The Orocobre Limited (ASX:ORE) share price opened today's trading session down nearly 6% following an announcement released by the company.
What did Orocobre announce?
Earlier today Orocobre released an announcement to the market regarding a ceremony to signify the commencement of constructing the Naraha Lithium Hydroxide Plant (Naraha Plant) in Japan.
The Naraha Plant is the first of its kind to be built in Japan and is designed to convert primary grade lithium into purified battery grade lithium hydroxide. The joint venture between Orocobre and Toyota Tsusho Corporation (TTC) is expected to deliver production to the Japanese battery industry.
According to Orocobre management the Naraha Plant will provide the company with invaluable product diversification, cementing Orocobre's position as a global lithium chemical producer. Orocobre Managing Director and CEO Mr. Martin Perez de Solay commented that the plant "couldn't have come at a more opportune time, as we work towards producing low-cost battery grade lithium hydroxide when demand is expected to grow significantly."
Following the start of construction, the Naraha Plant is expected to be in commission from the first half of 2021. Orocobre holds 75% interest in the joint venture with operations being run by TTC. Both companies estimate that it will take 9,500 tonnes of primary grade lithium carbonate to produce 10,000 tonnes per year of battery grade lithium hydroxide.
How has Orocobre performed in 2019?
Orocobre is a global supplier of lithium carbonate and established producer of boron. The company is listed on both the Australian and Toronto Stock Exchange and its operations include the Olaroz Lithium Facility in Northern Argentina and Borax Argentina.
Slumping lithium prices and a depressed sector have resulted in compressed margins for Orocobre. The company has had a poor 2019 with its share price down more than 18% for the year. Orocobre is also one of the most shorted stocks on the ASX, with a 15.4% short interest, reflecting the bearish sentiment held by investors.
Late last month Orocobre reported a weaker than expected quarterly update. Overall production for the June quarter was 3,455 tonnes, down from 3,596 tonnes in the previous corresponding period. According to the company the lithium market remains under pressure from Chinese exporters.
Following the announcement, the Orocobre share price opened down nearly 6% setting a new 52-week low of $2.50. At the time of writing, the company's share price has bounced to $2.57.
