PERTH (miningweekly.com) – ASX-listed Mineral Resources and US-based Albemarle have formed a joint venture (JV) after completing a transaction on the Wodgina lithium project, in Western Australia, only to mothball the operation given the low lithium prices.

The two companies in December struck a $1.15-billion agreement under which Albemarle would acquire a 50% interest in the Wodgina project, with the companies to form a JV to develop, mine, process and produce lithium and other minerals, apart from iron-ore, at the Wodgina project.

However, in August the deal was amended to allow Albemarle to obtain a 60% interest in the Wodgina JV, in exchange for $820-million in cash and the transfer of a 40% interest in two 25 000 t/y lithium hydroxide conversion units being built by Albemarle in Kemerton, Western Australia.

Mineral Resources on Friday said that the decision to place the Wodgina operation on care and maintenance was made in recognition of the challenging global lithium market and to preserve the value of the spodumene orebody.

The transition to care and maintenance is expected to take four weeks to complete.

“Given the current challenging market conditions for lithium, the JV believes there is more value to be delivered in the long term by placing Wodgina on care and maintenance now. This was a tough decision, but the right decision and we are working with affected employees to try and deploy as many of them as possible across Mineral Resources’ other operations,” said MD Chris Ellison.

“The JV will regularly review market conditions with a view to resuming spodumene concentrate production at Wodgina as market demand requires.

“We remain confident in lithium’s long-term positive fundamentals and believe we have the best partner in Albemarle and world-class assets to help us drive sustainable and lasting value for shareholders.”

Ellison said that the transaction with Albemarle allowed the company to participate in the high-margin lithium hydroxide market on an accelerated basis through the investment in the Kemerton Modules, while preserving its upside potential at Wodgina.

The 50 000 t/y lithium hydroxide conversion capacity at Kemerton is currently scheduled to be commissioned in stages starting in the first half of 2021. The timing and location of any further lithium hydroxide conversion capacity that may be developed by the JV will be based on market demand and will be funded on a 60%/40% by Albemarle and Mineral Resources.

Albemarle CEO Luke Kissam said that the decision to suspend operations at Wodgina was "prudent", adding that the JV was well positioned for future growth given the high-quality Wodgina resource and the combined operating expertise of both companies.