WA Premier defends rescue package which will benefit Ellison, Rinehart-backed Liontown

WA Premier Roger Cook says his government’s $150m rescue package for struggling lithium miners is designed to help protect 11,000 jobs across the state.

West Australian Premier Roger Cook has defended a taxpayer-funded lithium rescue package that is set to benefit Chris Ellison’s Mineral Resources and Gina Rinehart-backed Liontown Resources as well as other big industry players.

The $150m rescue package was unveiled as the WA government reacted to a spate of mine closures and hundreds of job losses in the state.

Mr Cook denied the assistance was too little too late as lithium miners sweat on prices recovering from a prolonged downturn.

The assistance is spread across new mines, established mines and downstream lithium processing as WA tries to avoid a repeat of the collapse of the ­nickel industry.

Liontown and Wesfarmers, which have new lithium mines in the ramp-up stage, will be eligible for a break on government charges on electricity, water, port fees and mining tenements.

The operators of struggling lithium mines can also apply for funding from a $50m interest-free loan facility to stay in production. The support cuts out after two years, or when the price for 6 per cent spodumene concentrate recovers to $US1100 a tonne. The current spodumene price is about $US815 a tonne.

The WA government will waive fees for the operators of the state’s two lithium hydroxide plants for the next two years up to a total value of $90m. The downstream relief package will benefit New York-listed Albemarle as well as China’s Tianqi and its partner IGO Limited.

Liontown boss Tony Ottaviano said the government had recognised the dire state of the lithium market and said the packaged seemed “well-balanced”.

“It’s tackling both the upstream and the downstream collectively,” Mr Ottaviano said.

“ There’s opportunity for both parts of the lithium supply chain in terms of support.

“As it relates to Liontown, we’re very pleased that it acknowledges companies that are in start-up, where we haven’t yet been able to amortise our fix costs.”

Workers at Liontown Resources’ Kathleen Valley project in Western Australia.

Liontown moved into survival mode this month in response to a price collapse that led to established producers like Pilbara Minerals and Mineral Resources cutting jobs and production. Mrs Rinehart’s Hancock Prospecting forked out about $1.3bn for its 19.9 per cent stake in Liontown at the height of a 2023 spending spree on WA lithium assets.

MinRes put its Bald Hill mine into care and maintenance this month amid the rout in the sector and shed about 900 jobs in lithium, iron ore and head office positions since July 1 on top of a major crisis over governance standards.

MinRes declined to comment on the package on Wednesday.

Rio Tinto takeover target Arcadium Lithium moved to transition its Mt Cattlin mine in WA to care and maintenance in September and booked a $US52m impairment on the asset.

Mr Cook denied his government was bailing out the likes of MinRes, Liontown and others.

“We’re not bailing mining companies out, we’re providing them with a short-term, interest-free loan facility to assist them to get through a period of time when they are challenged because of the global markets around lithium at the moment,” he said.

“This money will be repaid, but it is a timely support to make sure that we protect 11,000 jobs that depend on this mining and lithium-processing activity.”

Pilbara Minerals boss Dale Henderson described the assistance as “important”, and said it would help the industry “navigate this point of the market cycle” while supporting a “growth sector as it establishes itself”.

Albemarle also welcomed the rescue package, which came as it pressured MinRes to scale back production at their jointly owned Wodgina mine. Albemarle had also shelved plans to expand its lithium hydroxide plant at Kemerton and embarked on a major round of cost cutting.

WA last rolled out a lithium assistance package in 2020 in the form of a 12-month, 50 per cent royalty break as the price plunged below production costs to about $US400 per tonne. The WA government pocketed $1.04bn in lithium royalties in 2022-23, but the total fell to $422m last year.