Australia's WesCEF to pursue Li plans despite hurdles

Australian conglomerate Wesfarmers will still pursue the strategy for its chemicals, energy and fertilisers arm (WesCEF) to be an integrated lithium producer, despite the recent lithium market downturn.

Wesfarmers earlier this year warned of unprofitable lithium sales from its Mount Holland project, owing to high production costs as it goes through a ramp-up. But WesCEF plans to weather through the downturn and plow ahead with its lithium downstream developments, given strong long-term fundamentals and despite the market's immaturity and cyclical demand, according to the group's executives on 2 May.

Spodumene prices in China — which dominates global consumption of lithium raw materials — were assessed at $1,080-1,180/t on 30 April, down sharply from $5,750-5,900/t at the start of 2023.

"It's also worth remembering that when we invested in Covalent and took the final investment decision, lithium hydroxide prices were lower than they are today," said WesCEF's managing director Ian Hansen.

Wesfarmers and Chilean lithium firm SQM jointly own Australian firm Covalent Lithium, which looks after the Mount Holland project that includes a mine, concentrator and its 50,000 t/yr Kwinana lithium hydroxide refinery.

Completing the refinery's construction and commissioning remains WesCEF's priority, with the mine and concentrator going through a ramp-up, according to WesCEF. The firm is also progressing its potential expansion project for the mine and concentrator, which it submitted an application for environmental approvals. The first lithium hydroxide output out of the Kwinana refinery is still expected in the first half of 2025, with a delay in timeline.

Covalent completed its first spodumene concentrate shipment earlier in March, said WesCEF. Wesfarmers expected its share of spodumene concentrate output from Mount Holland to be 50,000t in the current July 2023-June 2024 fiscal year. The share will rise to 150,000-190,000t in the upcoming July 2024-June 2025 fiscal year.

Lithium downturn

The lithium downturn has led to multiple firms, including major particpants across the lithium and battery supply chain, reporting poor January-March results.

Australian lithium and nickel producer IGO, affected by slumps in the lithium and nickel markets, reported its first quarterly loss in years while posting lower output. Major US lithium producer Albemarle's executives have also called the market "unsustainable" in the long run, as it posts a whopping $1.1bn year-on-year fall in sales from its energy storage division.

Major Chinese lithium producer Tianqi Lithium also suffered heavy losses, while global lithium firm Arcadium Lithium earlier this year cut its planned sales numbers this year and warned that current market prices will weigh on future supply.

South Korea's top battery manufacturer LG Energy Solution (LGES) reported W157bn of operating profit in January-March, but would have reported an operating loss of W32bn if it did not receive almost W189bn in US Inflation Reduction Act tax credits.

By Joseph Ho