Major Outback Project Launches Amid Price Challenges
Liontown Resources has officially opened the billion-dollar Kathleen Valley lithium mine in Western Australia. The project, located 700 kilometres north-east of Perth, began shipping its first spodumene product in September after a three-year construction phase costing $951 million. Resources Minister Madeleine King and WA Mines Minister David Michael attended Thursday’s launch.
The site, which employs around 450 workers, supplies lithium to global clients including Tesla, Ford and LG. The mine sits approximately 60 kilometres north of Leinster and is expected to operate for 23 years. However, its commencement comes during a downturn in global lithium prices, which have fallen sharply in recent years.
Federal Resources Minister Madeleine King and WA Mines Minister David Michael at the Kathleen Valley lithium mine’s opening
Supply Chain and Production Highlights
Spodumene from the site is transported by truck to Geraldton, where it is shipped overseas. The original budget for the project was $545 million, but costs surged during construction, peaking with over 1,200 workers on site at times.
Despite the market downturn, Liontown managing director Tony Ottaviano remains optimistic. “There are many sources of demand, everyone focuses on EVs, but stationary batteries we believe will be a huge growth area,” he said.
“The price is so low at the moment new demand cannot be incentivised, so we’re setting up for another significant price spike.”
International Backing for Strategic Resource
Minister King said the mine represented a critical resource for Australia’s transition to a low-carbon economy. “The road to net zero goes through Australia’s resources sector,” she said.
Ms King also acknowledged LG’s confidence in the project. “I’ve heard LG are working on battery-powered space suits for NASA, so you never know, the spodumene from Kathleen Valley could soon make its way into space.”
Liontown recently extended its offtake deal with LG from 10 to 15 years, further demonstrating international support.
The Kathleen Valley mine is 80 per cent powered by renewables, including wind turbines
Sector Under Price Pressure
WA had eight lithium mines in operation last year. Since then, closures have included Bald Hill and Mt Cattlin mines, affecting around 300 workers.
Liontown was among the first lithium producers to access the WA government’s $150 million support package introduced in November. It received a $15 million interest-free loan.
Tim Goyder, Liontown’s chairman, said the support was welcome. “This is a 25-year mine life and resources are quite cyclical, so we’ve got a long-term view,” he said.
Mr Goyder added that no new mines are expected to open until prices rise. “What we do know is no new mines are going to come on stream until the price gets back to around $US1,500 or $US2,000 a tonne, and it’s currently $US700 a tonne.”
Liontown Resources chairman Tim Goyder and managing director Tony Ottaviano holding lithium concentrate at the Kathleen Valley mine.
Royalty Income Reflects Market Conditions
Lithium contributed $563 million in royalties to the WA government in 2023–24, second only to iron ore. The 2024–25 state budget forecasts a decline to $208 million, with a slight recovery to $286 million in 2025–26.
Under current rules, government support ends if lithium prices stay above $US1,100 a tonne for two consecutive quarters.
Mr Michael said the government remained confident in the long-term prospects of lithium. “We know that the world will need a lot of lithium as we decarbonise the globe and I know WA is best placed to do that.”
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Prices Remain Subdued, Outlook Mixed
Global lithium prices have plunged from a high of $US6,500 a tonne in 2022 to $US610 in June 2024.
IGO, co-owner of the Greenbushes mine in WA’s South West, achieved an average sales price of $US791 a tonne for the March quarter. Liontown slightly exceeded this, reaching $US815 a tonne with five shipments totalling 93,940 tonnes during the same period.
The Office of the Chief Economist predicts subdued prices until 2027, when a modest recovery to $US975 a tonne is expected. Meanwhile, lithium demand is forecast to rise 15 per cent annually through to 2027, with electric vehicle battery demand expected to grow 23 per cent per year and energy storage systems by 7 per cent.
WA Support Buoys Sector
Despite falling prices, the WA government has moved to stabilise the industry through temporary financial assistance. Mr Michael reiterated the government’s position. “There is some optimism of a price recovery in the next couple of years and the support package that we announced last year is about getting the lithium industry through the next couple of years.”
The Kathleen Valley mine’s opening signifies a major milestone for WA’s lithium sector. It demonstrates resilience amid challenging market conditions while aligning with long-term global trends in battery technology and clean energy.
