Covalent Kwinana lithium hydroxide output begins as refinery enters production phase

Covalent Lithium

Commissioning shifts to production at Australia’s third hydroxide refinery

Covalent Kwinana lithium hydroxide output has started, marking a key commissioning milestone. The 50,000 t/yr refinery has moved into production. The company is preparing commercial samples for customer qualification. The plant can support about one million EV batteries yearly. That estimate assumes average 50kWh battery packs. Covalent Kwinana lithium hydroxide output adds new supply in Western Australia.

Vertical integration supports ramp, but expansion remains uncertain

Covalent Kwinana lithium hydroxide output draws feed from Mount Holland. The mine and concentrator supply the Kwinana refinery. Covalent is a Wesfarmers and SQM joint venture. The site follows IGO-Tianqi Kwinana and Albemarle-Mineral Resources Kemerton. Both plants started in May 2022 during softer prices. Analysts questioned local processing expertise earlier this year. Wesfarmers said it was cautiously optimistic in February. Losses persist, including a A$24mn deficit last August. Expansion plans to 100,000 t/yr remain on hold. The concentrate expansion of 760,000 t/yr is also pending guidance. Therefore, capital discipline shapes near-term strategy.

Market dynamics will influence the ramp profile. Qualification timelines can delay commercial volumes. However, vertical integration should improve cost control and logistics. Reliability and product consistency will determine contract traction. Meanwhile, Australian hydroxide capacity is consolidating. Kwinana’s ecosystem now hosts three operating refineries. Covalent Kwinana lithium hydroxide output strengthens regional battery material clusters.

The Metalnomist Commentary

Covalent’s start-up is strategically important for non-China hydroxide supply. Yet ramp execution and qualification remain the critical hurdles. Watch unit costs, recovery rates, and offtake depth through 2026.

IGO–Tianqi lithium refinery talks signal uncertain future for Kwinana

IGO

IGO–Tianqi lithium refinery talks now center on the future of Kwinana. The IGO–Tianqi lithium refinery talks follow a A$955mn annual loss and persistent under-performance. Therefore, the IGO–Tianqi lithium refinery talks could reshape Australia’s downstream lithium strategy.

Kwinana losses spur strategic review

IGO sees no clear path to sustainable returns at the 24,000 t/yr Kwinana lithium hydroxide refinery. The asset posted a A$28.7mn loss in 2024–25 amid equipment failures and sub-nameplate output. Tianqi owns 51pc of the project through TLEA, while IGO holds 49pc. IGO fully impaired its 49pc stake in the operating train on 31 July. TLEA also paused the planned 24,000 t/yr expansion in January. Meanwhile, TLEA will keep ramping the existing plant toward nameplate capacity.

Near-term output guidance and upstream pivot

The joint venture targets 9,000–11,000 t of lithium hydroxide in 2025–26, up from 6,782 t last year. However, the guidance still trails the facility’s design capacity, underscoring ramp challenges. The partners will also push upstream capacity at the Greenbushes mine. The new processing plant is nearly complete and should lift spodumene capacity to 2mn t/yr. TLEA plans to process 1.5–1.65mn t of spodumene this year, up from 1.48mn t. As a result, cash flow may rely more on upstream strength while Kwinana stabilizes.

The Metalnomist Commentary 

The JV’s near-term value likely sits in Greenbushes while Kwinana’s economics reset. If talks yield a re-scope or partner rebalancing, Kwinana must demonstrate reliable, cost-competitive hydroxide output to justify further capital.

IGO and Tianqi Halt Expansion of Kwinana Lithium Hydroxide Project

Tianqi Lithium

Rising Inventory Levels Force Project Suspension

Australian miner IGO and China’s Tianqi Lithium have stopped all work on the second lithium hydroxide train at their Kwinana refinery in Western Australia. The decision follows a buildup of lithium hydroxide inventory at the facility, where the first 24,000-tonne-per-year train remains in its ramp-up phase. On January 24, both companies confirmed the suspension of the identical-capacity second train.

Impairment Charges and Market Challenges

IGO and Tianqi have warned investors of impairment charges related to the Kwinana site. Tianqi estimates a total impairment provision of 1.412 billion yuan ($195 million) in 2024 for construction-in-progress and right-of-use assets. This figure excludes any potential impairment for the first train. IGO stated that the final impairment value will be disclosed on February 20.

