MINERAL Resources (ASX: MIN) and Albermarle have mothballed the Wodgina lithium project in the Pilbara to wait out the lithium price slump after finalising the establishment of the unincorporated MARBL JV.

The MARBL JV (60:40 Albermarle MIN), has joined a growing number of developments cutting back, or halting lithium production to wait for better prices as the US-China trade wars and the stalled EV boom continues to frustrate the international market.

MIN said that it will take about four weeks to transition to care and maintenance.

During that time, Albermarle will manage the marketing and sale of spodumene concentrate, and under the terms of the JV, will continue to manage it once Wodgina goes back into production.

Mineral Resources managing director Chris Ellison cited tough market conditions, but said that they would be regularly reviewed by the JV, with production resuming when there was a demand.

“Given the current market conditions for lithium, the MARBL Lithium Joint Venture believes there is more value to be delivered in the long term by placing Wodgina on care and maintenance now,” he said.

“This was a tough decision, but the right decision and we are working with affected employees to try to deploy as many of them as possible across MRL’s other operations.

“We remain confident in lithium’s long-term positive fundamentals.”

Wodgina is the latest in a string of companies to downgrade or stop production as the downturn for battery metals forces them to reassess their options.

Albermarle’s other significant Australian JV, with Chinese Tianqi Lithium, has postponed the expansion of the world’s largest lithium mine at Greenbushes in WA’s south west, and Galaxy Resources slashed its production by 40pc.

The decision to mothball Wodgina comes off the back of the two companies finalising the establishment of the MARBL JV, for which negotiations began in December 2018.

The deal would give Albermarle the controlling interest of the mine, with Mineral Resources selling 60pc of the project for US$280m and gaining a 40pc interest in the first two 25ktpa lithium hydroxide conversion units to be built by Albermarle at its Kemerton hydroxide facility.

The establishment of the 60:40 unincorporated MARBL JV completes the binding Wodgina asset sale, and the revised arrangement with Albermarle.

“We are delighted to have established the MARBL Lithium Joint Venture with a great partner in Albermarle,” Mr Ellison said.

“Wodgina is a world-class asset with a mine life of more than 30 years while Kemerton, once constructed, will provide lithium hydroxide to battery makers globally.

“This transaction enables MRL to participate in the high-margin lithium hydroxide market on an accelerated basis through our investment in the Kemerton Modules while we are able to preserve all the upside potential of Wodgina.”

The next steps would see Albermarle foot the estimated US$1.2b cost of construction and successful commission of specific infrastructure at the Kemerton facility in relation to the Kemerton modules.

The JV expects the modules to be commissioned in stages beginning in the first half of 2021, following which, Albermarle would hand over the care, custody and control of the Kemerton modules to the modules manager.

 

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