PLS boss Dale Henderson sees bright light at end of the tunnel
The boss of Australia’s biggest pure play lithium producer PLS sees signs that history might repeat itself with a big spring in prices after a long winter.
Australia’s biggest pure play lithium miner PLS has drawn parallels between market conditions today and those that led that to the last outsized rally in prices for the battery-making ingredient.
PLS chief executive Dale Henderson says he was not sure China could act to rein in prices if they started to skyrocket based on a shortfall in supply.
Mr Henderson noted anything was possible in the immature lithium market after PLS, formerly known as Pilbara Minerals, posted a $196m full-year loss that came on the back of a 43 per cent plunge in prices.
The loss came two years after PLS reported a $2.4bn profit and had to buy a new office calculator to crunch the numbers after an explosion in prices that has been followed by a prolonged lithium winter.
PLS fetched an average price of $US769 a tonne based on spodumene concentrate containing 6 per cent lithium in 2024-25, down from $US1347 a year earlier and $US4447 in 2022-23.
Frank Ha, the boss of Shenzhen-listed Tianqi Lithium, speculated last week the recent uptick in prices sparked by the shutdown of a mine in China’s Jiangxi province run by battery heavyweight CATL might last until the end of the year.
Mr Ha said China would likely to keep a lid on both spodumene and lithium chemical prices if they started to climb too high.
Mr Henderson said PLS was now fielding interest from Chinese customers looking to lock in supply at a floor price and this month sold a spot cargo for $US1050 a tonne, well above the price being quoted on market indices.
“When I look back at that last price rally, a lot of the characteristics which occurred are there in terms of dysfunctional pricing mechanisms and a shortage of supply to satiate demand,” he said.
“Those couple of characteristics appear like they could well repeat, in which case we may well see another outsized rally. It’s possible. I’m not sure what anyone could do to stop that if there’s a shortfall of supply.”
Mr Henderson stressed time would tell what happened with lithium prices, and said PLS would take a cautious approach to restarting a mothballed processing plant at its flagship Pilgangoora mine in Western Australia’s Pilbara region.
The company’s share price was up almost 4 per cent to $2.19 in early trading on Monday, and has jumped more than 90 per cent since the start of June.
PLS ended June 30 with almost $1bn in cash and has forecast a big drop in capital expenditure in 2025-26, lower production costs and higher production.
Mr Henderson pointed out that while some of the industry’s idled capacity could come back online in response to higher prices, the downturn had discouraged investment in new mines.
“The long-term fundamentals for lithium remain intact. Current prices are not sufficient to incentivise new supply, which points to potential tightness ahead,” he said.
PLS’s revenue fell 39 per cent to $769m, with weaker pricing partly offset by a 7 per cent increase in sales to 760,100 tonnes. Underlying EBITDA slimped 83 per cent to $97m.
Barrenjoey analyst Glyn Lawcock said PLS remained in a strong position to weather the lithium storm and with current pricing stifling investment.
“It is only a matter of time before the lithium market turns, which we currently expect to happen in 2026,” he said.
The downturn has seen many players curtail production and slash jobs while some mines, including the Core Lithium operations near Darwin, Mineral Resources-owned Bald Hill and Rio Tinto-owned Mt Cattlin in WA, have been put into mothballs.
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