Lithium Price Slide Leads to Pilbara Profit Declining 89 Percent

Lithium is used in electric vehicle batteries.

An aerial view of lithium fields in the Atacama desert in Chile. Shutterstock

Lithium giant Pilbara Minerals reported an 89 percent profit decline on Aug. 26 amid falling commodity prices. Lithium is an essential component of electric vehicle (EV) batteries.

Pilbara reported a statutory net profit after tax of $257 million (US$174 million) for the 2024 financial year, down 89 percent in 2023 (pdf).

It owns the world’s largest hard rock lithium project, the Pilgangoora Operation, near Port Headland in Western Australia.

The 74 percent decline in the price Pilbara received for spodumene concentrate, which contains lithium, drove this profit fall.

Results Snapshot

Pilbara achieved an average realised price for spodumene concentrate (containing lithium) of US$1,176 per dry metric tonne, down from US$4,447 in 2023.

Meanwhile, revenue fell 69 percent to $1.254 billion, while earnings before interest, taxes, depreciation, and amortization (EBITDA) slid 84 percent to $538 million. Underlying profit after tax fell 86 percent to $318 million.

On a positive note, the company maintained an EBITDA margin of 43 percent, which measures its profit in relation to its revenue.

In further good news, Pilbara boosted production to 725.3 thousand dry metric tonnes compared to the 2023 financial year.

Lithium Price Weighs on Results

Chairman Kathleen Conlon said the 2024 financial year saw a softening in lithium prices that impacted financial performance.

However, she noted that as a nascent industry, price volatility was to be expected, and Pilbara worked on what they could control.

“It is how a company responds and the true strength of a business that comes to the fore in these times,” she said in 2024 annual report (pdf).

“Thanks to a strong balance sheet and a committed leadership team, Pilbara Minerals was able to achieve record production and sales in FY24, and remain committed to its operation, growth, chemicals and diversify strategy despite pricing movements.”

Conlon also indicated a positive outlook for long-term lithium demand amid the push towards net zero.

“The shift to decarbonise is continuing to gain momentum across the world and we are well positioned to be a key player in the battery materials market in support of a sustainable energy future,” she said.

During the financial year, Pilbara achieved its highest-ever production of spodumene concentrate at the 100 percent-owned Pilgangoora Operation.

In line with this production growth, Pilbara also boosted sales by 16 percent compared to the 2023 financial year. In particular, sales volumes rose 43 percent between the March and June quarters of 2024.

Meanwhile, Managing Director and CEO Dale Henderson said Pilbara delivered a “strong set of results” in the 2024 financial year, reinforcing the company’s position as a global leader in lithium production.

“Despite the challenges posed by a softer lithium pricing environment, Pilbara Minerals maintained a robust EBITDA margin of 43 percent, a testament to the strong operational performance and disciplined cost management of the team,” he said.

Pilbara started commissioning the P680 project in the June quarter, a crushing and ore sorting facility.

Henderson said the successful completion of the P680 primary rejection facility was a significant milestone, leading to record production and sales.

Looking ahead, he said 2025 promises to be another “exciting year” for Pilbara Minerals.

“The focus will remain on building on our strengths; extending our low-cost position as a scale operator; disciplined capital deployment to scale the operation in lock-step with lithium market growth and preserving our strong balance sheet,” he said.

Pilbara Shares Climb Amid Lithium Share Rebound

Despite the fall in profit, Pilbara Minerals shares were up in the green at the time of writing, rising 0.17 percent. For comparison, Piedmont Lithium shares are up 3.85 percent on the ASX today.

Investors appeared to have already priced in the declining lithium price and were reportedly expecting the result.

A recent global boost to the lithium outlook also boosted Pilbara. Lithium shares rose in the United States on Friday afternoon trade.

For example, on Aug. 23, the shares of global lithium giant Albemarle Corporation soared 4.17 percent, while Lithium Americas Corp shares jumped 3.03 percent.

Looking at the ASX lithium shares, many have fallen rapidly on the share market in the past financial year.

For example, Core Lithium shares have slumped 74 percent, Sayona Mining shares have declined 70 percent, Patriot Battery Metals shares have slid 59 percent, and Mineral Resources’ share price has dropped nearly 30 percent.