Galaxy Resources has secured a three year supply of spodumene from a Western Australian mine to feed its Jiangsu lithium carbonate plant in China.
The new deal will see feedstock spodumene delivered from Talison Lithium’s Greenbushes mine at a more economical rate than the costs of fully reinstating Galaxy’s own Mt Cattlin operation which was temporarily suspended in July 2012 due to increasing stockpiles of spodumene at Jiangsu. Mt Cattlin was developed as an integrated provider for Jiangsu but the deteriorating exchange rate has pressured the cost of local production.
Galaxy says the Mt Cattlin operations will remain on hold until further notice with a small workforce remaining on site to maintain the mine and processing plant while 37 staff at the Ravensthorpe facility will take redundancy packages.
Talison has recently expanded capacity at its site and improved head grade by 300%, resulting in the first major external supply of spodumene becoming available on the international market. Its supply contract to Jiangsu is expected to begin in July, once stockpiles at the site have depleted.
Galaxy’s managing director Iggy Tan says, “Given the current exchange rate and the adverse impact on local operating costs, it is financially a better option to purchase external spodumene instead of resuming operations at Mt Cattlin.
“The Talison Greenbushes mine has the benefit of a threefold head grade and greater capacity compared to Mt Cattlin, and can better weather the impact of the high Australian dollar,” he says.
Mt Cattlin will remain a crucial internal source of feedstock to ensure stable and secure supply to the Jiangsu plant to produce high-value lithium carbonate.
“Mt Cattlin has produced many thousands of tonnes of spodumene and is a strong and stable operation that can easily be brought back online when required. The operation reached 95% of design output in May 2012 just before it was placed in suspension due to inventory build-up. It will remain as a valuable strategic asset for the company,” says Iggy Tan.