MELBOURNE, Feb 15 (Reuters) - Australia's Wesfarmers (WES) ,...

MELBOURNE, Feb 15 (Reuters) - Australia's Wesfarmers (WES) , which jointly owns the Mount Holland lithium project in Western Australia with Chile's SQM SQMA.SN said on Wednesday production of lithium hydroxide will be delayed by around six months while costs jumped.

The delay to the chemicals used in the fast growing electric vehicle battery sector is due to labour shortages, refinery engineering delays and supply chain kinks in the wake of COVID shutdowns that have impacted the delivery of key equipment.

That has pushed up overall costs for the project by 10-20 percent. Wesfarmer's share of costs for the project is now seen at between A$1.2 billion- A$1.3 billion ($838 million-$908 million), up from A$1.09 billion.

"First production of lithium hydroxide at Kwinana is now expected in the first half of the 2025 calendar year, around six months later than previous guidance but with the impact of the delay expected to be partially offset by the early sale of spodumene concentrate during the 2024 calendar year," it said.

Wesfarmers also said the group was assessing options to expand capacity of the mine and concentrator.

The Covalent lithium project owns the Mount Holland mine and concentrator around 500 kilometres (310 miles) east of Perth, and the Kwinana refinery in Perth, and plans to produce 50,000 tonnes of lithium hydroxide a year once complete. ($1 = 1.4312 Australian dollars)