The $600 million Wodgina lithium project is being placed on care and maintenance, after its ownership was transferred to a joint venture between US company Albemarle Corporation and local company Mineral Resources.
The $600 million Wodgina lithium project is being placed on care and maintenance, after its ownership was transferred to a joint venture between US company Albemarle Corporation and local company Mineral Resources.
Mineral Resources said the decision was made in recognition of challenging global lithium market conditions and to preserve the value of the world-class Wodgina orebody.
It’s the latest in a string of moves by lithium companies, including Talison Lithum and Pilbara Minerals, to cut production or defer expansion projects following a sharp fall in lithium prices.
The announcement comes just days after Mineral Resources said construction of the Wodgina concentrate plant, being built at a cost of $610 million, was 99 per cent complete.
The joint venture expects the transition to care and maintenance to take approximately four weeks.
Mineral Resources said it would seek to redeploy affected employees across its other operations.
The joint venture, announced last year, will own both the Wodgina project and the first two 25,000 tonnes per annum lithium hydroxide processing units currently being built by Albemarle at Kemerton and due to be commissioned in the first half of 2021.
MRL managing director Chris Ellison said he was delighted to have finalised the MARBL joint venture.
“As we have stated previously, this transaction enables Mineral Resources to participate in the high-margin lithium hydroxide market on an accelerated basis through our investment in the Kemerton modules while we are able to preserve all the upside potential of Wodgina,” he said.
“Given the current challenging market conditions for lithium, the MARBL lithium joint venture believes there is more value to be delivered in the long term by placing Wodgina on care and maintenance now.
"This was a tough decision, but the right decision and we are working with affected employees to try to deploy as many of them as possible across Mineral Resources' other operations.”
Mr Ellison said the joint venture would review market conditions with a view to resuming concentrate production at Wodgina as market demand required.
“We remain confident in lithium’s long-term positive fundamentals and believe we have the best partner in Albemarle and world-class assets to help us drive sustainable and lasting value for our shareholders,” he said.
Albemarle chief executive Luke Kissam also put a positive spin on today’s news.
“In the short term, we have made the prudent decision to idle mine activity until market conditions improve, but we are well positioned for future growth given the high-quality Wodgina resource and the combined operating expertise of both companies,” Mr Kissam said.
The MARBL joint venture board will comprise three Albemarle representatives and two Mineral Resources representatives, reflecting its ownership split.
Albemarle will appoint both the chief executive and chief financial officer of the joint venture.
