The $1.4bn expansion of Greenbushes is back on track amid surging lithium markets
Greenbushes is easily the world’s biggest hard-rock lithium mine, and a $1.4bn expansion will cement its dominance in the global market.
Australia’s biggest lithium mine is set to get even bigger after one of its owners confirmed a $1.4bn expansion is back on track to lift its output by just over a million tonnes of lithium concentrate a year.
The Greenbushes mine, in Western Australia’s southwest, is already the biggest hard-rock lithium operation in the world, capable of supplying 1.3 million tonnes of high-grade concentrate each year. That will grow by another 280,000 tonnes of capacity this year through the completion of a tailings reprocessing circuit at the operation.
And recent regulatory filings by one of its owners indicate a major expansion is back on track amid a resurgent lithium market.
Greenbushes is 49 per cent-owned by global lithium giant Albemarle, with the remaining 51 per cent shared by China’s Tianqi Lithium and ASX-listed IGO.
A prospectus filed by Tianqi in support of a Hong Kong listing last week confirmed a $1.4bn expansion of the mine was back on track, with construction work on the first phase of the project likely to begin in the September quarter.
Greenbushes’ owners plan to build two new processing circuits at the mine, each adding 520,000 tonnes of annual lithium concentrate production capacity to its output. The first additional circuit was expected to be commissioned by 2025, Tianqi said, with the second likely to enter the market by 2027. “We are also considering additional expansion projects,” Tianqi told potential investors last week.
The major expansion of Greenbushes was supposed to begin in 2019, but was put on ice as an oversupply of lithium hit global pricing and as Tianqi ran into troubles completing the development of its lithium hydroxide plant in Western Australia that would have taken some of the additional production.
The total cost of the expansion work – including two new processing circuits, a new tailings facility and an upgrade to the mine’s power supply – is about $1.4bn, according to the filings.
Tianqi said it had launched feasibility studies into an expansion of its lithium hydroxide plant in Kwinana, south of Perth, that would double its output to 49,000 tonnes of lithium hydroxide a year.
The documents filed by Tianqi in Hong Kong do not give details of how much it plans to raise through the initial public offering, nor give an indication of the likely timing of the float.
But the company is reportedly seeking to raise as much as $US1bn-$US2bn ($1.4bn-$2.8bn) from new investors and begin trading on the Hong Kong exchange by the middle of the year.
Tianqi had planned a Hong Kong listing in 2018, but abandoned those plans as lithium markets crumbled, putting pressure on the company’s debt-ridden balance sheet. It sold just under half its interest in Greenbushes and the Kwinana refinery to IGO in a $1.4bn deal last year that helped ease the Chinese lithium major’s debt problems.
The decision of Greenbushes’ owners to pull the trigger on expanding the plants comes as the price of lithium concentrate made from spodumene ore hit fresh highs in January, averaging $US2400 a tonne for the month according to prices provided by research firm Benchmark Mineral Intelligence last month.
The average price for concentrate grading 6 per cent lithium jumped from an average $US1650 a tonne in December, Benchmark said – with the top end of sales reported to researchers touching $US3000 a tonne.
“This underscores a 478.3 per cent increase in spodumene pricing compared to January 2021, highlighting the price impact of mounting and now extreme tightness in lithium feedstock supply,” Benchmark said in its monthly assessment of global lithium markets.
Benchmark said it expected pricing to keep rising in the March quarter, given price rises for lithium carbonate and hydroxide. A critical shortage of workers in WA was also restricting the supply of concentrate from Australian mines into global markets, Benchmark said.