LITHIUM producer Galaxy Resources’ plan to develop a vertically integrated lithium business has faced a substantial set-back, following the suspension of operations and sacking of staff at its Mt Cattlin mine in WA due to high operating costs.
The Ravensthorpe mine was developed to act as an integrated feedstock provider for Galaxy’s Jiangsu lithium carbonate plant in China, but was placed on suspension in July 2012 because of inventory build up.
In mid March Galaxy announced the operation’s 37 remaining staff members would be made redundant and the mine closed until further notice. Galaxy managing director Iggy Tan attributed the suspension to the high Australian dollar and its influence on operating costs.
“Given the current exchange rate and the adverse impact on local operating costs, it is financially a better option to purchase external spodumene today instead of resuming operations at Mt Cattlin,” he said. Galaxy stated it would source spodumene feedstock from rival WA producer Talison Lithium under a three-year supply agreement that would see Galaxy purchase the feedstock in US dollars. Mr Tan said Talison would deliver spodumene to Jiangsu from its Greenbushes mine in WA – a process that would be more economical than the full reinstatement of the Mt Cattlin operations.
“The Talison Greenbushes mine has the benefit of a threefold head grade and greater capacity compared to Mt Cattlin, and can better weather the impact of the high Australian dollar,” he said.
The supply contract is expected to begin in July once existing stockpiles at Jiangsu are depleted.
A small workforce will remain on site at Mt Cattlin to maintain the mine and its processing plant, which will remain operationally ready in the event that Galaxy needs to resume internal production. Galaxy stated that it would provide support and assistance packages to affected staff members.