There’s significant expansion afoot in WA’s lithium industry as companies large and small ignore the nervous nellies among stockbrokers and analysts and plough on with exploration and processing plans.
The March quarterly reports from local industry majors last week – Mineral Resources, Pilbara Minerals and IGO confirmed that they had so far ridden out the price slide of battery grade lithium in China.
But they did acknowledge – particularly Pilbara – that the price weakness would continue for a time yet in 2023 but it saw this as a monetary blip and not anything more significant.
Certainly, sales data for March emerging in China and the US confirm the move to EVs remains solid, especially in China where the fall in lithium prices seems to have nicely offset the ending of most purchase subsidies in December.
Wesfarmers this week issued a strong hint that it is looking to expand its Mount Holland mine and then its Kwinana refinery sooner than expected (see below) and industry global major, Albemarle has now surprised with the go ahead of the final two trains of its WA hydroxide refinery at a cost of $2.3 billion.
Albemarle says will double the size of its existing lithium hydroxide plant at Kemerton, near the huge Greenbushes lithium mine in the southwest of WA.
Albemarle’s decision was independent of its $5.5 billion takeover offer for Liontown Resources but the expansion will make Albemarle the country’s biggest producer of lithium hydroxide and increase pressure to do a deal for another source like Liontown.
Annual production capacity at four trains will be 100,000 tonnes of lithium hydroxide – enough to produce batteries for more than two million electric vehicles each year.
The decision also came a month after Chile revealed plans to assume greater control of its lithium industry by squeezing the two major players – Albemarle and SQM (which has the Mount Holland JV with Wesfarmers).
Albemarle CEO Kent Masters said the decision to expand was driven by confidence in future demand.
“Australia is essential to the global supply chain for energy storage and an important part of our diverse portfolio,” he said in Wednesday’s statement.
The four processing trains at Kemerton will be the biggest investment by any company in downstream processing of lithium in Australia.
The additional two trains, wholly owned and operated by Albemarle, will increase the facility’s production by 50,000 metric tonnes per year.
Located near Bunbury, the plant – a joint venture with Mineral Resources – uses spodumene from Greenbushes.
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Meanwhile, Wesfarmers has made a couple of subtle but important adjustments, which hint of a more ambitious development plan for its Mount Holland lithium mine and Kwinana refinery project in WA with Chilean giant, SQM
Wesfarmers is building the Mt Holland mine and associated lithium hydroxide refinery with SQM which will have a capital cost for the first stage of $A2.6 billion, up from around $A1.9 billion originally.
In a presentation to the Macquarie investment conference in Sydney on Tuesday, Wesfarmers’ CEO, Rob Scott said the “Mt Holland lithium project is less than 12 months from earnings through sale of spodumene concentrate.”
“We are currently assessing the opportunity to expand the mine and concentrator, and once commissioned, we also have the option to consider an expansion of the refinery,” he added.
Wesfarmers’ share of the higher figure for the capex will be between $1.2-1.3 billion just for the company’s 50% share of the project’s first stage with SQM.
That’s up from the prior guidance of $1.085 billion, itself an adjustment from the original $950 million in 2021 dollars which the company blames on labour availability pressures, refinery engineering delays and Covid restrictions.
While first production of spodumene is expected in less than a year’s time, first production of lithium hydroxide is now expected in the first half of the 2025 calendar year, around six months later than previous guidance.
After the start to the project was deferred in January, 2020, the partners did a further feasibility study and gave to go-ahead a year later. The new plan calls for an increase in concentrator and refinery production capacity from 45,000 tonnes per annum to approximately 50,000 tonnes per annum of battery grade lithium hydroxide.
The existing plan has the flexibility to provide for a second phase of the project to expand production capacity at Mt Holland and the Kwinana refinery. Preliminary work to evaluate expansion options has been running in parallel with the construction of the first phase of the project.
