Tianqi launched production at its Kwinana chemical facility on Tuesday (September 10), with ramp-up estimated to take 12 to 18 months.
Tianqi launched production at its Kwinana chemical facility on Tuesday (September 10), with ramp-up estimated to take 12 to 18 months. After that period, production at the Perth-based plant is expected to reach 24,000 tonnes per year during Stage 1.
The AU$300 million Stage 2 expansion plans, which would see output increase to 48,000 tonnes per year, were expected to kick off by the end of 2019, but the Sichuan-based miner said it will now focus on initial production rates.
“All of our focus for the coming months is on getting Stage 1 into steady production and all resources have been channeled toward this,” said General Manager Phil Thick in a statement. “Once we have achieved this, we will return our focus to completion of Stage 2 as customer demand continues to build.”
The move comes at a time when increased supply paired with lower lithium prices is hurting the sector. In August, Tianqi reported a decline in profits during the first half of 2019 due to a drop in lithium chemical product prices and increasing financial costs, with other top producers seeing profits fall as well due to the current volatility in the space.
Despite this, the Chinese lithium giant remains optimistic about the long-term fundamentals of the battery metal.
“We expect significant growth in the lithium market, driven primarily by electric vehicles and energy storage, over the next 10 years and with the Kwinana plant we are very well placed to take significant advantage of that,” Tianqi Lithium President Vivian Wu said in a statement.
The company currently owns a 51 percent stake in Talison Lithium, which runs Australia’s largest lithium mine, Greenbushes, with top producer Albemarle (NYSE:ALB) owning the remaining 49 percent. The miners put on hold expansion plans at the site earlier this year, with Albemarle also delaying plans to build a lithium hydroxide plant with capacity of 100,000 tonnes per year at Wodgina and one with 75,000 tonnes of processing capacity at Kemerton, both in Western Australia.
Tianqi has been making news headlines since last year when it increased its interest in SQM (NYSE:SQM) — it acquired a 23.77 percent stake in the firm for US$4.07 billion, but not without challenges. In Western Australia, Chile’s SQM is developing a 45,000 tonne per year lithium hydroxide plant together with Wesfarmers (ASX:WES,OTC Pink:WFAFF) close to Tianqi’s Kwinana plant.
Additionally, Tianqi operates three plants in the Chinese provinces of Jiangsu and Sichuan and the municipality of Chongqing. A new facility is currently under construction in Suining, Sichuan. In August, the company said it expected its lithium chemical products output to exceed 680,000 tonnes this year.
On Wednesday, shares of Tianqi were trading down 1.35 percent at 24.79 yuan.
Don’t forget to follow us @INN_Resource for real-time news updates.
Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.