IGO Limited (ASX: IGO) has provided an update on the Kwinana Lithium Hydroxide Refinery (Kwinana), in which it holds a 49% interest through its stake in Tianqi Lithium Energy Australia (TLEA).
Key Highlights:
- October 2024 Major Shutdown:
A scheduled maintenance shutdown was completed at Kwinana in October 2024. During this period, key rectification and debottlenecking projects were undertaken at Lithium Hydroxide Plant 1 (LHP1) to improve production performance.- Expected Benefits: While improvements have been noted, full realization of these benefits is expected by March 2025.
- Lithium Hydroxide Inventory Build-Up:
Due to prevailing market conditions for lithium hydroxide, TLEA has faced an inventory build-up at Kwinana. This is anticipated to continue in the short to medium term as TLEA actively markets the product to both existing and prospective customers. - Impact on Dividends:
Given the current market conditions, the ramp-up of LHP1, and lower product sales, IGO does not expect TLEA to declare a dividend for FY25. There is no guidance on when dividends may be reinstated, though Greenbushes, another key asset, continues to generate solid cash flows.
Looking Ahead:
- Continued Collaboration: IGO is working closely with TLEA and its partner, Tianqi Lithium Corporation, as the planned upgrades are completed in the coming months.
- Market Conditions: The lithium market remains dynamic, and IGO will continue to monitor developments and update the market as necessary.
This update highlights Kwinana’s ongoing optimization efforts and the challenging market environment for lithium products. However, Greenbushes’ robust performance provides a cushion against current pressures on TLEA’s dividend outlook.
