IGO to Report Significant Impairment on Kwinana Refinery in 1H25 Results
IGO Limited has ceased all work on Lithium Hydroxide Plant 2 at its Kwinana Refinery, anticipating a substantial impairment loss in its upcoming half-year financial results.
- IGO and Tianqi Lithium Corporation halt construction on Kwinana Lithium Hydroxide Plant 2
- IGO holds 49% stake in Tianqi Lithium Energy Australia, owner of Kwinana Refinery
- Substantial pre-tax impairment expected in IGO’s 1H25 financial results
- Final impairment figure to be disclosed on 20 February 2025
- Operational pause signals challenges in lithium hydroxide market or project economics
Operational Halt at Kwinana
IGO Limited (ASX: IGO) has announced a significant development regarding its Kwinana Lithium Hydroxide Refinery, held through its 49% interest in Tianqi Lithium Energy Australia (TLEA). The company and its joint venture partner, Tianqi Lithium Corporation (TLC), have agreed to cease all works and activities on Lithium Hydroxide Plant 2 (LHP2) at the facility. This decision marks a notable pause in the expansion of one of Australia’s key lithium processing assets.
Financial Implications and Impairment Testing
IGO is currently finalising impairment testing related to the Kwinana Refinery. The company has foreshadowed a substantial pre-tax impairment charge that will be reflected in its half-year financial results for the period ending 31 December 2024. While the exact impairment value remains undisclosed, IGO has committed to providing full details with its 1H25 results announcement scheduled for 20 February 2025. This anticipated write-down underscores the financial strain the project is experiencing, potentially driven by shifts in market conditions, cost escalations, or operational challenges.
Context Within the Lithium Sector
The lithium market has been volatile, with fluctuating demand and pricing pressures impacting producers and processors alike. The Kwinana Refinery, designed to produce lithium hydroxide, a critical component for electric vehicle batteries, has been a strategic asset for IGO. The suspension of LHP2 construction may reflect broader uncertainties in lithium supply chains or a reassessment of project economics amid evolving market dynamics.
Strategic and Market Considerations
IGO’s decision to halt work on LHP2 could signal a strategic pivot or a cautious approach to capital deployment in a challenging environment. The joint venture nature of the project means that both IGO and Tianqi Lithium Corporation must align on next steps, balancing operational ambitions with financial prudence. Investors will be closely watching the upcoming impairment details and any guidance on future project timelines or potential restructuring.
Looking Ahead
As IGO prepares to release its half-year results, the market will seek clarity on the scale of the impairment and the company’s outlook for its lithium refining operations. The Kwinana Refinery’s trajectory will be a bellwether for lithium processing ventures in Australia, particularly as global demand for battery materials continues to evolve. How IGO navigates this setback could shape its position in the competitive lithium sector moving forward.
Bottom Line?
The halt at Kwinana and looming impairment mark a pivotal moment for IGO’s lithium ambitions, with market watchers awaiting the full financial impact.
Questions in the middle?
- What is the exact impairment amount IGO will report for the Kwinana Refinery?
- Will IGO and Tianqi Lithium Corporation resume construction on LHP2 or restructure the project?
- How will this impairment affect IGO’s broader lithium strategy and capital allocation?
