IGO managing director and chief executive officer (CEO) Ivan Vella has addressed key challenges facing the lithium sector at the 2024 Diggers & Dealers Mining Forum, while offering insight into the company’s future.
Held annually in Kalgoorlie, Western Australia, the Diggers and Dealers Mining Forum aims to secure highly respected and relevant experts in the resources sector who are well-positioned to provide insightful commentary about the industry’s outlook.
Taking place from August 5–7, the forum is an opportunity for professionals to network, visit regional mining sites, engage with the media, invest in key projects, and engage with the resources sector at an executive level.
Vella opened his presentation by discussing the critical role electric vehicles will play in the global energy transition.
“I’ve spent quite a bit of time in China … looking at the industry (and) the whole value chain right through from raw materials to the vehicles,” Vella said. “And it’s astonishing what’s been built there, that capability is absolutely amazing.
“The vehicles are fundamentally better than an internal combustion engine vehicle. They are cheaper. They are cheaper to maintain the total cost of ownership. They’re a better vehicle to maintain and the technology that’s built into them future proofs them from a sensors and automation point of view.”
A key component of rechargeable batteries for EVs, electric devices and renewable energy storage, the Grattan Institute expects lithium demand to grow by up to 41 times by 2040.
Describing the role lithium plays in EV batteries, Vella said the commodity is “too big to fail”.
“There’s an awful lot of investment that’s gone into lithium, a lot of R&D (research and development),” Vella said.
“And to replace that, and if you look right down to the chemistry, it would be very difficult to see (lithium) being replaced entirely. Does that mean to say it will be the only material or mineral used in that way? No, of course not. But it will be a big part of the puzzle.”
An emerging challenge for the EV manufacturing sector is range anxiety, which is when a driver of an electric car is afraid the battery will run out of power before they reach their desired destination or a suitable charging point is reached.
“(Range anxiety) will require a real shift in investment from countries, governments and the broader economy, but it also is going to require a change in behaviour,” Vella said.
“And I guess the simplest example is your phone. I mean, you don’t wait till it’s flat to plug it in, but those shifts in consumer behaviour (are) going to be all part of this.”
Vella pointed to the battery value chain as the second challenge.
“China has already either built or committed capacity about double what they require domestically by 2030. That’s a lot,” Vella said.
“And then (what) the West has committed, might be a little shaky in some places, (is) enough to meet their demand by 2030, so that suggests that it (the market) is going to be pretty competitive. It’s going to be difficult, and that’s going to force a lot of challenge back through that value chain.
“It’s going to force a lot of companies to think hard about how they compete, how they position themselves on the cost curve and so on, and it’s going to create a lot of pressures through the system.”
In addressing these challenges, Vella said IGO is carefully considering its role as a raw lithium supplier to the car manufacturing industry.
The year of 2024 has seen a global lithium and nickel downturn primarily caused by a supply surplus caused by increased lithium and nickel supplies from the likes of Indonesia and China.
As a result, Australian lithium and nickel miners such as IGO have had to weather storms from all angles.
“We’re very well positioned being a partner and having a share of Greenbushes, the world-class lithium hard rock asset (in Western Australia),” Vella said.
“It has got the lowest quartile costs (and) huge opportunity for optimisation and improvement still … It’s amazing to think that today, even under these conditions, it’s making a mid-60s EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin.
“It’s an incredible asset and it’s got a long life, lots of upside potential, (and) a lot of prospective ground around it as well.”
IGO and Tianqi Lithium currently share a 49 per cent stake in Greenbushes, with Albemarle owning the remaining balance. Talison Lithium, the operator of the site, is a joint venture between the three parties.
“My primary focus is on making sure we do our part to get the very best out of Greenbushes, contribute towards it and help it become an absolute world class mining operation,” Vella said.
Despite being hit hard by weakening prices, Vella hasn’t given up on nickel.
“We’re refocusing our exploration portfolio to be very, very surgical around nickel,” Vella said. “We want to make sure that it’s focused on things that can be economic.
“We’ll continue to work through the option value at Cosmos, and that’s getting a … study to understand how that orebody could come to the surface.
“It is all about its costs, it’s not about what the price is.”
Earlier this year, IGO revealed its immediate priorities to ensure future success. These included:
- enhancing safety culture and continuing to improve performance
- actively supporting the team at Greenbushes to drive further efficiencies, productivity and leading operating performance, while providing greater visibility of financial performance and optimising joint venture structures
- collaborating closely with its partner at the Kwinana Refinery to find a pathway to improved performance and a consistent ramp up
- consistent and stable delivery of performance and cashflows from Nova and Forrestania
- safely and diligently transitioning Cosmos into care and maintenance, while caring for our people who will impacted by this change
- supporting our growth agenda while ensuring we appropriately manage costs.
Since then, IGO has seen a downward trend in its total recordable injury frequency rate, strong production at Greenbushes, improved operational reliability at the Kwinana refinery, and strong cash flow from the Nova and Forrestania nickel operations.
The company will continue maintaining momentum to reduce harm, delivering key growth projects, conduct a shutdown at Kwinana to help identify its potential and transition Forrestania into care and maintenance.
IGO will also continue optimising and driving productivity at Greenbushes alongside Talison Lithium’s new CEO Rob Telford while maximising cash flow from Nova and executing its soon-to-be announced refresh strategy.
“There’s lots happening, (and) lots of change in the last six months for me,” Vella said.
“But it’s been a real pleasure (and) very exciting to be part of the IGO story and helping write that next chapter.”
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