Australia’s largest lithium mine, Greenbushes, renowned as one of the world’s premier lithium ventures, is the latest casualty of the downturn in battery metals demand. As prices plummet, the mine is poised to reduce production in response to declining sales and mounting inventories, according to statements from part-owner IGO Ltd. Output projections for spodumene concentrate, the primary lithium-bearing material, have been slashed by 100,000 tons for the current financial year, now ranging between 1.3 and 1.4 million tons.
The global slump in battery materials has disrupted projects worldwide as oversupply issues emerge, despite ongoing optimism surrounding the electric vehicle market. With prices witnessing a sharp decline, mining companies are implementing production cuts and cost-saving measures. In Australia, Pilbara Minerals Ltd. recently announced the unlikely prospect of dividend payouts, Core Lithium Ltd. is planning job cuts, and certain nickel mines are facing temporary shutdowns.
“The irony lies in the fact that Greenbushes is globally recognized as the lowest-cost producer of hard rocks,” remarked Jon Bishop, an analyst at Jarden Securities, referring to the geological formation mined at the site. “Hence, the decision to curtail production comes as a surprising turn of events.”
With sales expected to lag behind production by approximately 20% in the latter half of the year, IGO has highlighted a buildup of inventories at the site. In response, the mine’s partners, including Albemarle Corp. and a joint venture involving Tianqi Lithium Corp., have opted for a monthly pricing mechanism for offtake, replacing the previous quarterly framework.
Spodumene prices have continued their downward spiral, plunging by 80% last year. Should the current pricing environment persist, other operations are likely to follow suit in considering production adjustments, according to Jarden’s Bishop.
