Newly minted lithium miner Liontown Resources is paring back production and focusing on tapping higher margin ore in a bid to realise about $100 million in cost cuts.
Newly minted lithium miner Liontown Resources is paring back production and focusing on tapping higher margin ore in a bid to realise about $100 million in cost cuts.
Liontown revealed its newly revised mine plan under which it’s scaling back production from the initial ramp up target of 3 million tonnes per annum to 2.8mtpa from financial year 2027.
It comes against a backdrop of flailing lithium prices spurred by weaker demand; an environment the miner has been navigating just three months into production at Kathleen Valley in the northern Goldfields.
Mr Ottaviano told investors they would be targeting higher margin ore over volume, with the miner continuing to focus on the Mt Mann orebody.
Liontown has deferred kicking off development of the Northwest Flats area until FY31, being post the new production plan that runs until FY30.
Its forecasting unit costs of $775 to $855 dry metric tonnes to churn out six per cent spodumene concentrate at an all in sustaining cost (ASIC) of $1,170 to $1,290/dmt for the second half of FY25.
The ASIC includes state government royalties, which Mr Ottaviano said they had made assumptions around price and effects for those royalties.
Mr Ottaviano has been among the vocal advocates calling for royalty relief to help buffer the immature market, warning against what happened with nickel.
When Liontown made the final investment decision on the $951 million mine in mid-2022, it was within a more bullish market environment for the critical mineral.
The price of spodumene – the hard rock product that typically contains about six per cent lithium – has fallen from the peaks in 2022 to hover at about $US800/t today.
The thematic around the critical mineral this year has largely been defined by project closures, scale backs and cost cuts by the likes of fellow Western Australian producers.
“When we made the decision to build Kathleen Valley, we were looking into a very, very strong market, and the strategy for the company was to grow rapidly to 3 million tonnes and then shortly thereafter to 4 million tonnes,” Mr Ottaviano told investors.
“The price environment at that time afforded us the ability to invest upfront capital in order to move rapidly and accelerate our growth plans.
“The environment has changed, and as a result, that upfront capital that we needed to spend, we could not sustain at these prices.
“So, the businesses had to adapt, and we've done that in an agile way.”
Mr Ottaviano said they were taking a disciplined approach to capital spend and cost management to realise $100 million in savings.
“We've gone through our total capital and cost structures, and we've pulled out up to $100 million of savings from this optimisation program,” he said.
“But equally it's important we preserve future optionality…should the market change and should in conditions improve, we can pivot and move back into our expansion strategies.”
Liontown counts Ford, Telsa and LG among its offtake partners. Mt Ottavinao said the miner would still meet all its customer obligations with the mine plan design.
