Liontown chief on lithium royalty relief

Liontown Resources chief Tony Ottaviano says current lithium prices warranted royalty relief from the government to help buffer the immature market.

“If we’re hovering around the $870 [per tonne] mark then maybe the government should respond sooner rather than later,” he told journalists at Diggers and Dealers.

"We don’t want to leave it to the last minute like they did with nickel, and we saw what happened.

“The production tax credits don't really impact us because we're a raw producer, not like a downstream producer. Maybe there's some benefit there to bring it further upstream into the spodumene producer world, I'd like to see that.”

The state government rolled out a 50 per cent royalty rebate on spodumene concentrate for three producers in 2020 in response to the fall in lithium prices.

Earlier this year, the state government announced the same royalty relief for nickel miners following the spate of project closures. 

The federal government is mulling moving forward its proposed production tax credit for critical minerals- due to kick in in 2027- but Liontown won't be eligible for the 10 per cent refundable tax offset becuase it doesn't downstream process. 

“The government's got to play a role to help buffer that until industry sorts itself out through a proper world related index for pricing and not governed by one jurisdiction,” Mr Ottaviano added.

Now that the newly minted producer reached first production on schedule, Mr Ottaviano imparted some advice for those hoping to follow in its footsteps. 

He told them to hold the line, and “if you don’t have the stomach for it, leave it in the ground,” speaking at the 33^rd annual Diggers and Dealers conference.

It comes against the backdrop of a turbulent 18 months in the lithium sector, which saw prices dive as  much as 80 per cent from 2022's peaks, and has led the likes of fellow producer Albemarle to shut down parts of its Kemerton lithium hydroxide operation. 

Despite Albemarle scalling back its downstream processing operation in Kemerton, Mr Ottaviano said he still believed it was the value maximising pathway, the same sentiment he spruiked 12 months ago at last year's conference. 

He said it depended on who you partner with, where the plant is and what you produce.

Mr Ottaviano said one of the reasons Albemarle scaled back was due to concerns its product wasn’t compliant with the US’ Inflation Reduction Act.

He said Liontown wouldn’t have that issue.

Sharing his thoughts on the IRA, Mr Ottaviano said he doesn’t label Liontown with “green lithium” because he’s sceptical whether there would be a premium for it.

He said he saw the US legalisation as more of a catalyst or incentive for companies to build Westen supply chains.

“It'll be a ticket to play, you need to have these ESG credentials for us to buy from you, as opposed to we're going to pay extra,” he said.

“The world wants to establish a strong alternative supply chain for many of its critical commodities.

“Whether the IRA and the subsidies manifest into anything material is a bit by the way, it's really has it been sufficient to stimulate and build that Western supply chain, the rest will then work itself out.”

Liontown also told the market this morning that first ore had been mined from its Mt Mann underground asset, extracted last week. 

It also loaded up about 145 tonnes of spodumene concentrate onto a truck- managed by contractor Qube- destined for a dedicated stprage shed at the Port of Geraldton, ahead of first shipment planned for later this quarter.

Mr Ottavaino said now that Liontown was in production, it was working with its partners on its contract prices, which he said had a lot of upfront estbalishment costs.