Wesfarmers produced a rare update last week on its half-owned lithium project in WA that it picked up when it took over Kidman Resources in late 2019.
News on the projects Kidman had in its portfolio vanished after the takeover but it is clear Wesfarmers has fixed the Mount Holland (formerly known as the Earl Grey project) development.
Wesfarmers brought in the big Chilean lithium brine producer SQM to the project as half owner which is still on track for first production in two years’ time, even though there has been cost pressures.
“Mt Holland remains one of only a small number of vertically-integrated projects where sustainably-sourced, battery-grade lithium hydroxide will be produced from a single origin, Wesfarmers told the recent Macquarie investment conference.
“While there has been some cost inflation in development costs, and the Covalent (the project managers) team continue to actively manage and monitor these pressures, Wesfarmers’ expected share of the project capex remains in line with prior guidance of $950 million. And we expect average cash cost over the life of the project in the order of $US5,400 dollars a tonne of lithium hydroxide.
“… the Mt Holland project provides some valuable commercial options, which we continue to review in the context of their capacity to enhance shareholder returns from this project.
“These options include the potential to expand the capacity of the mine, concentrator and refinery, the option to sell spodumene ahead of the commissioning of the refinery as well as the option to evaluate adjacent opportunities within the broader industry. Importantly, Mt Holland remains one of only a small number of vertically-integrated projects where sustainably-sourced, battery-grade lithium hydroxide will be produced from a single origin.
“The project is supported by strong fundamentals with first production in the second half of calendar year 2024 and total production capacity of 50 thousand tonnes of lithium hydroxide per annum,” Wesfarmers said.
Compared to the publicity for the likes of Albemarle, IGO, Liontown and Pilbara Minerals this project has had a low profile because it is buried within the larger Wesfarmers corporate structure.
Thiess has the mining contract at Mount Holland.
But a 2024 start date would put it in company with a number of other projects on a similar timescale.
But EV production and demand remains solid as Albemarle’s forecast for the rest of the year and obvious plans beyond the end of 2022.
Lithium will not be a big driver for Wesfarmers – retailing is number one through Bunnings, chemists (API), Kmart and Target and Officeworks.
Worries about the performance of those businesses rather than lithium saw the shares ease 0.3% to $48.92 – not a bad outcome given the ASX 200 was off almost 1% for the session.