IGO Limited (ASX: IGO) started commissioning operations at its Chemical Grade Plant 3 facility on 18th December 2025, processing the first ore at what’s positioned to become one of Western Australia’s most important lithium mining expansions.
The timing couldn’t be better. After weathering a brutal two-year price downturn, the lithium sector is showing signs of life.
Strategic Expansion at World’s Largest Hard-Rock Operation
Chemical Grade Plant 3 sits at the Greenbushes operation in Western Australia, approximately 250 kilometres south of Perth. The facility will add 500,000 tonnes per annum of spodumene concentrate production capacity once fully operational.
That brings total site capacity to roughly 2.1 million tonnes annually. The numbers matter because Greenbushes already supplies more than 20% of global lithium demand from a single location.
IGO holds a 24.99% indirect stake through the Tianqi Lithium Energy Australia joint venture. Tianqi owns 26.01%, while Albemarle Corporation holds the remaining 49% through the Talison Lithium operating company.
The Perth-based miner confirmed the commissioning began on schedule. Full production results will feature in IGO’s second quarter FY26 results, scheduled for release on 29th January 2026.
Greenbushes operation in Western Australia’s South West region
Cost Pressures and Project Delays
The expansion didn’t come cheap. IGO revised the total project cost to approximately A$880 million in late 2024, up significantly from the original A$500-550 million estimate announced earlier.
Industry-wide cost escalations hit the project. Design changes and delayed work packages pushed completion timelines back. The remaining cost to complete sits at A$270 million.
Despite the overruns, analysts view the expansion as strategically sound. The facility mirrors Chemical Grade Plant 2’s design, which has delivered strong operational performance since commissioning.
Lithium Market Shows Recovery Signs
Global lithium prices crashed from their 2022 peaks. Spodumene concentrate, the primary product from Greenbushes, fell to around US$1,135 per tonne by late 2025.
Yet market dynamics are shifting. High-cost producers shut down or suspended operations throughout 2024 and 2025. Core Lithium suspended its Finniss project. Arcadium Lithium placed Mt Cattlin on care and maintenance.
That supply rationalization is working. The so-called “junk supply” that flooded markets has been removed. Chinese lepidolite mining operations, which contributed to oversupply, scaled back significantly.
IGO’s Greenbushes stake generated exceptional margins despite price weakness. The operation achieved 68% EBITDA margins year-to-date in FY25, among the highest in global mining.
Industry forecasts point to tightening supply-demand dynamics by 2026. Electric vehicle production continues growing, particularly in China, Europe, and North America. Energy storage deployments are accelerating.
Australia’s Lithium Dominance
Australia’s lithium production reached 86,000 metric tonnes in 2023. The country supplies roughly half of global hard-rock lithium output.
Greenbushes leads that production. The mine has operated continuously since 1983 and contains some of the world’s highest-grade spodumene deposits. The pegmatite ore bodies feature lithium concentrations that often reach 50% of the rock composition.
The site produced approximately 342,000 tonnes of lithium concentrate in Q1 FY25, down 13% quarter-on-quarter due to planned reductions in throughput and feed grades. Production in FY25 is guided between 1.35-1.55 million tonnes.
Competing Australian operations are scaling up as well. Pilbara Minerals completed its P1000 expansion in 2025. Liontown Resources’ Kathleen Valley operation reached commercial production in January 2025.
Chemical-grade processing facility at Greenbushes
What Comes Next
Chemical Grade Plant 4 is already on the drawing board. The joint venture partners signalled construction could begin in 2027, adding another 500,000 tonnes of annual capacity.
Environmental approvals for broader site expansion are progressing. The Western Australian Environmental Protection Authority is reviewing plans for waste rock storage, water management infrastructure, and highway crossing upgrades.
IGO’s broader portfolio extends beyond lithium. The company operates the Nova nickel-copper-cobalt mine, which continues production until 2026. It also holds a stake in the Kwinana lithium hydroxide refinery, though that facility suffered a major write-down in FY25.
The company’s net cash position strengthened to A$284 million as of Q1 FY25. Management generated A$49 million in underlying free cash flow despite soft commodity prices.
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Investor Outlook
IGO shares have rebounded strongly in 2025, up approximately 40% year-to-date. The stock traded at A$7.12 as of 12th December 2025, within a 52-week range of A$3.09 to A$7.51.
Market capitalisation sits around A$5.4 billion. Analyst price targets range from A$4.04 to A$7.88, with a consensus around A$5.54 per share.
The Chemical Grade Plant 3 commissioning marks a pivotal moment for IGO and the broader lithium sector. Production growth from low-cost, high-margin operations like Greenbushes will shape supply availability as demand accelerates through the rest of the decade.
Whether lithium prices can sustain a meaningful recovery depends largely on EV adoption rates and energy storage deployment. But for now, the world’s largest hard-rock operation is expanding at precisely the moment market fundamentals appear to be improving.
