Neometals looks to India for refining

Neometals will be considering India as the location to build a lithium hydroxide refinery, but previously announced plans for the project to be built in Kalgoorlie will remain as an option.

The West Perth-based company signed a memorandum of understanding with Indian energy trading business Manikaran Power to undertake feasibility work on a refinery.

The two businesses will jointly fund test work and evaluation costs for what would be the first lithium hydroxide refinery in the country.

The plant would be supplied by Neometals’ offtake option for lithium from the Mt Marion mine, which is 57,000 tonnes of lithium per annum.

That offtake agreement can start in the 2021 financial year, if the option is exercised.

Neometals chief executive Chris Reed told Business News it was important to the company’s strategy to have a partner to invest in the project.

The recent trend in the market, however, has been stronger interest in offtake deals rather than equity investments as the lithium price has come off, Mr Reed said.

“Going 50/50 with these guys for that size plant is something we’re comfortable with and can finance off our own balance sheet,” he said.

“We retained the offtake because we wanted (to go) downstream.

“It’s a better business.

“(It’s) directly exposed to the electric vehicle and the energy storage markets because they need the lithium chemicals to make batteries.

“The lithium can come from brine or a rock, (and) we’re currently in oversupply of spodumene (the rock).

“We’ll be in oversupply for the short to medium term.”

India was also an attractive location because there were incentives and rebates for investment into the lithium industry.

Kalgoorlie, by contrast, would have a higher capital intensity than previously anticipated.

But work on a Kalgoorlie plant will continue to progress in the background, Mr Reed said.

“We are moving ahead with the approvals, the engineering work is equally applicable wherever you build it, it’s the same feedstock,” he said.

Shares in Neometals were unchanged at 21.5 cents each.