Plummeting Production Show Australia’s Lithium Refining Challenge

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(Bloomberg) — Production has plummeted at Australia’s first lithium hydroxide refinery, operated by Tianqi Lithium Corp., extending a run of setbacks in the country’s attempt to move into battery metal refining.

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The Kwinana refinery south of Perth produced just 142 tons of the battery-grade chemical in the three months to June 30, the project’s joint venture partner IGO Ltd. said in a statement Monday. That was down 85% from the March quarter, and a tiny fraction of its goal of 24,000 tons a year.

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The figure was “significantly below expectations” and was due to “ongoing technical challenges following the scheduled shutdown during the quarter,” IGO said. Its Sydney-based shares fell as much as 5.3% to a three-month low, before trading down 4% to A$13.90 at 10:52 a.m. local time. 

IGO gave no production guidance for the 2024 financial year, but said it will aim to reach 50% capacity by the end of 2023. In May, acting Chief Executive Officer Matt Dusci said he hoped to reach 60-70% of its target capacity by the end of 2023. 

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Australia is the world’s biggest producer of lithium, a vital ingredient in electric vehicle batteries, but the vast majority of that is shipped as ore to China for refining.

China’s Tianqi Lithium Energy Australia is one of three groups attempting to build an onshore refining industry, spurred on by growing demand from US and European carmakers for lithium that bypasses Chinese refineries altogether. 

The move into downstream production has proved more difficult than expected. The other Australian refineries, operated by US lithium producer Albemarle Corp. and Australian conglomerate Wesfarmers Ltd., have also struggled to meet production targets.  

In more positive news, IGO reported a sharp rise in production at the Greenbushes lithium mine, the largest in the world, which it holds in a joint venture with Tianqi and Albemarle.  

The mine in Western Australia produced 395,000 tons of spodumene concentrate, a lithium-bearing ore, up 11% on the previous quarter. Sales volumes was up 28% and revenue was up 23% quarter on quarter, IGO said. 

—With assistance from Georgina McKay.