Australia's IGO produces first battery-grade lithium hydroxide from Kwinana refinery

Australian metals producer IGO announced the first production of battery-grade lithium hydroxide from the Kwinana Lithium Hydroxide Refinery in Western Australia, the company said May 20.

The Sydney-listed company said the qualification process with offtake customers will start once product samples have been independently verified.

Platts assessed CIF North Asia lithium carbonate at $76,000/mt May 20 and lithium hydroxide CIF North Asia at $80,200/mt, according to S&P Global Commodity Insights data.

The refinery is a 51:49 joint venture between China's key lithium producer Tianqi Lithium Corp. and IGO.

"Vertical integration into downstream processing is a key plank in IGO's strategy and we are proud to be involved in the first production of lithium hydroxide in commercial quantities in Australia," IGO CEO Peter Bradford said in a statement. "The joint venture's interest in both the upstream mining asset at Greenbushes and the downstream refinery at Kwinana is emerging as a globally significant, integrated lithium business."

RBC Capital Markets analyst said in a research note: "We view this as a key de-risking milestone for the plant and Lithium Joint Venture."

"In general, liberating lithium/producing hydroxide is a difficult process and we view the largest operational risk for the Lithium JV being the Kwinana plant's ability to produce battery-grade hydroxide at name plate (design recovery rate, production and cost). Producing battery-grade hydroxide from the plant for a limited period is the first step of ramping up towards name plate," RBC said.

The bank said IGO had previously guided commercial production in FY2023.

"We forecast: 1) commercial production in SeptQ 2022, 2) battery-grade hydroxide at around 50% by DecQ 2022, 3) 6-month accreditation process for the hydroxide and 4) Train 1 ramping up to name plate (24,000 mt/year, 100%) by SeptQ 2023 (no changes made to RBC estimate)," RBC analysts said, adding that with high Lithium hydroxide prices, the ramp-up of the Kwinana plant is anticipated to support FCF generation for the Lithium JV/IGO over FY23 and beyond.

Tianqi Lithium May 9 signed a five-year strategic cooperation agreement with the country's leading power battery supplier China Aviation Lithium Battery Co. in a deal that would allow the two companies to create an integrated value chain in the lithium industry.

IGO said Feb. 21 it was in discussions to buy Glencore's CSA copper mine in New South Wales, but it stopped negotiations a week later, leaving special purpose acquisition company Metals Acquisition Corp. as the only contender for the mine.