Phoslock Rebounds with Cashflow Surplus and Factory Restart, Eyes 2026 Growth
Phoslock Environmental Technologies has reversed its cashflow deficits with a quarterly surplus, resumed factory operations after a long pause, and is gearing up for significant sales growth in 2026.
- Quarterly operating cashflow surplus of $128,000 after previous deficits
- Sales volumes surged to 371 tonnes, up from 32 tonnes year-on-year
- Factory operations restarted in January 2026, ramping to 12 tonnes per day
- R&D on new lanthanum product shows promise but needs refinement
- Ongoing legal challenges including shareholder class action remain unresolved
Financial Turnaround
Phoslock Environmental Technologies Limited (ASX – PET) has reported a notable financial turnaround in its December 2025 quarterly activities report. The company posted a cashflow surplus from operating activities of approximately $128,000, a significant reversal from the deficits recorded in both the previous quarter and the same quarter last year. This improvement was driven by increased customer receipts and a reduction in operating and administrative costs, including sharply lower legal and insurance expenses following reimbursements from AXA Insurance.
With a closing cash position of $5.2 million, up slightly from the previous quarter, Phoslock has managed to reduce its annual cash outflows from operating activities to $2.4 million, down from $3.3 million in 2024. This financial discipline provides a stronger foundation as the company moves into 2026.
Sales and Production Momentum
Sales volumes have surged dramatically, with 371 tonnes sold in the December quarter compared to just 32 tonnes in the same period last year. The growth was geographically diverse, with Brazil accounting for 45% of sales, the USA 35%, and Europe 18%. For the full year, sales volume reached 1,200 tonnes, a substantial increase from 227 tonnes in 2024.
Operations at the company’s factory in Changxing, China, resumed on 5 January 2026 after a hiatus since November 2021. While the restart encountered some equipment failures, production is ramping up steadily towards a capacity of 12 metric tons per day. This operational restart is critical for meeting anticipated demand and improving supply chain reliability.
Research and Development Progress
Phoslock continues its R&D efforts in China, focusing on an experimental product containing 10% lanthanum designed to improve phosphorus binding efficacy in water treatment. Initial assessments of efficacy and safety are encouraging, but pilot-scale operations have revealed inconsistencies in the free lanthanum content of treated water. Resolving these issues is essential before the company can proceed to field trials, which could open new market opportunities if successful.
Legal and Corporate Landscape
The company remains engaged in legacy legal matters, including a shareholder class action filed by the Banton Group. The case is currently in the discovery phase, with the next hearing scheduled for February 2026. While the outcome is uncertain, Phoslock has reiterated its commitment to regulatory compliance and defending its interests vigorously.
Outlook for 2026
Looking ahead, Phoslock expects a significant increase in sales volumes, particularly driven by strong demand in Europe. Several large lake remediation projects are anticipated in the fourth quarter, which could further boost revenue and market presence. The combination of resumed production, improved cashflow, and ongoing R&D innovation positions the company for a potentially transformative year.
Bottom Line?
Phoslock’s operational restart and financial recovery set the stage for a pivotal 2026, but legal and R&D hurdles remain key watchpoints.
Questions in the middle?
- How will the shareholder class action impact Phoslock’s financial and operational plans?
- Can the company resolve the lanthanum content inconsistencies to advance new product trials?
- Will the production ramp-up meet the anticipated demand from large European projects?
