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Battery metals bust spurs output cut at leading lithium mine

29th January 2024

By: Bloomberg

  

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Australia’s biggest lithium mine and one the world’s flagship projects has become the latest battery-metals venture to feel the pain from faltering demand growth, with output set to be trimmed as prices sink.

Production from Greenbushes in Western Australia is likely to be reduced as sales drop and inventories rise, according to part-owner IGO. Output guidance for spodumene concentrate - the lithium-bearing material — was cut to a range of 1.3-million to 1.4-million tons this financial year, down 100 000 t.

A slump across battery materials has upended projects worldwide as gluts emerge, even as optimism about the outlook for electric vehicles persists. With prices in freefall, miners are imposing production cuts and seeking to rein in costs. In Australia, Pilbara Minerals said recently it’s unlikely to pay a dividend, Core Lithium will cut jobs, and some nickel mines will be halted.

“The irony is clearly that this is the lowest-cost producer globally of the hard rocks,” said Jon Bishop, analyst at Jarden Securities, referring to the type of formation mined at Greenbushes. “So for them to be curtailing production, it’s a little bit about-face.”

Sales will be about 20% lower than production in the second half as inventories build at site, IGO said in a statement. The mine’s partners — which include Albemarle, and a joint venture of Tianqi Lithium — have agreed to a monthly pricing mechanism for offtake, replacing a quarterly framework.

Prices of spodumene have extended losses after collapsing by 80% last year. If the current price environment persists, other operations would certainly have to consider dialing back production, according to Jarden’s Bishop.

Edited by Bloomberg

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