IGO Faces Challenges Amid Technical Issues and Falling Lithium Prices
Technical Hurdles at Kwinana
Battery metals miner IGO has been confronted with persistent technical issues at its Kwinana operation, with interruptions affecting the operation's ramp-up. Despite these challenges, the Kwinana lithium hydroxide refinery managed to show improved operational outcomes. However, total lithium hydroxide production for the quarter was 607 tonnes, with 500 tonnes being of battery grade, falling short of quarterly expectations. IGO highlighted that they faced several operational interruptions, primarily blockages and material handling challenges. A significant rectification program is underway at Kwinana, with an aim to elevate production rates.
Market Challenges for Lithium
IGO's quarterly report underscores a volatile lithium market with diminishing demand and declining lithium chemical prices, which have had repercussions on the supply chain. This volatility has hit IGO's Greenbushes operation, resulting in a decline in spodumene sales by 36%, amounting to a loss of $1.2 billion. Even so, the joint venture operation recorded an all-time high spodumene production, totalling 414,000 tonnes. This is a 5% increase from the preceding quarter. Despite these highs and lows, IGO's share in the lithium mine garnered a quarterly dividend of $578 million.
Operational Outlook
The company has set its sights on enhancing production rates at Kwinana's Train 1 to approximately half of its total capacity by the close of the December quarter. IGO has also intimated that spodumene sales from Greenbushes for the December quarter might fall below production levels due to deferred product shipments.
Other Operational Difficulties
Apart from the Kwinana and Greenbushes challenges, IGO has also reported operational challenges at its Nova and Forrestania assets, impacting production rates and incurring elevated cash costs. The Nova operation saw a 27% decline in nickel production and a 22% fall in copper production. These decreases, though partly planned, were also influenced by the transition to lower grade mining blocks and other operational hindrances. Forrestania's output also dropped by 21%. By the end of trading, IGO's share price dropped by 9.014%, closing at $9.69 per share.
