The opening of Altura Mining’s Pilgangoora operation last week provides a good opportunity to evaluate the state of the local lithium industry.
The opening of Altura Mining’s Pilgangoora operation last week provides a good opportunity to evaluate the state of the local lithium industry.
Altura Mining managing director James Brown is candid in his assessment of the hurdles his company faced to develop its $151 million lithium project in the Pilbara.
“I think if you break it down, identifying an orebody is a gamble in itself,” Mr Brown told Business News.
“The odds are probably 1,000 to one of finding an economic orebody, so that’s the first challenge.
“We did find mineralisation and the criticism was it wouldn’t be big enough.
“It was big enough, and then you can look at the market perspective.”
Mr Brown said sourcing capital also proved difficult.
“These aren’t easy to fund, we’ve all been on the record; these sit outside the normal project funding avenues that we have,” he said.
“Certainly, you do need to look at different funding avenues, the market is fairly opaque; it’s a juvenile-type market.
“And there isn’t any exchange trading and there’s no index, that’s the next challenge, and then you get the funding and then you have to deliver.”
Altura raised $41.6 million in November 2016 through a share placement with Chinese battery manufacturer Shaanxi J&R Optimum Energy.
That was followed by a $US110 million debt facility agreement with a group of international investment banks in July last year.
And Altura has now delivered, with stage one of the Pilgangoora mine officially opened last week and first shipment expected to leave Port Hedland later this month.
The mine is set to produce about 220,000 tonnes per annum of lithium concentrate, and ASX-listed Altura is evaluating plans to double output in a second stage of development.
Stage one of the project had a capital cost of $151 million.
The opening comes 18 months after contractors broke ground at the Pilgangoora site, located 120 kilometres south of Port Hedland.
Mr Brown said the opening was a momentous occasion for the company.
“By no sense of the word are we beating our own chest, but certainly we see the product coming into the port is testament and proof that the plan works,” he said.
“We’ve been buoyed by the volumes that have been coming out.
“The indications, and all our analysis prove, that what we have is export-quality product.
“We’re buoyed by the fact that the process plant works very well, we’ve got increased capacity with the final commissioning, which will bring us up to reasonable production levels.
“I think from a success point, the obvious point of success is reaching nameplate production, which we think will be by the end of the year.”
With Pilgangoora coming online, there are now seven lithium mines operating within WA.
The largest of these is Talison Lithium’s Greenbushes mines in the South West.
The Greenbushes mine is the world’s largest source of lithium, producing about 649,000 tonnes of concentrate in 2017, or 29 per cent of the global supply.
Talison has approved two upgrades – a $320 million expansion to double capacity to 1.3mtpa, and a $561 million project to boost output to 1.95mtpa.
Other WA players include Galaxy Resources, which owns the Mt Cattlin mine, while Mineral Resources operates both the Mt Marion and Wodgina mines.
Galaxy produced 91,753t of concentrate in the 2018 financial year at Mt Cattlin, which is located near Ravensthorpe.
It is currently building optimisation circuits, a process expected to lift output to between 220,000tpa and 240,000tpa.
MinRes produced 435,000t of spodumene concentrate at Mt Marion in FY18, along with 3.5mt of direct shipping ore (DSO) at Wodgina.
Chris Ellison-led MinRes plans to spend $610 million on the construction of three lithium concentrate processing trains at Wodgina, located in close proximity to Pilgangoora in the Pilbara.
MinRes has proposed the sale a 49 per cent stake in the Wodgina project.
Tawana Resources runs the Bald Hill operation, which is located in the Eastern Goldfields, and began production in March this year.
ASX-listed Tawana has a 50 per cent stake in the project, with Singapore-listed Alliance Mineral Assets owning the other 50 per cent.
Tawana said last week it was targeting production of between 60,000t and 75,000t of lithium concentrate for the second half of 2018.
Pilbara Minerals operates at Pilgangoora, near the Altura mine, with its stage one project forecast to produce about 320,000tpa of spodumene.
Like Altura, Pilbara Minerals is planning to expand the capacity of its mine, with its second stage aiming to boost output to about 800,000tpa.
The state government estimated that lithium sales in WA reached $780 million last year, with more 1,200 people employed within the sector.
Mines and Petroleum Minister Bill Johnston said the industry, which is underpinned by growth in Chinese demand for electric vehicles, offered a boon for the state.
“Lithium is a new growth story for WA, there’s plenty of upside for our state because there’s an opportunity for continued processing of the material,” he said.
“The great thing here is that there is enormous growth in demand for this material.
“It’s not even about competing with existing operations; it’s about creating the space for new operations, so that’s a genuine opportunity.”
Bill Johnston (left) and James Brown are confident about the future of WA’s lithium sector.
The Altura opening comes a few months after the McGowan government announced the establishment of a Lithium and Energy Materials Industry taskforce to capitalise on the state’s potential to produce and process lithium and other energy materials.
“The taskforce is working with an industry reference group; the industry reference group has had its first meeting and we’re very much looking forward to having further feedback from that working group,” Mr Johnston said.
“It’s only going to be successful if we have the support of industry.
“This isn’t something government can do by itself, it has to be done as a genuine partnership between industry and government.
“Our aim is to help companies like Altura develop the state’s world-leading lithium industry, which creates opportunities and jobs for Western Australians.
“By expanding further into the battery materials value chain, the state will further diversify the WA economy and maximise benefits to the local community.”
Details of the projects mentioned in this article – and 170 other mining, oil and gas, construction and infrastructure projects under way or planned in WA – are available at www.businessnews.com.au/index/project
Tayler Neale travelled to the Altura mine opening as a guest of the company.
