CONTINUED weak lithium prices have forced Wesfarmers (ASX: WES) and its Chilean partner SQM to delay the construction of the Mt Holland lithium project in the WA goldfields.
The partners announced their decision to mothball the project in an ASX release after trading had closed on January 23, saying that the final investment decision was deferred to “enhance the long-term value of the project”.
The project included the construction of the mine and co-located concentrator at Mt Holland, and a lithium hydroxide refinery in Kwinana.
Wesfarmers said that while it would wait till 2021 to pull the trigger on a final investment decision, in the meantime it would conduct further work to cut capital and operating costs and explore opportunities to improve utility and infrastructure solutions for the project.
Wesfarmers acquired its 50pc stake in the JV when it bought out Kidman Resources for $776m in 2019.
Since then, lithium has continued its downward spiral as the Chinese demand continues to weaken, forcing a string of major projects to be put on the backburner.
In six months alone, six major projects have been mothballed, or have announced major cutbacks on the back of the soft prices.
Mineral Resources’ Wodinga was mothballed in November as did Pilbara Minerals Pilgangoora earlier in the year, Galaxy resources slashed its output and Alinta Resources collapsed.
Wesfarmers managing director Rob Scott said that a final investment decision would be made in 2021.
“Once completed, the project is expected to play an important role in the global lithium hydroxide market, with a long-term outlook that remains attractive,” he said.
