China's Ganfeng Lithium Co, the world's biggest lithium company by market capitalisation, posted its best ever quarterly profit on Monday, helped by soaring prices for the commodity used in electric-vehicle (EV) batteries.
Jiangxi-based Ganfeng, which counts automaker BMW among its customers, said in a filing to the Hong Kong stock exchange its net income was 1.42 billion yuan (US$219.5 million) in the first half of 2021, up almost nine-fold from 157.7 million yuan a year earlier.
That implies a second-quarter profit of 938.9 million yuan, after net income of 476.1 million yuan in January-March, and marks Ganfeng's best quarterly result in Refinitiv Eikon records going back to the third quarter of 2009.
First-half revenue was up 69.5per cent year-on-year to 4.03 billion yuan, boosted by a near tripling in lithium carbonate prices over the past 12 months as EV battery demand bounces back from the coronavirus pandemic.
"The increase of the price of lithium carbonate has slowed down stepwise since April 2021; the price of lithium hydroxide has continued to rise," Ganfeng said.
It put its current annual production capacity at 40,500 tonnes of battery-grade lithium carbonate, 81,000 tonnes of lithium hydroxide - which is favoured in nickel-rich batteries - and 2,000 tonnes of lithium metal.
First-half earnings were also swelled by 543.9 million yuan of fair value gains on financial assets, Ganfeng said.
The company has taken advantage of the price bonanza to splash out some US$900 million buying lithium mine assets this year as it pursues an aggressive strategy to increase production capacity. It has also announced major investment in its own battery production.
Spodumene concentrate from hard-rock lithium mines, which is converted into lithium chemicals, is expected to remain in short supply throughout the year due to limited short-term capacity increases and rapid demand growth downstream, Ganfeng said.
(US$1 = 6.4688 Chinese yuan renminbi)
(Reporting by Tom Daly; Editing by Emelia Sithole-Matarise)