IGO has announced plans to see through the current slump in lithium prices.
IGO and Tianqi Lithium have a 51 per cent stake in the Greenbushes lithium project in Western Australia.
The remaining 49 per cent is owned by Albermarle Corporation.
The companies are currently considering spodumene offtake volumes and discussing pricing arrangements that apply to spodumene concentrate sales from Greenbushes.
A new pricing mechanism will be applied to spodumene concentrate offtake volumes, which will be reset monthly based on the average for the previous month.
The mechanism will reference the average of four price reporting agencies, including Fastmarkets, Asian Metals, Benchmark Minerals Intelligence and S&P Platts.
IGO expects that sales for the second half of the 2023–24 financial year (FY24) will be approximately 20 per cent lower than production as inventories build at Greenbushes.
The company will likely reduce production at the site to effectively match its inventory build with product logistics.
As a result, IGO’s slated FY24 production guidance from Greenbushes has been revised to between 1.3 million tonnes per annum (Mtpa) and 1.4Mtpa of spodumene concentrate, down from the previously forecast 1.4Mtpa–1.5Mtpa.
Talison – the operator of the mine – is also currently constructing a third chemical grade processing plant (CGP3) at Greenbushes, which IGO said will continue as planned.
While there is no change to its cash production cost guidance at this point, IGO said it expects these to be above the top end of its guidance.
“Despite the short-term weakness in the lithium market, the JV partners at Greenbushes are strongly aligned on continuing to drive value from this world class operation,” IGO managing director and chief executive officer Ivan Vella said.
“IGO is pleased with the new arrangements which balance near term market weakness whilst maintaining the leading position of this world class asset, including the commitment to CGP3 development.
“I am looking forward to continuing to build our relationship with two industry leaders and realise the full potential of our asset and its impact on this nascent industry.”
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