IGO says it expects “unconstrained” production from Greenbushes despite dire lithium market

The lithium price is still struggling, but IGO says the giant Greenbushes lithium mine in WA is expected to lift output this year.

Lithium produced at Tianqi and IGO’s troubled refinery in Kwinana, WA. Picture: Sharon Smith/NCA Newswire

Albemarle, Tianqi and IGO will take the brakes off the giant Greenbushes mine despite low lithium prices, with the mine set to lift production over the next year as IGO intensifies its hunt for growth opportunities.

And, faced with ailing nickel assets that are running towards the end of their life amid a grim outlook for the commodity, IGO says it has turned its attention to looking for more lithium around its former nickel mines in the South West of WA.

IGO managing director Ivan Vella has been hit with a plague of woes since taking the top job at the lithium and nickel company in December.

The company has written off the $1.3bn spent on a disastrous takeover of WA nickel producer Western Areas, including mothballing the development of its Cosmos nickel mine, and has since been hit hard by tumbling lithium prices which have wiped off some of the gloss of its minority stake in the giant Greenbushes, through a joint venture with China’s Tianqi Lithium

IGO’s Nova nickel mine is set to run out of ore by mid-2027 on current mine plans, and its Forrestania nickel mines are already being prepared for closure.

But IGO, which released its June quarter production report on Tuesday, said its lithium investment had offered a rare bright spot in the period, with Greenbushes production lifting 19 per cent to 332,000 tonnes of concentrate in the period – returning to more normal levels after the partners in the mine elected last year to stockpile concentrate and slow output due to dire market conditions.

Average prices for the period fell marginally to $US1020 a tonne, delivered to the port, down from $US1034 a tonne. But the lift in volumes led to a 12 per cent fall in cash production costs, to $338 a tonne.

IGO said on Tuesday it expects export volumes to lift again in the current fiscal year, saying it expects “unconstrained” mining and processing at the giant mine, which is expected to produce 1.35 to 1.55 million tonnes of concentrate for the full financial year. Greenbushes produced 1.38 million tonnes in the last financial year.

The partners are also pressing ahead with a further expansion at Greenbushes, taking out an additional credit line to help fund construction of the third processing train at the mine.

IGO said its joint venture with Tianqi – which in turn owns half of Greenbushes – had delivered the ASX-listed company a $159.3m dividend in the quarter, taking the total dividend payout for the full year to $761.4m.

But the company also announced the early closure of its Forrestania nickel operations, after a “significant seismic event” at its Spotted Quoll mine forced its temporary closure. The company is planning to put the mine into care and maintenance in the September period, IGO said.

Mr Vella told analysts on Tuesday the company would announce the details of a shake-up of its corporate strategy when IGO delivers its annual financial results at the end of August.

But IGO appears to be doubling down on its lithium investment, after flagging a $275m to $295m writedown of advanced nickel exploration projects in WA.

IGO’s exploration teams are looking for copper in the Paterson region in WA, nickel in the Kimberley region, and copper and nickel targets in the Northern Territory.

But the company has also flagged a major shake-up of its exploration programs as part of its strategic review, saying on Tuesday it expects to announce a “ramp down of activity once current field activities are complete, and a rationalisation and relinquishment of tenements that are no longer viewed as prospective”.

IGO’s efforts to find new nickel deposits to keep Forrestania alive are now focused on nickel targets in the region, the company said on Tuesday, as it looks to add to its lithium holdings.

Mr Vella said the August strategy reset was focused on preparing growth options, both through its exploration portfolio and other means.

But the IGO boss said Greenbushes would remain at the centre of any future investment strategy, given its position as the biggest and cheapest hard rock lithium mine in the world.

“Thinking about how lithium grows as an industry and as a market and how we want to best position that – there’s a lot to do,” he said.

“I think we’re very unique in the portion of Greenbushes that we hold and that overall asset and its cost position – it’s just so strong. The tonnes that we produce at Greenbushes are always going to win on a like-for-like basis against spodumene anywhere else in the world.

“Even some of the best deposits out there that are being considered for development just don’t have the same cost potential.”

IGO shares closed down 4.8 per cent to $5.40 on Tuesday.