of shanghai ganglian e-commerce holdings, expressed to Caixin reporters that it is expected that lithium carbonate prices will continue to run weakly and fluctuate in the fourth quarter. Compared to early October, downstream demand in November is expected to pick up slightly, providing some support to lithium carbonate prices. It is forecasted that by December, monthly supply of lithium carbonate will turn into surplus, leading to further price declines.

Although the performance has gradually reduced losses each quarter, tianqi lithium corporation still faces the risk of the important equity investment returns from SQM being weakened, aside from the weak running of lithium carbonate prices. The semi-annual report shows that on May 31st this year, SQM and Codelco (Chile's National Copper Corporation) formally signed a "Partnership Agreement." The agreement stipulates that starting from 2025, Codelco will hold the majority stake in the core lithium business of the joint venture company at the Atacama salt flat, and will consolidate the combined financial statements in the second stage as agreed in the agreement.

As a result, tianqi lithium corporation persists in the resolution of the nationalization of SQM requiring a decision to be made by a special shareholders' meeting. After the Chilean Financial Market Commission (referred to as "CMF") rejected this request following a review, tianqi lithium corporation filed a lawsuit against CMF's decision with the Chilean court on July 26th this year. As of the disclosure date of this report, this lawsuit is still under review.