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China's Tianqi Lithium doubles annual loss guidance on bigger SQM impairment

Published 28/04/2020, 02:04 pm
FMG
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SQMA
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002466
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99C-LTCB
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* Company sees 2019 loss at 6 bln yuan vs 2.8 bln yuan previously

* Impairment for stake in Chilean miner SQM rises by 3.07 bln yuan

* Adjustment made in light of coronavirus impact on SQM's sales

* Tianqi shares dive 10% to lowest since November 2015

By Tom Daly

BEIJING, April 28 (Reuters) - Tianqi Lithium Corp 002466.SZ , one of the world's top lithium producers, said on Tuesday its net loss for 2019 was expected to be twice as big as it previously indicated after raising the impairment provision on its stake in Chilean miner SQM.

The Chinese firm, which has flagged liquidity problems as it struggles to repay loans taken out to buy the 23.8% stake in 2018, said in a filing to the Shenzhen Stock Exchange its annual net loss is now set to total 5.98 billion yuan ($843.6 million). filing was an adjustment to Tianqi's preliminary 2019 result - a net loss of 2.8 billion yuan which was announced in February. The company is due to release its full earnings report later on Tuesday. huge net loss will pile further financial pressure on Tianqi, which has already said it is considering asset sales to reduce its debt load as prices for lithium AM-99C-LTCB languish at multi-year troughs around two-thirds lower than they were when it agreed to buy the SQM stake. has been linked with selling part of its stake in the Greenbushes mine in Western Australia, the largest and lowest cost hard-rock lithium mine in the world, which is expected to draw interest from suitors such as Fortescue Metals Group FMG.AX . Tianqi said in February it had set aside an impairment provision of about 2.2 billion yuan for the stake in SQM SQMA.SN , formally known as Sociedad Quimica y Minera de Chile, but on Tuesday said it had increased the provision by 3.07 billion yuan. impairment is a loss in the recoverable amount of an asset on a company's balance sheet.

Tianqi said the revision was made because of the impact of the coronavirus outbreak on SQM's key lithium export markets, such as the United States and Europe, which had been underestimated in February.

Furthermore, SQM last month said it expected lithium prices to fall further and the outlook for electric vehicle demand is worsening, Tianqi said in the filing.

Tianqi's shares slumped as much as 10% on Tuesday to 16.34 yuan, the lowest since November 2015. company is also due to report earnings for the first quarter of 2020 later on Tuesday, for which it has flagged a loss of 450-510 million yuan. = 7.0884 Chinese yuan renminbi)

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