Greenbushes Mine Faces Delays Amid Lithium Market Downturn

Beyond Kwinana, IGO and Tianqi also co-own Greenbushes, the world’s largest and lowest-cost hard rock lithium mine, alongside Albemarle. The site has faced project timeline delays due to the prolonged lithium market downturn. Commissioning of its chemical-grade plant 3 has been pushed back to September-December 2026 from a previous target of July-September 2025.

Greenbushes spodumene output reached 406,000 tonnes in the third quarter of 2024, marking a 22% increase from the previous quarter but a 2% decline year-over-year. Meanwhile, lithium hydroxide production at Kwinana climbed 13% from the previous quarter and more than doubled year-over-year to 1,502 tonnes.

Tianqi Lithium Boosts Lithium Salts Output Despite Lower Spodumene Production

Tianqi Lithium

Tianqi Lithium increased chemical lithium output in 2024, balancing weaker spodumene concentrate production from its Australian operations.

Lithium Chemical Production Surges at Anju Facility

Chinese producer Tianqi Lithium reported a 39% increase in lithium salts output in 2024, reaching 70,715 tonnes. This includes lithium carbonate, hydroxide, chloride, and metal produced across China and Australia. The ramp-up at the Anju factory in Sichuan province drove most of the increase, bringing the company’s global chemical capacity to 91,600 t/yr.

Meanwhile, Tianqi canceled phase two of its Kwinana lithium hydroxide plant in Australia due to economic concerns. The first phase, with 24,000 t/yr capacity, remains in operation. Tianqi aims to reach 122,600 t/yr in future chemical capacity.

Spodumene Output Falls, but Resources Remain Strong

In contrast, spodumene concentrate output fell by 7.4% to 1.41 million tonnes at the Greenbushes mine in Australia. Tianqi and IGO’s joint venture owns 51% of Greenbushes, with Albemarle holding the other 49%. Despite the dip, Greenbushes remains the world’s largest and lowest-cost hard rock lithium mine.

Tianqi plans to start production at a 520,000 t/yr Plant 3 project in October 2025, aiming to expand its spodumene processing capabilities.

Meanwhile, Greenbushes’ total lithium resources held steady at 440 million tonnes, or 16 million tonnes LCE. However, proven reserves dipped to 8.1 million tonnes LCE from 8.5 million the year before.

The Metalnomist Commentary

Tianqi Lithium’s focus on ramping up downstream capacity shows a strategic pivot toward value-added products. While mining volumes fluctuate, control over refining capacity secures margin stability amid global lithium price volatility.

IGO lithium hydroxide refinery faces hurdles as Greenbushes lifts spodumene output

IGO

IGO lithium hydroxide refinery performance weighed on fiscal results despite a group profit. IGO lithium hydroxide refinery output rose year on year, but remained below guidance. As a result, management flagged more impairments and a cautious production outlook.

Kwinana update: IGO lithium hydroxide refinery under pressure

IGO reported a A$62.3mn profit for FY2024-25. However, the IGO lithium hydroxide refinery at Kwinana lost A$28.7mn. Equipment failures kept April–June production well below nameplate. Quarterly output reached 2,126t, up 60pc year on year. Full-year lithium hydroxide totaled 6,782t, almost doubling last year. Management expects further impairments of A$70–90mn for its 49pc JV stake. An earlier write-down of A$524.6mn already reduced the asset’s value. Train 2 construction remains halted while options are reviewed.

Upstream strength: Greenbushes delivers, Nova trims guidance

Greenbushes lifted second-quarter spodumene output to 340,203t, up 2.4pc on the year. Full-year production reached ~1.48mn t, within 1.35–1.55mn t guidance. Site cash costs averaged A$325/t in FY2024-25, with A$366/t in April–June. Spodumene sales rose 12pc on the quarter to ~411,855t after port delays eased. Guidance for FY2025-26 is 1.5–1.65mn t, with a third chemical grade plant due by late 2025. That plant could add up to 500,000 t/yr of concentrate. Nova produced 5,107t of nickel in April–June and 16,371t for the year. Next year’s guidance targets 15,000–18,000t nickel and 600–700t cobalt.

The downstream landscape in Kwinana is tightening. Covalent Lithium completed its 50,000 t/yr refinery, underscoring competitive pressure. Meanwhile, CEO Ivan Vella emphasized focus on Greenbushes with partners Tianqi Lithium and Albemarle. IGO guided 9,000–11,000t of lithium hydroxide for FY2025-26, reflecting operational caution. Therefore, the path to stable downstream margins remains challenging.

