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Chilean lithium giantflags ‘aggressive’ Australian expansion

Chilean lithium giant SQM says its takeover of Azure Mineralswon’t be its last push into Australia as it expressed confidence that acommodity price recovery would bolster future returns from its new Mt Hollandlithium partnership with Wesfarmers.

SQM chief executive Ricardo Ramos described Australia as thenext global lithium bowl, and flagged “aggressive” ongoing investment in thecountry over coming years at the opening for the Mt Holland Mine 400 kilometreseast of Perth on Thursday.

We want to invest more, we think it’s a great project, I wouldlove to have 10 different Mt Hollands in Australia, one is not enough,” MrRamos said.

“We have a very good team in Australia looking for high-qualityprojects, and we think we will find opportunities in the future, and we willwait until we have those opportunities.”

Wesfarmers chief executive Rob Scott, who joined Mr Ramos at themine opening, said he was confident the Covalent joint venture – which will produce lithium hydroxide from a facility south of Perth from 2025 – would turn a profit at today’s prices.

Once the project is up and runningbased on where the prices are at the moment, we should be profitable,recognising that we do have, we think, the competitive advantage around lithiumhydroxide,” Mr Scott said.

“So what really matters to us is not what’s happening to theprice today, but where the price will be in the years ahead

The Covalent JV is mining spodumene ore out of a 70-metre-deeppit south of Southern Cross. The material is pulled out of the ground andtrucked to a nearby concentrating facility which will produce roughly 380,000tonnes of spodumene concentrate a year.

A refinery under construction in Kwinana will eventually processthat material to produce around 50,000 tonnes of lithium hydroxide a year,which Mr Scott said would likely begin in the first half of 2025.

Before the Kwinana facility opens, the company will haulspodumene concentrate to the nearby port of Bunbury, where it will be exported.

Mr Ramos said SQM would hopefully produce close to 300,000tonnes of lithium carbonate per year out of Chile and wants the company toproduce the same amount outside of Chile in coming years, namely in Australia.

“Australia is the future, it is the next bowl of lithiumproduction in the world, and we want to be here,” he said.

“Australia is a great place to produce lithium, low cost, andwe’re going to have really good competition in terms of cost, safety andenvironmental, community relations. That’s why we’re expecting very aggressiveinvestment.”

Mr Scott said while Wesfarmers was open to other lithiumventures, the Mt Holland mine had the capacity to double in size, which he saidwould be the company’s priority if it were to invest further.

Wesfarmers has spent $892 million on the Mt Holland mine and thepartly-built lithium hydroxide plant, which is on top of the $776 million itpaid for Kidman Resources for the asset in 2019.

Mr Scott said stalled projects by other producers could lead tosupply tightening and prices bouncing back, while Mr Ramos has predicted thebattery mineral will likely lift in the second half of the year.

Asked whether he shared Mr Ramos’ optimism for a priceturnaround in the second half of 2024, Mr Scott said: “I’m sure Ricardo wouldagree that it’s very difficult to predict future prices.”

“If you go back 12 to 24 months ago, clearly the pricing was atunsustainably high levels and when prices are at very high levels that can leadto producers coming into the market with much higher cost structures in aneffort just to get product out there,” he said.

The JV earlier this year confirmed it had secured a secondlithium concentrate offtake deal with South Korea’s LG Energy Solution