IGO has announced it will be reducing lithium production at its Greenbushes mine in Western Australia, citing lower than expected spodumene concentrate volumes.
IGO’s lithium business is held via its 49 per cent interest in Tianqi Lithium Energy Australia (TLEA). Over recent months, TLEA and Albemarle, the joint venture partners of the Windfield Joint Venture (JV), have been considering spodumene concentrate offtake volumes and discussing pricing arrangements that apply to spodumene concentrate sales from the Greenbushes Operation, operated by Talison Lithium under the Windfield JV.
The Windfield Board has agreed to amend the pricing mechanism which will be applied to SC6.0 spodumene concentrate offtake volumes effective 1 January 2024.
Under the new mechanism, pricing will be reset monthly, based on the average of the previous month, referencing the average of four price reporting agencies, including Fastmarkets, Asian Metals, Benchmark Minerals Intelligence and S&P Platts, less a five per cent volume discount, FOB Australia.
The JV Partners have also indicated their spodumene concentrate volumes for the second half of FY24. Indicated volumes are below forecast, and as such IGO has announced that it is likely that production at Greenbushes will be marginally reduced during this period to effectively match inventory build with product logistics.
IGO expects that sales for the second half will be approximately 20 per cent lower than production as inventories build at site.
As a result, IGO’s stated FY24 production guidance from Greenbushes has been revised to between 1.3Mtpa to 1.4Mtpa (previously 1.4Mtpa – 1.5Mtpa) of SC6.0 spodumene concentrate.
While there is no change to cash production cost guidance at this point, IGO expects these to be above the top end of its guidance. Talison is finalising its CY24 budget, after which IGO will provide any required update to cash cost and capex guidance within its Half Year reporting on 22 February 2024.
The JV Partners remain committed to the completion of the CGP3 processing plant.
IGO’s Managing Director and CEO, Ivan Vella, said that despite the short-term weakness in the lithium market, the JV Partners are strongly aligned on continuing to drive value from the operation.
“IGO is pleased with the new arrangements which balance near term market weakness whilst maintaining the leading position of this world class asset, including the commitment to CGP3 development.
“I am looking forward to continuing to build our relationship with two industry leaders and realise the full potential of our asset and its impact on this nascent industry.”