Tell us something we don’t already know Lithium will be...

Tell us something we don’t already know

Lithium will be arollercoaster for the next 10 years, says IGO boss

IGO chief executive Ivan Vella says extreme volatility inlithium prices will continue for at least a decade as he revealed plans to addcopper to the miner’s list of products.

In his first major strategy update since joining the lithium and nickelminer a year ago, Mr Vella said battery materials would continue to be IGO’s focus and government subsidies for critical minerals were not lucrative enough to drive his strategy

But in a subtle change of direction, Mr Vella said IGO wouldhave a “lesser focus” on nickel in future because of the structural changes inthe sector caused by huge supply growth in Indonesia.

IGO will instead try to build a copper division to complementits flagship lithium assets, which include Western Australia’s Greenbushesmine and the Kwinana lithium hydroxide refinery.

Mr Vella said copper was a mature industry that would provideIGO with a stable complement to the extreme volatility of the lithium sector.

Prices for the lithium-richspodumene that IGO produces at Greenbushes peaked above $US8000 a tonne inJanuary 2023 but had fallen to just $US730 a tonne on September 11, accordingto S&P Global Platts.

Mr Vella said the lithium sector was still immature in terms ofprice transparency and price discovery, and investors should expect furthervolatility.

“We believe lithium is going to be highly volatile through thecycle,” he said. “That will be the nature of the business that we are in for atleast the next decade.”

Mismatches between lithium supply and demand would continue tohappen in coming years, said Mr Vella, and IGO would try to run its lithiumdivision to capitalise on extreme peaks and troughs in commodity prices.

“We need to recognise and embrace that,” he said.

The comments directly contradict the narrative posited over thepast three years by rival lithium bosses who suggested the boom would be“durable” because electric vehicle uptake outside China was accelerating – andminers had learned not to flood the market with supply as they did during the first lithium bust in 2019.

By 2035, Mr Vella wants IGO to have “multiple” lithium assets atvarious stages of development.

But he said low production costs were critical becausegovernment subsidies would not alone save uncompetitive mines.

“We just don’t think subsidies, incentives, tariffs … are goingto drive substantive shifts in the economics that should affect our strategy orbusiness case,” he said.

Mr Vella said he believed lithium produced at Greenbushes wouldbe considered a “foreign entity of concern” by the US government and wouldtherefore not be eligible for subsidies offered under the Inflation ReductionAct.

The ruling is due to the Chinese heritage of IGO’spartner at the mine, Tianqi, as revealed in TheAustralian Financial Review in May.

Mr Vella acknowledged that most other miners were also keen tobuy copper assets, so the best way for IGO to get into that industry wouldlikely be through exploration.

Lithium stocks rallied strongly on Wednesday after the closureof a Chinese mine responsible for 5 per cent of global supply. IGO shares were5 per cent higher in afternoon trade on Thursday.

UBS analyst Levi Spry said the Chinese mine curtailment waspositive for the commodity price, but more mines would need to close to ensurelithium supply matched demand next year.

“We will need to see more supply come out to solve our 2025surplus,” he said.