Liontown Resources chief executive Tony Ottaviano gives WA Government relief for lithium miners the thumbs up

The boss of WA’s newest lithium miner has commended the State Government for its lithium rescue package and makes no apologies for sticking his hand out for help, even though his company could be on track for profitability early next year. Liontown Resources spearheaded a campaign behind closed doors, revealed by The West Australian, for the WA Government to provide financial assistance to the State’s struggling lithium miners. Liontown shipped first spodumene concentrate from its Kathleen Valley mine in the Goldfields two months ago and is currently in the cash-burning phase of ramping up mining activity, all the while lithium prices are lingering in the doldrums. The company over the past two months has cut a third of its white collar workforce and put an expansion of Kathleen Valley on ice to save $100 million as it grapples with the lithium downturn. On Wednesday the Cook Government announced a $150 million lifeline for WA’s lithium miners and processors. This includes waiving port and mining tenement fees for miners in the ramp-up phase, which will directly benefit Liontown, as well as a $50 million zero interest loan. Coinciding with the Government’s announcement was Liontown’s annual general meeting in the CBD. Tony Ottaviano, the miner’s chief executive, told media after the AGM that he was yet to fully digest the support package but was “very appreciative” of the assistance. “It’s commendable that the government has responded . . . I’ve only just seen it, it seems well balanced. It’s tackling both the upstream and the downstream collectively,” he said. “As it relates to Liontown, we’re very pleased that it acknowledges companies in ramp-up, where we haven’t been able to yet amortize our fixed costs, and we’re in a unique position . . . the government’s acknowledged that.” He said a royalty relief proposal was Liontown’s “entry point” into negotiations with government, which subsequently evolved into other forms of assistance. Miners like Liontown owe the WA Government a 5 per cent revenue cut via royalty payments from the spodumene concentrate they churn out. Earlier in the morning Mr Ottaviano broadly agreed with a shareholder assertion that Liontown might be profitable as early as the March quarter if the ramp-up phase keeps going according to plan and spodumene concentrate prices at least hold up around the current level of about $US860 per tonne. Liontown later clarified it was not specifically providing profit guidance. The lithiun price over the past month has jumped from approximately $US750/t, but remain well below the lofty $US8000/t heights of early 2023. He indicated that Liontown would still very likely put its hand out for a slice of the support package. “Every little bit helps, we’re not going to apologize for making sure that we’re in the most robust position through the cycle,” Mr Ottaviano said. “And whatever levers we need to, within reason, that we need to pull, we will pull.” Lithium miners largely applauded the government assistance, even those are unlikely to directly benefit from it — like Pilbara Minerals. “Pilbara Minerals welcomes the government’s response to the current lithium market challenges, and we look forward to working with government on the implementation of this support package,” the company’s boss Dale Henderson said. “These measures provide important assistance to the Lithium industry to navigate this point of the market cycle and positions Western Australia to support this important growth sector as it establishes itself. “ Downstream lithium processors, which comprises of IGO, Albemarle and China’s Tianqi, will have government fees temporarily waived for up to 2 years, equating to a total maximum value of $90m. Tianqi Lithium Energy Australia, a 51/49 joint venture between Tianqi and IGO, welcomed the move but said the Federal Government also needs to lend a helping hand beyond the previously-announced production tax credits. “The support package is practical and accessible immediately and will provide some genuine relief to industry,” TLEA chief Raj Surendran said. “Further action is required by the Australian Government to secure the future of critical minerals supply from Australia.” Australian corporate giant Wesfarmers and Chile’s SQM could benefit from both the upstream and downstream components of the lithium support. The duo own the Mt Holland mine, which started pumping out spodumene concentrate in late 2023, and are building a lithium hydroxide refinery in Kwinana — near IGO and Tianqi’s operation — slated to come online during the middle of next year. Aaron Hood, the managing director of Wesfarmers’ chemicals, energy and fertiliser division, said the support package highlighted the importance of “a strong relationship between government and industry”. “The support comes at a crucial time for the lithium industry, and it’s pleasing the package is focussed on both upstream mining and downstream refining,” Mr Hood said. “Government assistance is vital for many of these new projects that invest capital into production operations and the creation of many jobs, often for years before moving into production and seeing returns.” Mineral Resources, which has three lithium mines in WA, declined to comment. They are not expected to be big beneficiaries of the assistance. WA’s two most prominent mining lobby groups welcomed the help. “Today’s announcement is welcome recognition of the commercial reality facing key players,” Chamber of Minerals and Energy chief Rebecca Tomkinson said. “This program will ensure lithium producers across the sector have the best fighting chance to counter the turbulent global headwinds,” Association of Mining and Exploration Companies boss Warren Pearce said.