KALGOORLIE (miningweekly.com) – Lithium developer Liontown Resources on Monday announced a joint study with Japanese major Sumitomo into the development of a lithium supply chain between Australia and Japan.

The agreement will support a jointly-funded study that explores the feasibility of a supply chain that extends from the mining and processing of lithium concentrates at the Kathleen Valley mine, in Western Australia, to the production of lithium hydroxide and the stable supply of lithium-ion batteries in Japan and overseas.

Sumitomo Corporation and Liontown will leverage their respective strengths to contribute to the stable supply of lithium and further contribute to the creation of a decarbonized society, the Japanese major said.

The study is non-binding and is expected to be undertaken over a period of two years.

“We are putting our downstream strategy into action by partnering with Sumitomo Corporation to explore the feasibility of developing downstream lithium products between Australia and Japan, two longstanding and successful partner nations in natural resources,” said Liontown MD and CEO Tony Ottaviano.

“We wanted a global player that understands refining and marketing as we progress our downstream thinking,” he told delegates at the Diggers & Dealers conference.

Ottaviano told journalists on the side-lines of the conference that the study would weigh the development of a potential downstream operation with the production of an intermediate product, evaluating the economics and the ultimate optionality for Liontown.

Given that there is no exclusivity agreement in place with Sumitomo, the way is also clear for Liontown to investigate alternative downstream options with other companies.

“I'd say after the two years, coupled with the strategic work we're doing, we'll have a clear strategy ratified by the board. And then probably two or three strategic partners, which we've completed a feasibility study around and we could be ready to make an investment decision,” Ottaviano told shareholders.

“The two-year journey is a fairly long project, but we don’t want to rush the decision. There is a lot of merit in being a second mover, or fast follower. We can see what [lithium hydroxide] operations here in Australia are doing, and if they can get to nameplate, and we can learn from the issues they have had.”

Given that some 90% of Kathleen Valley’s production is been locked in for up to five years, Ottaviano said the downstream aspirations would coincide with the tapering-off of these offtake agreements, leaving Kathleen Valley production open to downstream optionality.

“Liontown really is powering ahead on all fronts, and our flagship Kathleen Valley project is now less than 12 months from first production,” Ottaviano said.

The 2.5-million-tonne-a-year Kathleen Valley operation will produce 500 000 t/y of spodumene concentrate, and in year six of operations, Liontown would look to increase the project capacity to four-million tonnes a year, delivering 700 000 t/y of spodumene concentrate, within six years.

Based on this production scenario, the Kathleen Valley operation is expected to have a mine life of 23 years, and will generate life-of-mine free cash flows of A$12.2-billion.