Tianqi boss declares WA’s Kwinana refinery venture with IGO won’t be shut down
The company that pioneered Chinese investment in Australian lithium wants its Aussie partner to keep the faith in their loss-making refinery.
The head of one of China’s biggest lithium companies claims he has never been happier with the performance of a West Australian refinery that its partner in the venture, IGO, wants shut down because it is bleeding money.
Tianqi Lithium chief executive Frank Ha said his company would consider adding to the $3bn it has already invested in Australia, but doing so would be problematic under tougher rules around Chinese involvement in critical minerals areas.
“We have a plant here, we have talent here, a management team, everything except there is some uncertainty of the FIRB (Foreign Investment Review Board) approvals that stops us or makes us hesitant,” he said.
Mr Ha is 100 per cent committed to overcoming problems with the refinery, the first of its kind built in Australia and indeed outside of China, despite the misgivings of his IGO counterpart Ivan Vella.
Shenzhen-traded Tianqi and IGO together also control a 51 per cent stake in the world-leading WA Greenbushes lithium mine.
Mr Ha and Mr Vella are due to meet in Perth on Thursday and remain at odds on the future of the $1.2bn refinery at Kwinana.
Mr Vella all but declared it a lost cause last month with IGO preparing to further write down the value of its share, this time to zero.
But Mr Ha likened their venture to a marriage and Kwinana their child.
“Even though he’s not happy, he will have to be with me … this is the contract, this is the agreement,” Mr Ha said. “If you marry me and you are not happy, you have to stay with me … we have a child and we have to be responsible.”
He said Kwinana produces a product to global export standards. “That’s something we’re proud of.”
Tianqi said the joint venture employed about 340 people and contributed $1.4bn annually to the WA economy.
Mr Ha assured the workers there on Tuesday that their jobs were safe. He noted refinery performance was improving and that it now regularly hit 50 per cent of nameplate capacity, although not in any sustained fashion.
The plant was built to produce 24,000 tonnes of battery-grade lithium hydroxide a year but has never performed anywhere near that level since achieving first production in May 2022. It even lost money when lithium prices were sky high.
IGO accounts suggest Kwinana lost $28.7m in the June quarter, after a $19.7m loss in the March quarter, and signalled it wanted to shut it down.
In the three months to June 30, lithium hydroxide production of 2126 tonnes was 35 per cent of nameplate capacity.
Mr Ha declined to speculate on how much longer it would take, or how much more it would cost, to achieve capacity.
Tianqi operates five chemical plants in China and Mr Ha admitted it had not faced the same problems there. China has established supply chains, technical know-how and its skilled workforce, which was taking time to build in Australia.
Wesfarmers and its partner SQM last week declared first battery-grade lithium hydroxide production at their plant next door to the Tianqi-IGO refinery.
The Wesfarmers-SQM joint venture, known as Covalent Lithium, expected to build up to 50,000 tonnes per annum nameplate capacity over the next 18 months.
New York-listed Albemarle, the 49 per cent minority owner of the Greenbushes mine to Tianqi-IGO’s 51 per cent, built the second lithium hydroxide plant in WA but has struggled to make it work, too.
Tianqi also owns 22.5 per cent of SQM.
Mr Ha said Tianqi was doing everything it could to protect its rights as a shareholder in a dispute where Tianqi maintains a deal between SQM and Chile’s state mining company Codelco should have been put to a shareholder vote.
The deal will give control of SQM’s Atacama lithium brine operations to Codelco while extending SQM’s operational rights by another 30 years.
Gina Rinehart landed her first big partnership in lithium in late 2023 by joining forces with SQM in the $1.7bn acquisition of Azure Minerals and its Andover project in WA’s Pilbara.
Mr Ha speculated the recent uptick in lithium prices sparked by the shutdown of a mine in China’s Jiangxi province run by CATL might last until the end of the year.
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