WA lithium plays surge as China shifts gear on electric vehicle subsidy change

Lithium miners have extended recent share price gains on news the Chinese government will slow its planned cuts to subsidies for the electric vehicle industry ...
17th January 2020
Resources Rising Stars

Lithium miners have extended recent share price gains on news the Chinese government will slow its planned cuts to subsidies for the electric vehicle industry (reports The West Australian).

A Chinese official told Bloomberg that handouts to stimulate new energy vehicle sales would not be cut on July 1 this year as they had been last year.

The government has been gradually reducing subsidies for electric vehicles, which were introduced in 2009, to encourage the industry to innovate and compete against conventional vehicles.

Electric vehicle sales have been falling in China since July when the government cut subsidies by more than 50 per cent.

The falling sales have prompted auto manufacturers, battery cell makers and chemical converters to wind back production and cut orders of raw material such as lithium concentrate, impacting a swag of WA miners of the product.

Most WA lithium miners have been on a rebound since late last month on hopes that the sector may have bottomed following the suspension of some mines and production curbs across the industry.

Investors were also buoyed by a Chilean court upholding a complaint against big global lithium producer SQM that puts in doubt a significant expansion of its Atacama Desert brine operations.

Indigestion in the lithium market last year prompted the collapse of Bald Hill operator Alita Resources and forced both Pilbara and Galaxy to wind-back production.

Altura Mining, which avoided having to scale back its production in response to the slowdown, is in a trading halt today as it seeks to bed down a $US160 million debt refinancing.

The company, that holds debt of at least $US143 million, is not trading profitably, having reported a $17.1 million loss for the three months to the end of September.

The company revealed last month its ability to continue as a going concern depended on refinancing its loan and generating sufficient cashflow from its operations or additional financing to meet its obligations.

Altura shares last changed hands for 6.2¢.

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