Australian conglomerate Wesfarmers is "cautiously optimistic" about successfully commissioning and running its upcoming 50,000 t/yr Kwinana lithium hydroxide refinery in collaboration with Chilean lithium firm SQM as it dismissed concerns raised by analysts.
The commissioning of the Kwinana facility is 64pc complete as of this week, said Wesfarmers. First lithium hydroxide output is expected in the middle of 2025. The target for Wesfarmers' chemicals, energy and fertilisers arm WesCEF's share of spodumene concentrate production for the July 2025-June 2026 financial year has been set at 190,000t.
"We feel that we have adequate experience [and] capability together with our team in SQM to commission and run [the facility] successfully," said Wesfarmers' managing director Rob Scott during its latest half-yearly results briefing on 20 February. "Ultimately time will tell in the next 6-12 months," he said.
Scott was responding to a question posed by an analyst that brought up concerns over the difficulty of building and operating a lithium hydroxide plant in Western Australia because of a lack of technical and processing capability in the state, after the analyst said a similar comment was recently made by US lithium firm Albemarle's chief executive officer Kent Masters during a conference.
"When you look at that vertically integrated operation once we hit full production run rates and get to fractionalise that cost, we still think it's a viable and beneficial project for Wesfarmers," said WesCEF's managing director Aaron Hood.
Wesfarmers owns Covalent Lithium, which runs the Mount Holland project in Australia that produces its spodumene concentrate, in a 50:50 joint venture with SQM. WesCEF's share of spodumene concentrate output totalled 70,000t during July-December 2024, in line with its guidance, with higher production throughput. Sales of spodumene concentrate came in at 80,000t for the same period.
Sales of spodumene concentrate into the market will continue going into July 2025-June 2026 as the refinery goes through its ramp-up, added Hood, with the group seeing it "challenging" to generate profit through lithium hydroxide sales in the same period.
WesCEF's lithium business continued to be loss-making and made a loss of A$24mn ($15.3mn) in July-December 2024 because of lower lithium market prices and higher unit costs of production during its ramp-up.
Argus-assessed prices for 6pc grade lithium concentrate (spodumene) inched down to $850-910/t cif China on 18 February from $850-920/t cif China a week earlier.