The Metalnomist Commentary

Kwinana’s setbacks confirm how hard first-wave hydroxide plants must fight for reliability. Upstream strength at Greenbushes helps cushion earnings, but downstream scale and uptime will decide value capture. Watch the Train 1 impairment, Train 2 timing, and IGO’s offtake strategy as prices and unit costs converge.

IGO and Tianqi Lithium Suspend Dividends Amid Lithium Inventory Challenges

Tianqi Lithium Energy Australia (TLEA)

Australia-based IGO and China's Tianqi Lithium have announced the suspension of the annual dividend for their joint venture, Tianqi Lithium Energy Australia (TLEA), citing lower sales and an increasing inventory of lithium salts at their Kwinana Refinery. This decision reflects broader market challenges, including shifts in battery chemistry that affect demand for lithium hydroxide.

Inventory Buildup and Market Dynamics

IGO, which holds a 49% stake in the Kwinana refinery through the joint venture, reported a significant buildup of lithium hydroxide inventory. The refinery, which was shut down in October 2024 for scheduled maintenance, is facing ongoing challenges with inventory management due to weaker-than-expected demand growth for lithium hydroxide. This demand slowdown is partly attributed to shifts in battery chemistry, with converters increasingly retrofitting production lines to switch from lithium hydroxide to lithium carbonate production.

The change in preference towards lithium carbonate is driven by its use in lithium iron phosphate (LFP) batteries, which are becoming increasingly popular in hybrid electric vehicles, affordable mass-market models, and energy storage projects.

Financial Implications and Outlook

As a result of these market conditions, IGO indicated that TLEA would not issue dividends for the fiscal year 2025 and could not provide a timeline for when these payments might resume. This suspension reflects the joint venture's cautious approach to financial management in light of uncertain market demand and inventory pressures.

Despite these challenges at the refinery level, the Greenbushes lithium mine, part of a joint venture between TLEA and US lithium producer Albemarle, continues to perform well, generating solid cash flows. This suggests that while the refined product market faces difficulties, the raw material extraction aspect of the business remains robust.

Lithium Market Growth Could Reach 25pc in 2026 as Battery Storage Demand Surges

SQM BESS

Lithium market growth could reach 25pc in 2026 as stronger battery energy storage demand combines with steady electric vehicle consumption, according to Chilean producer SQM. The outlook suggests that the lithium market is entering a new demand phase led not only by EVs, but also by large-scale stationary storage.

SQM raised its 2026 production guidance to 260,000t of lithium carbonate equivalent, up from 230,000t in 2025. The company also expects sales to rise by 10pc this year, supported by strong Asia-Pacific demand and full-capacity operations at its Atacama assets.

Lithium market growth is also improving short-term pricing expectations. SQM expects first-quarter sales to rise by more than 15pc from the same period in 2025, which would set a record for January-March sales. The company also expects prices to be substantially higher than the $10/kg level recorded in the fourth quarter.

Battery Storage Demand Changes the Lithium Growth Model

Battery energy storage is becoming a stronger driver of lithium demand. This matters because Bess demand can grow independently of passenger EV cycles, especially as grids add more renewable power and require storage for stability.

SQM’s outlook shows that lithium producers are increasingly watching storage demand alongside EV sales. EV consumption remains steady, but storage growth can absorb additional lithium carbonate equivalent volumes and tighten the market faster than expected.

The company has already secured contracts covering 80pc of its 2026 LCE volumes. That leaves 20pc, or around 52,000t, available for spot market sales. This structure gives SQM exposure to higher prices if demand remains strong, while also protecting much of its volume through contract coverage.

SQM Output Expansion Strengthens Chile’s Lithium Position

SQM produced 233,000t of lithium carbonate equivalent in 2025, up 14pc from the previous year. A record fourth quarter drove the result, with NovaAndino Litio producing 66,000t LCE, up 52pc from the same period in 2024.

NovaAndino Litio is the new name of SQM’s Chilean lithium subsidiary following its merger with Codelco. The rebrand signals the growing importance of Chile’s state-linked lithium strategy and the central role of the Atacama operations in global supply.

SQM’s Australian operations also continued to progress. Its attributable production from the Mt. Holland extraction site reached 156,400t of lithium concentrate in 2025, while the Kwinana hydroxide refinery produced 1,600t LCE during its ramp-up phase. These assets give SQM a broader lithium platform across both brine and hard-rock supply chains.

The Metalnomist Commentary

SQM’s forecast shows that lithium demand is becoming more diversified and less dependent on EVs alone. If battery storage continues to outperform expectations, producers with flexible sales exposure and reliable capacity could regain pricing power faster than the market expected.