More pain ahead for IGO as TLEA decides on | Australian Markets

IGO’s implicit pleas for associate Tianqi Lithium to mothball the perennially problematic Kwinana refinery have fallen on deaf ears.

Tianqi Lithium Energy Australia — a three way partnership owned 51 per cent by Tianqi and 49 per cent by IGO — on Tuesday acknowledged it was “prioritising the long-term viability” of its Kwinana lithium hydroxide refinery by “continuing to optimise plant operations, reduce production costs, and improve overall productivity”.

China’s Tianqi controls the TLEA JV and seems to be dragging IGO alongside to siphon some of the money TLEA receives from the profitable Greenbushes lithium mine into the loss-making Kwinana refinery.

TLEA has a 51 per cent stake in Greenbushes and Tianqi successfully controls how a lot money generated by the mine is diverted to Kwinana for the operation to keep operating.

Kwinana made an underlying earnings loss of roughly $28.7 million during the June quarter.

The $1.2 billion refinery has been affected by mechanical points since first hydroxide was produced in 2021 and has not produced a money surplus during a 12-month period, even when lithium costs had been at lofty heights in 2022 and 2023.

“Modifications implemented over the past six to eight months have yielded positive results. Production has achieved run rates of 50 percent and above, marking a significant milestone in operational performance,“ TLEA chief executive Raj Surendran said on Tuesday.

“We now have an excellent handle on the chemistry of the feed and how it reacts during processing.”

The TLEA assertion comes as IGO more and more faces stress from its traders to have the Kwinana refinery briefly shut to curb the money burn.

IGO chief govt Ivan Vella instructed analysts on Wednesday final week there have been “different points of view on the future of the asset and of the business”.

MST Financial analyst Matthew Frydman questioned why IGO continued to invest within the first processing prepare at Kwinana regardless of telling the market it was prone to be absolutely impaired on the books for the 12 months.

Mr Vella, who can be a director on the TLEA board, on the time stated the query was “very valid and clearly an issue that’s at hand between the joint venture partners and the board”.

“I don’t think it’s helpful for me to get into it much further. I think the issue is clear. And as you can appreciate, there must be different points of view on the future of the asset and of the business,” he stated.

Tianqi has the controlling vote on the board.

IGO final week successfully wrote down the worth of its share in manufacturing prepare one of the Kwinana refinery to zero.

TLEA in January paused construction on prepare two of the refinery amid the continuing lithium hydroxide provide glut.

Tony Ottaviano, the boss of lithium miner Liontown Resources, stated TLEA’s resolution might be primarily based on “the inevitable upside” for the battery commodity’s demand.

“You cannot have more than 30 per cent of the cost curve not making money (while) you’ve got (demand) growth of 22 per cent year-on-year, that equation cannot continue,” he stated at Diggers & Dealers on Tuesday.

“So most of us lithium producers are saying to themselves that at some point this will change, and therefore we need to be ready for the inevitable upside.

“So I suspect, and I’m not privy to the TLEA insight and strategy, but I suspect they also see it the same way.”