IGO, along with its joint venture partner China’s Tianqi Lithium, will cease all operations at one of its lithium hydroxide plants at the Kwinana refinery in Western Australia, the two companies said on Friday, following an earlier impairment warning.
The Australian battery metal producer warned of an additional net loss in its first-half results earlier this week, citing a decline in value of its troubled Kwinana refinery.
Some mines that produce lithium, used in electric vehicle batteries, have curtailed operations or delayed expansions after a 90% drop in prices over the last two years, while other loss-making mines have maintained production, largely because they have the support of Chinese battery-makers.
A growing list of producers have been reviewing lithium operations in Australia since last year amid a rout in prices for the battery raw material that is expected to result in more production cuts, which included the likes of Arcadium Lithium and Albemarle.
IGO expects to provide the final figure related to the impairment value in its first-half results.
The Kwinana facility is part of the Tianqi Lithium Energy Australia (TLEA) joint venture between IGO and Tianqi, in which the Australian miner holds 49% and the latter holds a 51% stake.
The decision on ceasing work at the plant has also been agreed to by both Kwinana joint venture partners, IGO said.
Tianqi Lithium, in a separate announcement on Thursday, determined in a board meeting that “continuing with the construction of Lithium Hydroxide Project Train II is not economically viable.”
On Friday, it stated that the company sees a total impairment provision of around 1.412 billion yuan ($193.74 million) “for construction in progress and right-of-use assets” at the plant.
The lithium market is reeling from rapid supply growth that has outpaced strong projections for demand from several years ago, as uptake of electric vehicles has been slower than expected.
($1 = 7.2880 Chinese yuan renminbi)
(By Shivangi Lahiri; Editing by Sriraj Kalluvila and Shailesh Kuber)
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