Kumyang Co., a South Korean battery materials company, is under investigation by the Korea Exchange following a significant downgrade of its production outlook for a lithium mine in Mongolia. The company slashed its projected 2023 sales from KRW 402.4 billion ($300 million) to just KRW 6.6 billion ($4.9 million), and reduced its operating profit forecast by over 99%. The news, disclosed on Sept. 27, caused a sharp drop in Kumyang’s stock, which fell 7.5% the following trading day.
Kumyang attributed the revision to delays in winter construction, equipment import issues, and challenges securing high-grade ore. However, the Korea Exchange expressed concern, stating that the scale of the forecast adjustment, amounting to trillions of won, lacked sufficient external justification. The exchange is currently reviewing the company’s explanations and may designate Kumyang as a non-compliant disclosure corporation.
The company’s revised forecasts for the next three years also saw significant reductions, with sales expectations down 94% and operating profit projections slashed by 97%. Kumyang has yet to receive approval from Mongolian authorities for its lithium development.
With mounting shareholder discontent and ongoing financial struggles, Kumyang’s future hinges on its ability to stabilize both its lithium mining project and secondary battery production.
