Eramet produces first lithium from Centenario plant in Argentina
Eramet becomes the first European company to produce lithium carbonate at an industrial scale.
The Western Australian government has unveiled a support package worth up to A$150 million ($97 million) in interest-free loans to keep the state’s struggling hard rock lithium sector afloat.
WA supplies up to 50% of the world’s lithium but the slump in prices has forced producers to suspend operations or curtail expansion plans.
There have been calls for the government to provide royalty relief, as it has in the past with the iron ore and nickel sectors.
WA premier Roger Cook announced on Wednesday the government would waive fees for downstream processing, port charges and mining tenement fees for miners during the ramp-up phase for up to two years.
A A$50 million interest-free loan facility will also be temporarily available to miners, depending on their financial position and operating plan. The loans will be repaid quarterly over the two years following the end of the interest-free period, which will occur when average spodumene prices have exceeded $1100 per tonne for two consecutive quarters, or by June 30, 2026.
“This package will provide important temporary and responsible support for WA’s fledgling lithium industry, taking into account the extremely challenging market conditions it is facing,” Cook said.
The move comes as the government of Prime Minister Anthony Albanese introduced a bill this week to provide critical minerals and rare earths producers with production tax incentives as part of its “Future Made in Australia” agenda. Australia’s federal government aims to provide up to A$17 billion in production tax incentives for the critical minerals and rare earths industry.
Federal Minister for Resources and Northern Australia, Madeleine King, and the Chamber of Minerals and Energy welcomed the announcement, with the latter saying it was now clear lithium prices were likely to be lower for longer.
“It’s important for governments to act when necessary to support the sector through periods of temporary market weakness and keep WA’s skin in the game for when the market recovers,” Chamber of Minerals and Energy WA CEO Rebecca Tomkinson said.
The Association of Mining and Exploration Companies described the support as necessary. “This program will ensure lithium producers across the sector have the best fighting chance to counter the turbulent global headwinds,” CEO Warren Pearce said.
Cook’s announcement was made during the annual general meeting of the state’s newest producer, Liontown Resources (ASX: LTR).
While admitting he was yet to fully review the package, Liontown managing director Tony Ottaviano said any support was appreciated.
“Firstly, it’s commendable that the government has responded, so very appreciative of them acknowledging the tough industry that we’re in at the moment,” he told reporters after the meeting.
“It seems well balanced. It’s tackling both the upstream and the downstream collectively, so there’s opportunity from both areas of the lithium supply chain in terms of support.
“And thirdly, as it relates to Liontown, we’re very pleased that it acknowledges companies in start-up, in ramp-up, where we haven’t been able to yet amortize our fixed costs, and we’re in a unique position as we ramp-up, and the government’s acknowledged it.”
Liontown’s A$1 billion Kathleen Valley operation is WA’s newest lithium mine, having only achieved first production in late July and the first shipment in September.
The company had A$263 million in cash at the end of September after issuing $250 million in convertible notes to foundational customer LG Energy Solution.
There have been some concerns in the market that the company may not be able to withstand a prolonged lithium downturn as it ramps up Kathleen Valley.
Liontown chairman Tim Goyder was defiant at the AGM. “We’ve got it under control folks, so don’t worry and don’t read all that crap in the paper. We don’t want to go broke and we won’t go broke,” he said to applause from shareholders.
Instead, Liontown announced this month that it had revised its mine plan to 2.8 million tonnes per annum from 4Mtpa to focus on high-margin tonnes and lower costs.
Goyder said Liontown would continue to adapt to market conditions.
Guidance for the first half of 2026 is 170,000-185,000t of spodumene concentrate at all-in sustaining costs of A$1170-1290 per dry metric tonne of 6% spodumene sold.
Despite around 1.5 million tonnes of spodumene concentrate being removed from the global market this year, Pilbara Minerals (ASX: PLS) managing director Dale Henderson said as much as 40-50% of producers were still losing money.
“I put to you that this is unsustainable, and we have to see pricing move, otherwise industry cannot function. And I suspect that we’ll see more supply curtailments, as we have already been seeing over the course of this year,” he told the company’s AGM in Perth on Tuesday.
“It looks more probable that pricing has to move upwards, otherwise, not only will new supply not come to serve this market, but these other suppliers will have to fall out of the market, because they will not have an economic choice.”
While describing the lithium market as a “wild ride”, Henderson pointed out that the supply shortage of 2022 that sent spot spodumene prices to as high as $8000/t was based on a shortage of just 4% of market volume.
“Despite what was a relatively minor imbalance in supply, it translated through to an outsized pricing response,” he said.
“The second thing to call out is that pricing response was incredibly rapid, and nobody forecast it. It came out of nowhere. Now I put to you that I think a lot of the conditions which set up this run is still here today, and we should bear this in mind as we think about navigating the market as this industry continues to evolve.”
Prices are currently around $800/t.
Ottaviano said the company got calls about spodumene concentrate most days, highlighting that demand was there.
“Now, when is that recovery going to happen? Well, we believe it’s not that far away, because the situation is, demand is growing, and no supply is coming on. In fact, supply is being taken out. So there’s going to be a rebalance, and when it rebalances, it will rebalance strong,” he said.
Ottaviano noted that Wood Mackenzie was forecasting spodumene prices to remain at or below $950/t for the remainder of the decade.
However, that forecast assumed an additional 100,000t of lithium carbonate equivalent production out of Australia in 2025, a figure that now looks unlikely due to recent curtailments.
“So you ask yourself, if that’s what’s predicted in the price and none of that’s coming on, where do you think we’re going to go?” Ottaviano said.
Last week, Citi forecast the incentive price for Australian spodumene projects to restart was in the range of $950-1300/t.
Construction of new greenfields projects is even less likely in current market conditions.
“I often say to investors that Kathleen Valley is the Last of the Mohicans for this decade. There is no greenfield projects even shovel-ready,” Ottaviano said.
“And when we published our DFS in December 2021, there were 10 projects that were all going to come on at the same time as us. Only four made it, so supply is harder to come on than people think.”
