IGO and joint venture partner Tianqi have called tools down on work and activities on the expansion of the troubled lithium hydroxide plant in Kwinana ahead of a forewarned write-down on the asset.
IGO and joint venture partner Tianqi have called tools down on work and activities on the expansion of the troubled lithium hydroxide plant in Kwinana ahead of a forewarned write-down on the asset.
The critical minerals miner said the pair – through the Tianqi Lithium Energy Australia (TLEA) joint venture controlled by the Chinese miner – have “ceased all works and activities on lithium hydroxide plant 2 at Kwinana”.
TLEA is yet to make a final investment call on train 2, for which the partners have been progressing front-end engineering and design work.
The partners will continue to churn out battery-grade lithium hydroxide from train 1, which produced just 3,508 tonnes in FY24.
Production from that train came online in the December quarter of 2022 but the partners have long-grappled with issues reaching nameplate capacity of 24,000 tonnes.
A major shutdown took place in October in an effort to improve production performance.
The original plan at Kwinana was to build four trains each producing of 24,000 tonnes of battery-grade lithium hydroxide per year.
The last reference to early works capex on train 2 was in IGO's March quarterly report, in which it reported that $4.5 million has been spent in that period or $9.5 million year-to-date, at that time.
At last count, IGO spent $20.3 million worth of “sustaining and improvement” capital on train 1 during the September quarter. Its guidance range for capex on the first train is between $80 million to $100 million for FY25.
Today’s update comes just days after TLEA warned the market it was preparing to make a “substantial” pre-tax impairment against its flailing refinery amid weak market conditions for the key battery material.
It said it expected to book a net loss from TLEA in its in its financial results for the half year to December 2024. The Ivan Vella-led miner plans to update the market on the final impairment value in its first half financial results on February 20.
Through the same TLEA joint venture, the pair own 51 per cent of the mammoth Greenbushes lithium mine, with the remaining stake in the hands of Albemarle.
Construction of the chemical grade processing plant at Greenbushes also hasn’t been without its challenges, with the cost of the third plant blowing out to $880 million.
That third plant is designed to bring online 500,000 tonnes per annum of spodumene concentrate production capacity.
It all comes against a backdrop of subdued lithium prices and weaker than expected demand leading majority of the state's produces to scale back or mothball operations.
Shareholders responded well to today's update, with shares in IGO up 2.59 per cent to $5.34 at 11AM AWST.
