Australian lithium company Pilbara Minerals announced a decline in first-quarter revenue, citing lower production of spodumene concentrate, decreased market prices, and higher operating costs. The company reported producing 144,200 metric tons of lithium-rich spodumene concentrate for the three-month period ending in September, down from 162,800 tons in the previous quarter of fiscal 2023.

Weaker Sales and Decreased Average Selling Price

Sales were also weaker, with a 17% decrease compared to the prior quarter. Furthermore, Pilbara Minerals experienced a 31% drop in its average selling price of spodumene concentrate, which reached US$2,240 per ton.

Factors Affecting Production and Costs

The decline in production was primarily due to maintenance and ongoing work related to the P680 Primary Rejection Facility project. The company expects the ramp-up of this project to be completed by the end of the second fiscal quarter. These factors contributed to a 19% increase in unit operating costs on a free-on-board (FOB) basis.

According to Pilbara Minerals' quarterly report, the rise in unit costs is attributable to pre-investment expenses in mine site operations, including personnel and consumables for the P680 project. Additionally, lower production volumes were caused by planned shutdowns required for completing key tie-ins with the P680 project. General inflation-driven increases on key inputs such as diesel, labor, and consumables also played a role.

Future Outlook and Price Volatility

Pilbara Minerals anticipates a decline in unit operating costs on an FOB basis throughout fiscal year 2024 as production increases and benefits from the additional processing capacity provided by the P680 project.

The company acknowledges the volatility of market pricing for spodumene concentrate and lithium chemicals in the near-term. Lithium prices have experienced a significant decline this year after a substantial rally in the previous two years, mainly due to global supply growth surpassing demand.

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