Focusing On Strong Growth Business Units
Lithium Australia (ASX: LIT) has elected to reduce its international activities on focus on its local developments as it refines its strategy to deal with the impact of COVID-19 on global markets.
In view of ongoing trade constraints and market unpredictability, the company announced that is further reducing outgoings and maximising support for the business units closest to positive cash flow for the benefit of shareholders.
The company noted that demand for many commodities in the battery-minerals space has bounced back strongly in recent times; with, in particular, prices for copper, nickel and steel increasing.
However, the markets for lithium and cobalt in particular will likely take longer to recover. That said, demand for batteries remains strong and an increase in demand for all battery minerals is anticipated in the medium to longer term.
The company is confident that two of its operations will continue to expand in the near future.
It has forecast that its Soluna Australia, battery-based energy storage developer, will achieve positive cash flow by the December 2020 quarter, while the Envirostream battery recycling business is expected to record particularly strong growth for FY2020.
“Lithium Australia has taken significant measures to refocus its business on its revenue- generating battery recycling and battery sales businesses, which it expects will generate significant revenue during FY21. This focus will drive value for shareholders,” Managing Director, Adrian Griffin said. “The company has also reduced its cash burn for FY21, which unfortunately means some reduction in workforce numbers. However, we are striving to minimise direct impacts on employees. Funding has been refocused on the Group business units with the most capital efficiency, in an effort to drive value for shareholders.”