IGO has “low confidence” in Kwinana refinery 

IGO (ASX: IGO) has fully impaired its 49% stake in the Kwinana lithium hydroxide refinery in WA, citing ongoing operational issues. 

Q4 FY25 lithium hydroxide production of 2126t represented 35% of nameplate capacity for the refinery.  

The plant operated at reduced capacity due to equipment failure in Q3, limiting production to May, a further equipment failure in June and other downtime. 

IGO managing director Ivan Vella says the refinery operated well below nameplate capacity in the quarter and did not achieve guided production tonnes for the year. 

“Despite the strong commitment from the team at site to address operational problems and ongoing issues, IGO has low confidence in the ability of this asset to achieve meaningful, sustained improvement,” he said. 

“We continue to work with our JV partner to determine the optimal future pathway for the plant.” 

IGO estimates a further impairment charge of $70-90M (IGO’s 49% share) for FY25, resulting in Train 1 being fully impaired.  

Greenbushes and Nova delivered strong performances in Q4. 

Metal production at Nova improved markedly from Q3, supported by ongoing operational initiatives to address the challenges associated with the complexity of mining an end of life ore body.  

Following a challenging H1 FY25 operating result, a 31% improvement in nickel production in H2 FY25 supported delivery of FY25 nickel production guidance. 

Mr Vella says production at Nova has trended up over recent quarters.  

“There has been considerable work done to understand the extremities of the ore body and how to proactively manage the difficulties associated with operating the asset to end of mine life,” he said. 

“This provides increased confidence that we have the plans and tactics in place to manage through this more difficult phase of operation as the mine comes to a close.” 

Greenbushes spodumene sales increased as delayed shipments from Q3 were fulfilled. 

Mr Vella says Greenbushes is a world-class ore body and generated a strong margin in FY25.  

“There are plenty of challenges and opportunities as we focus on full optimisation and achieving maximum value from the asset,” he said. 

“The new management team are focused on a range of significant operational improvements both in the short term as well as the life of mine optimisation work. 

“Management and the JV partners are strongly aligned and working closely to deliver the pathway forward.” 

Greenbushes is targeting FY26 production and cash cost guidance of 1,500-1,650kt and $310-360/t, respectively.