25 Oct, 2023

Mineral Resources bullish on Wodgina lithium plant expansions in Albemarle JV

author's image

By Anthony Barich


SNL Image

The Wodgina lithium project in Western Australia, which is operated under a joint venture owned by Albemarle and Mineral Resources.
Source: Mineral Resources Ltd.

Mineral Resources Ltd. is working on approvals for the fifth and sixth spodumene concentrate processing units at its Wodgina lithium project in Western Australia, confident of backing from joint venture partner Albemarle Corp., the company said Oct. 25.

Mineral Resources is now unencumbered to market its share of Wodgina spodumene concentrate and lithium battery chemicals after increasing its ownership to 50% from 40% and divesting its 15% share in the Kemerton lithium hydroxide plant to Albemarle in the MARBL Lithium Operations Pty. Ltd. joint venture restructure.

Wodgina's third train is ramping up, bringing capacity to 750,000 dry metric tons per year of 6% spodumene concentrate.

A final investment decision for a fourth train with 250,000 dmt/y capacity is due in the first quarter of 2024, James Bruce, executive general manager of corporate development, said during an Oct. 25 quarterly analyst call.

Payback for Mineral Resources' A$160 million share of train 4 will be "measured in months not years," given that Wodgina is "one of the lowest-cost spodumene mines in the world," Bruce said on the call when asked whether falling lithium prices would impact expansion decisions at Wodgina. Costs are set to fall significantly further as production ramps up, the executive added.

"Market demand is continuing to grow at about 20% per annum," Bruce said. "Customers are wanting product and we are prepared to supply it to them — long term at index prices. And we are considering options around volume supply to customers as we go forward."

Bruce said Wodgina's ore body can support six trains, and over the next two years Mineral Resources will continue to do the stripping required to open up stages 3 and 4 of the pit. When those stages are open in about two years, "we'll be ready for train 4, and trains 5 and 6 can follow shortly after that."

On the possibility of scrapping plans for future trains if the market sours, Bruce affirmed that "our relationship with Albemarle is strong ... Albemarle is economically rational and looks at the opportunity in the same way that we do."

Mineral Resources Managing Director Chris Ellison and Albemarle CEO Kent Masters "talk all the time, and I think there's strong alignment," Bruce added.

Observers said Albemarle's options for expanding spodumene production in Australia narrowed when its A$6.6 billion bid for Liontown Resources Ltd. collapsed.

Wodgina hit record quarterly spodumene concentrate production of 45,000 dmt for its attributable share during the first quarter of fiscal 2024, up 77% year over year. Mount Marion produced 64,000 dmt of spodumene concentrate, up 18%.

Iron ore production from Mineral Resources' West Australian Yilgarn Hub asset fell 2% year over year to 1.9 million metric tons in the September quarter, and Pilbara Hub's iron ore output slipped 1% to 2.9 MMt over the same period.

S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.