...lithium winter is here to stay for some time. Lithium piles up at IGO’s WA refinery as demand slows Mark WembridgeResources reporter
Dec 23, 2024 – 12.17pm
IGO is struggling to find customers for its lithium hydroxide, as dismal prices cause the battery material to pile up at its Western Australia processing plant.
The lithium and nickel miner on Monday warned that sales from the refinery were so slow that it did not expect to receive a dividend from the Kwinana plant’s owner, Tianqi Lithium Energy Australia, in 2025.
TLEA is owned jointly by its parent Tianqi of China and ASX-listed IGO. The inability to sell enough lithium from the Kwinana refinery is the latest setback for the local downstream processing industry, which has been severely affected by the lithium rout.
Sluggish demand for the battery material was expected to continue for some time, IGO warned, adding that it was continuing to market its product to existing and prospective customers.
Lithium hydroxide from the Kwinana plant is used in rechargeable batteries for electric vehicles and energy storage systems. Customers for the material include battery cell manufacturers in South Korea and Europe.
Most Australian lithium miners have either ceased production or mothballed their operations after lower EV sales suppressed demand for the white metal, which is a critical component in the global energy transition.
The mismatch between supply and demand has seen prices for the lithium-rich spodumene produced at IGO’s Greenbushes joint venture fall to less than $US800 ($1279) per tonne this year – down from a peak of more than $US8000 a tonne two years ago.
Brokers at Citi estimated that all lithium mines in WA would be unprofitable if the price dipped below $US1000 per tonne, except for Greenbushes, which is co-owned by China’s Tianqi, IGO and US giant Albemarle.
Levi Spry, an analyst at UBS, this month upgraded his rating of IGO’s stock to “neutral” from “sell”, and nudged up his forecast for spodumene prices for 2025-26 to as much as $US850 per tonne. He acknowledged that UBS was bearish on lithium producers due to an oversupply.
The Kwinana lithium hydroxide plant, located on the outskirts of Perth, was established as part of efforts to build local downstream operations to process the battery material.
The Kwinana refinery has recently emerged from a temporary shutdown aimed at cutting costs and pushing the loss-making plant towards profitability.
“The works completed during the shutdown have resulted in improved performance,” IGO said. But it warned that the full benefits from the closure would not be seen until March.
The dismal outlook for lithium has been shared by other producers such as Liontown Resources, Mineral Resources and Pilbara Minerals, which are all among the most shorted stocks on the Australian Securities Exchange.
The miner’s board narrowly missed receiving a strike at its annual general meeting in November, when 24.4 per cent of votes were cast against its remuneration report – just under the 25 per cent threshold.
IGO shares have almost halved in value during 2024 and were trading up 1 per cent on Monday at $4.86.
