Production at the Greenbushes lithium mine in Western Australia’s South West is set to drop in a further sign of instability in Australia’s critical minerals market.
In a statement to the ASX on Monday, joint venture partner IGO cited a weak global lithium market and revised its production estimates, with the mine’s expected output dropping from 1.4 to 1.5 million tonnes, to 1.3 to 1.4 million tonnes.
IGO said sales would be 20 per cent lower than production.
“Despite the short-term weakness in the lithium market, the JV Partners at Greenbushes are strongly aligned on continuing to drive value from this world class operation,” IGO managing director Ivan Vella said
“IGO is pleased with the new arrangements, which balance near-term market weakness while maintaining the leading position of this world-class asset.”
A spokesperson for Talison, which operates the mine on behalf of the joint venture partners, told the ABC that it had no plans to alter its workforce.
“Talison’s Greenbushes Lithium Operation has been leading the lithium industry for more than 40 years and is well positioned to navigate current market fluctuations,” the spokesperson said.
It is the latest in a run of negative news for critical minerals sector in WA, with the suspension of nickel mines at Ravensthorpe, Kambalda and Halls Creek triggering hundreds of job losses.
The collapse in lithium prices has also seen expansion plans halted at Albemarle’s refinery at Kemerton, 100 kilometres from Greenbushes.
The slump triggered crisis meetings between miners, the state and federal governments last week, with the prospect of royalty relief flagged.
Changing forecasts
Mining analyst Tim Treadgold said it was a bad sign for smaller producers.
“When you see the biggest, ugliest producer in the world make a decision like cutting back on output, you’ve got to say that everybody else of a lesser degree is in deep trouble,” he said.
He said while he was not surprised by the move while lithium supplies dramatically exceeded demand, he was surprised by just how badly the electric vehicle industry was doing.
“People are simply not buying them. You would still be a very brave person to own an EV in country WA,” Mr Treadgold said.
“It’s not just range anxiety and charger anxiety, it’s insurance anxiety, because these things are very expensive to insure.”
He said current forecasts suggested it would be two-to-three years before prices bounced back.
“On a positive note, you are seeing heavy duty investors continue to pour money into lithium,” Mr Treadgold said.
“The deals are being done, but they’re not being done for tomorrow. They’re being done for three years’ time.”
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