The lithium mining sector has collectively fallen into adjustment after a "one-day tour" market trend.

As of the close on June 27,lithium mining concept stocks generally closed lower,with Rongjie Shares (002192.SZ),China Mining Resources (002738.SZ),Ganfeng Lithium (002460.SZ),and Tianqi Lithium (002466.SZ) all falling by more than 3%.

Recently,several domestic lithium mining companies have seen their overseas lithium resource investments successively forced to "divest".Tianqi Lithium's investment in Chile's SQM and Ganfeng Lithium's lithium clay resources in Mexico are both facing the issue of being nationalized by their respective local governments.

In addition,the futures contract for lithium carbonate has continued to decline,hovering around 90,000 yuan/ton,breaking through the cost line of most companies.

Under multiple difficulties,Ganfeng Lithium's stock price has fallen to 29.24 yuan per share,touching 27.77 yuan per share at one point yesterday,while the stock once rose to 157.4 yuan per share in September 2021; Tianqi Lithium's stock price has also nearly halved this year,with a cumulative decline of over 43%,closing at 30.57 yuan per share as of June 27.

The lithium mining sector continues to adjust.

Affected by the industry's downward cycle,the price of lithium carbonate has entered a downward channel,and the inventory impairment of related listed companies has gradually become apparent,with the sector's stock performance remaining sluggish.

According to First Financial's statistics based on Wind,since June,among the 19 A-share listed companies in the Wind lithium mining sector,all stocks except Salt Lake Shares have declined,with an average cumulative monthly decline of over 11%.

The decline from the beginning of the year has been even greater.During this period,the average sector decline was 24.7%.Among them,Jin Yuan Shares (000546.SZ),Tianqi Lithium,and Rongjie Shares (002192.SZ) led the decline,with their stock prices falling by 51%,43%,and 42% respectively over the year.

In the futures market,the futures price of lithium carbonate continued to decline,with the main contract reporting 94,600 yuan/ton at the close on June 27,with a cumulative decline of 12.8% since June.The spot price has fallen from 500,000 yuan/ton at the beginning of 2023,once dropping to about 90,000 yuan/ton.Shanghai Steelhome released the latest data on June 27th,showing that the average price of battery-grade lithium carbonate is reported at 90,000 yuan/ton; the average price of industrial-grade lithium carbonate is reported at 87,000 yuan/ton; the average price of battery-grade lithium hydroxide (coarse particles) is reported at 83,000 yuan/ton.

Baichuan Yingfu analysis indicates that the futures market price of lithium carbonate has recently experienced significant fluctuations,and the market transaction volume has picked up.However,this is mainly due to futures and spot transactions among traders,with major downstream manufacturers on the sidelines and smaller manufacturers replenishing their essential needs at lower price points.

"Overall,the situation of increasing supply and decreasing demand in the lithium carbonate market is difficult to reverse in the short term," Baichuan Yingfu analysis suggests.Despite some lithium salt manufacturers planning maintenance or production cuts,the supply of lithium carbonate remains ample,and the weak downstream demand is not expected to improve in the short term.It is anticipated that the price of lithium carbonate will fluctuate within the range of 85,000 yuan/ton to 92,000 yuan/ton.

Looking at the entire industry chain,a research report from Central China Securities statistical analysis shows that since 2024,the lithium battery sector has accumulated a decline of 26.43%,significantly underperforming the CSI 300 Index.Looking forward to the 2024 sector performance,the demand for lithium batteries continues to grow but at a slower pace.The release of production capacity will also put pressure on industry profits,and it is generally expected that the sector's performance for the year will continue to be under pressure,with the performance of sub-sectors and specific targets continuing to diverge.

The difficulty of overseas lithium resource deployment increases.

Domestic lithium prices continue to decline,and the overseas market's mining end also faces uncertainty.

On the evening of June 24th,Ganfeng Lithium Industry announced that its controlling subsidiary has been affected by the Mexican government's policy of nationalizing lithium resources,leading to operational disruptions and the cancellation of mining concessions.The company has initiated arbitration proceedings with the (International Centre for Settlement of Investment Disputes) and is in communication and negotiation with the local government.

Ganfeng Lithium Industry's lithium resource development project in Mexico has always been a focus of attention.The previous decision by the Mexican Ministry of Economy to maintain the cancellation of mining concessions issued by the original Mexican Mining Authority,according to local law,the final result will be determined by the judgment of the Federal Administrative Court.

In April of this year,during the performance explanation meeting,Liang Bin,the chairman of Ganfeng Lithium Industry,stated that the decision by the Mexican Ministry of Economy is not the final result and will await the judgment of the Mexican Federal Administrative Court.

Similarly,Tianqi Lithium Industry's overseas lithium resource investments also face the risk of frequent uncertain events.According to the announcement disclosed by Tianqi Lithium Industry on June 2nd,the lithium miner,Sociedad Química y Minera de Chile (SQM),has signed an agreement with the Chilean state-owned copper company Codelco to establish a joint venture to develop the Atacama salt flat,which SQM currently leases from the Chilean Production Development Corporation.The joint venture will be primarily responsible for the mining and production activities of lithium,potassium,and other products,as well as subsequent sales.Starting from 2025,70% of the joint venture's operating profits will belong to the Chilean government.

Earlier,in 2018,Tianqi Lithium Industry invested $4.066 billion to purchase 23.77% of the shares in SQM,becoming the second-largest shareholder of the latter.However,before the realization of capacity benefits,Tianqi Lithium Industry suffered severe losses for three consecutive years due to huge debts,once falling into a debt crisis.As of now,the company holds approximately 22.16% of the total shares in SQM.

In the first quarter of this year,Tianqi Lithium Industry's operating income was 2.585 billion yuan,a significant year-on-year decrease of 77.42%.The net profit loss was 3.897 billion yuan,a year-on-year decrease of 179.93%.The main reason for the loss was the reduction in investment income from SQM.Based on the latest tax litigation decision of SQM,it is expected to cause a loss of about $1.1 billion to its net profit in the first quarter of 2024.

Faced with the potential nationalization of SQM by the Chilean government,Tianqi Lithium Industry announced that as the second-largest shareholder of SQM,its investment returns and rights to participate in the governance of SQM would also be affected,and it does not rule out the possibility of making impairment provisions for this investment.

In addition,China Mining Resources,Shengxin Lithium Energy,and Zangge Mining are also experiencing similar risks,as their lithium mining investments in Canada are being forced to divest.

Transaction analysts told Yicai that such investments in overseas mining are influenced by international politics,economic environment,industrial policies,market environment,and other factors,and the investment returns are uncertain.Many companies invest in debt,and during the upcycle,while the company's main business grows,they can also enjoy the drive of investment income,bringing an added effect to their overall performance; during the downcycle,the performance addition becomes a drag.