Orocobre stock closed 3.7% higher on Wednesday, after the Australian lithium miner reported a 9.9% rise in annual revenue. 

The jump comes as global demand for lithium, a vital component in batteries for electric vehicles, continues to surge. 

The company announced that in addition to the US$84.8m (£61.7m) of annual revenue, its sales of lithium carbonate rose by just over 2,800 tonnes on the 2020 financial year to 13,319 tonnes. At the same time, the firm was able to reduce average production costs to $3,860 per tonne, a 12% reduction.

Argentine tax changes drag company

Ultimately, Orocobre reported a net loss after tax of $89.5m. However, this reflected less the company’s own operations or the state of global lithium demand, and more the politics of Argentina. 

Changes to the Argentine tax rate inflicted a $74.9m blow to the firm, which operates the Olaroz Lithium Facility in the north of the South American nation. 

Orocobre nonetheless remained optimistic about the long-term opportunity offered by its Argentine operation. The firm maintained its previous guidance for the first half of Olaroz’s 2022 production of $9,000 per tonne, and stated that the 2022 financial year was fully contracted.

$2.6bn merger nears completion

The company also announced that it had obtained all of the required approvals to complete its $2.6bn merger with Galaxy Resources. The subsequent entity, which will operate under the name Allkem Ltd, looks set to become the fifth most valuable lithium producer in the world. 

Welcoming Galaxy staff and shareholders, director and CEO Martin Perez de Solay said: "The name Allkem recognises that together we can deliver more for stakeholders. With the merger, we will go further in our commitment to delivering the lithium chemicals that the world increasingly needs to mitigate climate change and carbon emissions."

Chip shortage weighs on demand

Up 109% since the start of the year, Orocobre stock currently stands at AUD9.52 (US$6.91). Traders and investors will hope that the company can capitalise on the long-term trend of electric vehicle adoption. 

In the short-term, however, the lithium market is grappling with the consequences of the ongoing global semiconductor chip shortage: with vehicle manufacturing still disrupted as a result, demand for the element has weakened somewhat. 

Further reading: Erris acquires 50 per cent stake in German lithium project