IGO sees no path forward for WA lithium refinery

While the lithium market looks to be in the early stages of a recovery, IGO (ASX: IGO) has no confidence in the leads for a healing at the Kwinana lithium refinery in Western Australia.

Kwinana, southern of Perth, is had by Tianqi Lithium Power Australia (TLEA), which is 51% had by China’s Tianqi Lithium (SHE: 002466) and 49% by IGO. In January, TLEA introduced it would certainly put on hold the building and construction of the 2nd train of the Kwinana plant amidst the battle to get to nameplate ability at Train 1.

IGO chief executive officer Ivan Vella informed the firm’s yearly basic conference in Perth on Wednesday that the firm remained to discuss with Tianqi on the future of the center.

” It would certainly be excellent if it had actually functioned. It would certainly be excellent if we had actually discovered a path,” he informed investors.

” We do not see that path there, so we decided on Train 2, and we’re resolving Train 1 with Tianqi.

” That is made complex, due to the fact that they see the globe in a different way, and we’re doing that in a considerate method. The joint endeavor is really crucial to us. That connection is essential. We require to remain to tip via the via the obstacles there in a suitable fashion,” Vella claimed.

Tianqi has formerly claimed it had no strategies to put on hold the refinery, in spite of IGO’s setting.

IGO reported a A$ 605 million ($ 393 million) problems on Kwinana in its full-year outcomes, reported in August.

‘ Not functioning’

Vella commended the TLEA group for leaving “no rock unturned” in attempting to enhance the efficiency of Kwinana.

” And yet, via the year, 35% of nameplate ability, after 3 years– it is simply not functioning,” he claimed.

The plant revealed indications of renovation in the September quarter, getting to 46% of nameplate ability, though it supplied a revenues prior to passion, tax obligation, devaluation and amortization (EBITDA) loss of A$ 19.6 million.

Manufacturing boosted by 31% to 2,775 tonnes of hydroxide, while conversion expenses dropped by 18% to A$ 14,177 per tonne.

Vella claimed IGO had actually benchmarked Kwinana versus various other plants around the world and identified it was a “tested possession”.

” It’s not something that we assume deserves ferreting out the roadway and attempting to fix,” he claimed. “If it was nameplate today, we still do not think that it would certainly be financial which’s not a feature of that specific possession. That’s a feature of what it implies to do downstream handling in Australia.

” When you take a look at the power expenses, when you take a look at the labor expenses, when you take a look at the absence of more comprehensive collections of ability around these possessions, it is challenging, so for those in the room of downstream, it’s an extremely, really tough globe.

” Returns are reduced, and when you have actually a tested possession, you incorporate both. We assume that brings about a rather challenging end result.” An investor asked if the renovation in lithium costs would certainly obtain the refinery to a minimum of a break-even factor, however Vella claimed it had to do with refining expenses greater than lithium costs.

” If you’re greater than 2 or 3 or even more times than that price for the handling, that wears down any kind of possible margin,” he claimed.

” So also as the cycle relocations, it comes to be really tough to preserve the competition when your underlying expenses there are so high.

” The last point we intend to do is remain to buy what, also at the most effective lithium cost, is still a reduced return possession.”

Greenbushes has even more to offer

TLEA likewise has a 51% risk in the Greenbushes mine in WA in joint endeavor with Albemarle (NYSE: ALB).

Greenbushes is commonly thought about to be the most effective and least expensive price acid rock lithium mine around the world.

” We have actually remained to reveal this is a rate one mining possession,” Vella claimed.

” It’s comparable to it obtains for an orebody in lithium, for certain, however among the most effective of any kind of mine that I have actually seen.”

Greenbushes generated 1.48 million tonnes of spodumene concentrate at system expenses of A$ 325/t in the year to June 30, 2025, creating cashflow of A$ 1.5 billion and an EBITDA margin of 66%, which Vella called “amazing”.

Vella claimed the possession was much from complete possible and more optimization job was underway.

” For me, it’s something that I have actually not seen previously– the degree of possibility,” he claimed.

” There are absolutely some experts that claim to me, ‘it’s the most affordable price possession on earth, in lithium. Just how can it actually obtain that better?’ And I can guarantee you, I obtain pleased each time I take a look at the job they’re doing.”

Chemical quality plant 3 gets on track for appointing and very first ore by the end of the year, which will certainly increase ability by a more 500,000 t annually.

” Never ever has actually the timing been so excellent right into a climbing market, to make sure that’s a happiness,” Vella claimed. “You do not reach prepare that, however it behaves when it exercises.”