A USD$250 million investment, offtake extension and downstream collaboration between Liontown Resources and LG Energy Solution will explore the feasibility of establishing an Inflation Reduction Act-compliant lithium refinery to process Kathleen Valley spodumene.
The funding will also allow for the long-term growth of Kathleen Valley and will progress early enabling works in the underground mine to preserve the 4Mtpa expansion option on a 2027 timeframe and to support 3Mtpa production.
Liontown continues optimisation studies for both the mine and the processing plant as part of its review of the 4Mtpa expansion case.
In addition to securing funding, the existing LG Energy Solution offtake agreement has been extended by ten years (15 years in total), which the company said demonstrates sustained customer demand for high-quality lithium supply.
The downstream collaboration agreement between the pair will allow the feasibility of establishing an IRA-compliant lithium refinery to be explored, which has the potential for long-term value creation.
Liontown’s Managing Director and CEO, Tony Ottaviano, said, “I am very pleased to announce that we have taken a major step forward in our strategic partnership with foundational customer LG Energy Solution, one of the world’s leading battery producers.
“LG Energy Solution’s long-term investment in Liontown is a testament to the world-class quality of the Kathleen Valley Project and a tremendous endorsement of the capability of our team.”
Mr Ottaviano said the funding will be instrumental in supporting the production ramp up to 3Mtpa and early works necessary to preserve the potential 4Mtpa expansion case for Kathleen Valley.
“In addition, I am pleased to announce that the strategic partnership with LG Energy Solution will also include entering into a new downstream collaboration agreement to investigate the establishment of an IRA-compliant lithium refinery to process Kathleen Valley spodumene into battery-grade lithium chemicals.
“These developments pave the way for Liontown to pursue our long-term strategy to be a globally significant provider of battery minerals as the world transitions to a low-carbon future. We believe this partnership and investment will deliver substantial value to our stakeholders and position us at the forefront of the lithium industry.”
The long-term partnership with LG Energy Solution follows an extensive due diligence process. This further reinforces the tier-one qualities of Kathleen Valley and reflects Liontown’s position as an emerging producer of high quality, fully IRA-compliant, lithium raw materials.
The Kathleen Valley Project remains on budget to first production, with approximately AUD$120 million budgeted and planned to be spent for capital costs to complete construction and commissioning. The balance of AUD$381 million of additional liquidity provides balance sheet strength to fund Kathleen Valley ramp-up to 3Mtpa steady state production.
A final investment decision to commit to long lead items for the plant expansion will consider the outcome of the optimisation studies and prevailing market conditions at the time. A decision by the Board on whether to proceed is anticipated by the end of calendar year 2025.
In conjunction with LG Energy Solution’s investment, the offtake extension provides for an increase in offtake volumes of spodumene concentrate with a target of 6 per cent Li2O grade (SC6) from the initial 100ktpa in year one, to 150ktpa in years two to five, rising to 160ktpa SC6 in years six to ten, and subsequently reducing to 140ktpa in years 11 to 15.
The intended refinery investigated through the downstream collaboration will convert material from Kathleen Valley from both the LG Energy Solution offtake and potential additional tonnes from a future 4Mtpa expansion.
The companies will commence feasibility studies to evaluate site selection, economic viability, and sustainability considerations, underscoring Liontown and LG Energy Solution’s commitment to sustainable growth and value creation.
Liontown said that this collaboration, coupled with the company’s existing downstream pre-feasibility with Sumitomo Corporation (which continues in parallel), is consistent with its strategy to extract maximum value through vertical integration in the battery value chain.
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