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Tianqi Lithium Terminates Phase II Construction of Kwinana Lithium Hydroxide Refinery in Australia

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Highlights

  • Tianqi Lithium terminates Phase II of the Kwinana Lithium Hydroxide Project in Australia, deemed economically unviable.
  • The decision will reduce FY2024 net profit by RMB 501 million and require impairment provisions of RMB 1.412 billion.
  • The strategic move reflects broader challenges in lithium production amid volatile market conditions and a complex economic landscape.

Tianqi Lithium Corporation (opens in a new tab) has officially terminated the Phase II construction of its Kwinana Lithium Hydroxide Project in Australia, deeming it “economically unviable” after an extensive evaluation of financial feasibility reports Hongqiu Su at Shanghai Metals Market. (opens in a new tab)

What is Lithium Hydroxide (LiOH) used for?

Lithium hydroxide (LiOH) is primarily used in several industrial and chemical processes. These can range from battery production and carbon dioxide scrubbing to lubricants, air purification, the synthesis of other Lithium compounds, and water treatment. Lithium is known as a critical mineral.

The Details

The decision halts a project initially approved in 2017, involving an estimated investment of AUD 328 million (RMB 1.709 billion). The move comes after years of delays, strategic adjustments, and fluctuating market conditions, marking a significant shift in Tianqi’s investment priorities.

The termination will reduce Tianqi’s FY2024 net profit by approximately RMB 501 million (6.86% of its audited annual profit) and add additional impairment provisions of around RMB 1.412 billion for construction in progress and related assets. Inventory write-downs and bad debt provisions further compound the financial impact, with high production costs and declining lithium hydroxide market prices cited as critical factors.

The broader implications of this decision highlight the challenges of scaling lithium hydroxide production amidst volatile market conditions and the economic complexity of large-scale battery material projects. Despite the potential for long-term demand growth tied to the energy transition, Tianqi’s retreat underscores the financial risks associated with resource overcommitment and the lengthy commercialization timelines for such ventures.

What’s the Future Hold?

This strategic pivot calls into question the future role of Kwinana’s existing Phase I operations and Tianqi’s broader position in the competitive lithium market, as industry players increasingly face pressure to optimize capital allocation and adapt to fluctuating global demand.

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