AUS
NZ
UK
CA
USA
IND
Highlights
- Dividend Uncertainty: IGO unable to determine when dividends will resume from its joint venture with Tianqi Lithium.
- Operational Updates: Kwinana plant ramp-up expected to achieve full improved performance by March 2024.
- Lithium Price Pressure: Declining lithium prices and inventory buildup impacting the sector.
Australian lithium miner IGO Ltd (ASX:IGO) announced on Monday that it is unable to determine when it will resume paying annual dividends from its joint venture operations with China’s Tianqi Lithium Corp (SHE: 002466). The uncertainty reflects ongoing challenges in the lithium sector, as the Kwinana lithium hydroxide plant continues its ramp-up phase amidst declining lithium prices and subdued demand.
Joint Venture Challenges
IGO holds a 49% stake in Tianqi Lithium Energy Australia (TLEA), the joint venture with Tianqi Lithium. The partnership oversees the Kwinana lithium hydroxide plant, which has been undergoing a ramp-up phase. According to IGO, the plant underwent planned maintenance in October and is expected to fully realize improved operational performance by March 2024.
However, TLEA has been facing inventory buildup at Kwinana over recent months, with the trend likely to persist in the short to medium term. This comes as lithium prices, a critical component for electric vehicle batteries, continue to decline due to muted global demand.
Financial Impact
The ongoing challenges have led to significant financial implications for IGO. In fiscal year 2024, the company received A$761 million (approximately $476 million) in dividends from its operations in Western Australia, a notable decline from the A$1.18 billion received in 2023.
While IGO could not confirm when dividends from the joint venture would resume, the company emphasized that its Greenbushes lithium mine, Australia’s largest, remains a strong performer. The Greenbushes mine continues to generate solid cash flows, providing a degree of stability amid broader sector challenges.
Broader Lithium Sector Trends
The lithium sector has been grappling with declining prices as demand for electric vehicles slows, creating headwinds for producers globally. The inventory buildup at Kwinana reflects this trend, as production outpaces demand in the short term.
Despite these challenges, IGO remains optimistic about the long-term outlook for lithium, driven by the global transition to renewable energy and electric mobility. The company’s focus on ramping up production at Kwinana aligns with its strategy to position itself as a leader in battery metals.
