https://thewest.com.au/business/mining/embattled-lithium-miners-get-royalty-relief-ng-b881734784z
Embattled lithium miners get royalty relief
Stuart McKinnonThe West Australian
Tue, 1 December 2020 2:00AM
Stuart McKinnon
Altura Mining’s Pilgangoora lithium project in the Pilbara.
Three WA lithium miners will get a 50 per cent royalty break for a year under a $20 million State Government relief package that aims to ease pressure on the struggling sector.
Pilbara Minerals, Galaxy Resources and the collapsed Altura Mining will be able to apply for the relief, which would need to be paid back over two years at the end of the 12-month scheme.
The rebate will apply only to operating lithium mines where employee numbers do not fall significantly.
The scheme will not apply if the average price of spodumene concentrate (semi-processed lithium ore) rises to $US550 per tonne for a given quarter.
The Government’s relief package comes after a cry for help from lithium miners, who have been battling sagging prices for the battery metal for the past two years.
In August, a joint report by the WA Chamber of Minerals and Energy and the Association of Mining and Exploration Companies called on the Government for royalty relief to ensure the sector’s survival and to guarantee the State could sustain a viable lithium downstream processing industry.
WA Mines and Petroleum Minister Bill Johnston described the support as temporary, measured and effective, noting it would not cost the Budget in the long-term.
He said the Government was confident the industry’s call for help was a short-term requirement because demand and prices for lithium were widely tipped to rise in the future.
“Over the past two years, the fall in the price of spodumene concentrate has put these companies’ operations at risk and their finances under pressure,” he said.
“Supporting these producers could prevent the loss of more than 600 jobs and save more than $20 million in annual royalty revenue over the coming years.”
Mr Johnston, pictured, said the move also sent a clear message to global investors and industry players that the Government supported the sector.
The royalty relief has not been extended to Talison Lithium’s Greenbushes operation in the South West, a joint venture between US chemicals giant Albemarle and China’s Tianqi.
Mr Johnston said only the three companies had sought assistance. It also comes too late for Pilbara lithium producer Altura, which was placed in receivership late last month by its lenders after battling weak prices and a heavy debt burden.
However Mr Johnston said the relief was available to the company’s administrators or any future operator of the mine.
Spodumene prices have tumbled from $US950/t in January 2018 to around $US400/t in recent months because of a glut of product and weaker than expected demand, exacerbated by the coronavirus pandemic.
However, the share prices of lithium miners have rebounded strongly in recent weeks, with investors seeing a solid recovery in utilisation rates in the chemical conversion plants in China as well as stronger demand from auto-makers and higher electric vehicle sales, particularly in Europe.
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