LRS General Discussion, page-18584

Here is the full article - potentially positive news for spodumene mines in Brazil (although as far as I'm aware, Brazil spodumene is not IRA compliant either because Brazil does not yet have a free trade agreement with the U.S).

However, this doesn't mean that Brazil spodumene won't be attractive for future conversion plants in North America. In terms of geography - Brazil is the most logical source because:

- Distance (the freighting distance is not far relatively speaking) and freight costs are supposedly only $42/t
- Low cost operation in Brazil provides relative certainty to converters that their spodumene sources will continue to operate regardless of changes in lithium spot prices.
- Canada is closer, but there is also next to no change of any new spodumene production in Canada until 2028 at the very earliest.
- Critical Minerals Agreement planned to be signed between Brazil and the U.S. this November

U.S. to Buy Critical Minerals from Brazil, Ambassador Says - The Rio Times (riotimesonline.com)
- rewrew

US blocks subsidiesfor Albemarle lithium made in Australia

New York-listed Albemarle says the lithium it mines andprocesses in Australia does not qualify for billions of dollars in US subsidiesin a major blow to the future of its downstream operations in WA.

Albemarle said the inability to access subsidies under theInflation Reduction Act had been a major factor in its decision to slash itsworkforce and curtail investment in WA

The battery materials heavyweight is shut out under the USDepartment of Energy’s “foreign entity of concern” rule. Albemarle owns 49 percent of the Greenbushes mine in WA. The remaining 51 per cent is owned byChina’s Tianqi and ASX-listed IGO.

Resources Minister Madeleine King said on Friday that it was upto the US to decide how the subsidies of the IRA will be applied and to whichcompanies.

The Albanese government is backing US efforts to developnon-China critical minerals supply chains. However, it has indicated Tianqi –as the first mover in lithium refining in Australia – will qualify forproduction tax credits available here

Albemarle boss Kent Masters saidgeopolitical developments were also adding uncertainty for the company.

“This includes escalating trade tensions and ongoing armedconflicts. Challenging Western supply chain dynamics are also at play,” he toldanalysts.

Mr Masters said the IRA’s consumer tax credit on electricvehicles had yet to benefit upstream producers like Albemarle and that itsAustralian product would not qualify for credits.

“As written the final US Department of Energy foreign entity ofconcern or FEOC rule will impact the eligibility of our Australian product, andwe suspect that others could be impacted as well,” he said.

Mr Masters was speaking after Albemarle moved to cut 300 jobs –about 40 per cent of its workforce in WA – and said it would write down thevalue of its processing assets in the state by up to $US1.1 billion.

Albemarle expects to save up to $US300 million in capital overthe next 18 months by stopping work on a third production train at its Kemertonplant in WA’s south-west. It is putting train two into care and maintenance andwill focus on trying to get train one working properly.

In contrast to the problems it has had with cost blowouts anddelays in WA, Albemarle said it achieved first commercial sales from Meishan, anew lithium hydroxide plant in China, about six months ahead of schedule.

Tianqi has built and operates lithium refineries in China buthas struggled to get the plant it owns with IGO at Kwinana in WA operating atanywhere near nameplate capacity.

The US government lists China, Russia, Iran and North Korea as“foreign entities of concern” and has sought to ensure critical minerals thatare “subject to the control” of those nations are not eligible for subsidies.

Rules published by the US Department of Energy in May made itclear that a company is disqualified if it is registered in China, or is 25 percent owned by a foreign entity of concern.

The focus on Chinese ownership was criticised by some Australian lithium players and raised doubts over whether Greenbushes and Mt Marion, co-owned by Chris Ellison’s Mineral Resources and China’s Ganfeng, would qualify.

Ms King, who has flagged bringing forward production tax creditsto assist Albemarle and others as lithium prices tank, indicated US supplychain priorities highlighted the importance of Australian-owned assets notlinked to China.

“The US economy is the biggest in the world and it continues togrow. It is seeking to secure its supply chains in a manner that reflects therealities of their economy,” she said.

“We will continue to work constructively with the USadministration in regard to all aspects of critical minerals and rare earthselements policy.

“It is a matter for the US to decide how the subsidies of theIRA will be applied and to which companies.

What this highlights is that lithium mines and other criticalminerals and rare earths elements mines and potential processing facilitiesthat remain in Australian ownership are in a good position to make use of theIRA subsidies which the production tax credits will dovetail into to bring onmore jobs in Australia, and also in the US.”

Liontown Resources, which started lithium production this week,expects to qualify for IRA credits based on having no links to China. It isunderstood lithium produced by the Wesfarmers and SQM joint venture will alsoqualify, even though Tianqi is a big shareholder in Chile-based SQM.

Mr Masters said the hard calls on processing at Kemerton wouldnot impact plans to boost production from the Greenbushes mine. He said anydecision to bring train two out of care maintenance at Kemerton would depend onprices improving and being able to get train 1 running efficiently in the faceof workforce issues.

Part of the decision aboutfocusing on train one and not two is to really optimise that asset, get it towork. We have struggled with workforce in Australia, and we struggle to rampthe two of them together,” he said