Key Takeaways
Australian miner IGO Ltd. slashed its full-year production forecast for Greenbushes, the world’s largest hard-rock lithium mine, by as much as 13 percent, citing a host of “systemic” operational issues.
The company disclosed the revised guidance in a market update, lowering expected output of spodumene concentrate to between 1.38 million and 1.43 million tons for the year, according to a company filing.
The previous forecast was for 1.50 million to 1.65 million tons. The downgrade stems from persistent challenges related to safety performance, ore grades, recovery rates, and plant reliability that the company said will take time to resolve. Greenbushes accounts for approximately one-fifth of the global lithium supply, according to Bloomberg Intelligence data.
The reduction in supply from a key global producer sent IGO’s shares tumbling as much as 14 percent on the ASX. The next major data release for the lithium market will be quarterly results from major producers, which will provide further insight into global supply dynamics.
The announcement had an immediate and divergent impact on lithium stocks. Shares in IGO (ASX: IGO) slumped 11.71 percent to close at $7.54.
In contrast, companies with exposure to the lithium market saw significant gains. Tianqi Lithium (09696.HK), which owns 51% of Greenbushes in a joint venture with IGO, saw its shares close up 5.44% in Hong Kong.
Competitor Ganfeng Lithium (01772.HK) experienced an even stronger rally, with its shares climbing 6.99% to HKD80.4 by midday.
The Greenbushes mine is a critical piece of the global lithium supply chain, a material essential for the production of batteries for electric vehicles and energy storage. The operational problems and subsequent production cut highlight the complexities of scaling up supply to meet rapidly growing demand.
As a peer comparison, the production downgrade from this single mine is significant, representing a noticeable percentage of total global lithium output.
This article is for informational purposes only and does not constitute investment advice.
