IGO’s earnings into the red, Cosmos nickel put to bed, but Kwinana lithium plant recovering from the dead

The battery metal price pinch has dragged IGO’s quarterly earnings into the red for the first time in well over a decade, but the miner helmed by Ivan Vella feels it has turned a corner. IGO is also set to draw a line under its disastrous $1.3 billion takeover of Western Areas as it shifts the once-hyped Cosmos nickel mine near Leinster into care and maintenance. The miner revealed in late January that it would shutter the project, with the loss of 400 jobs, as a supply glut of cheap nickel from Indonesia keeps prices for the key battery metal stuck in the doldrums. IGO told investors in its quarterly update on Tuesday that work to mothball Cosmo had been progressing and it expects the mine to transition into formal care and maintenance by mid-June, “ensuring the assets are best preserved for a restart of operations when market conditions allow”. The total cost of wind-down operations this quarter is expected to be between $40 million and $60m, which will be partly offset by the sale of 2000 tonnes of nickel. Care and maintenance costs are expected to be between $12m and $15m a year. Elsewhere across IGO’s nickel assets, both Nova and Forrestania reported lower output and sales revenue in the three months to the end of March — but the ageing mines still eeked out positive cash flows despite the depressed nickel price, thanks to pre-existing hedging arrangements. Mr Vella painted a grim picture of the long-term forecast for WA’s nickel industry on Tuesday. “China’s got a lot of expansion opportunities ... it’s hard to see a big shift (to Australia) from their other options,” he said. Mr Vella also stated he was not seeing any interest in IGO’s nickel assets from non-China sources. But the miner is celebrating an improvement at the troubled Kwinana lithium hydroxide plant it owns through the Tianqi Lithium Energy Australia joint venture. The plant has so far failed to live up to expectations since opening five years ago, but Mr Vella said the company had recorded a steady improvement in production over the March quarter. “While there is further improvement needed, there is a deeper understanding of the bottlenecks being targeted in 2024,” he said. “I am pleased with the high quality and consistency of the battery grade hydroxide being produced. TLEA also saw lithium hydroxide sales resume during the quarter, with samples now certified and approved by two customers.” The Greenbushes lithium mine south of Perth — in which TLEA owns a partial stake through a complex partnership arrangement with Talison Lithium and US giant Albemarle — reported a well-flagged planned fall in spodumene concentre sales. Mr Vella was bullish about the demand recovery for lithium after IGO reduced its spodumene concentrate stockpile substantially by selling 200,000 extra tonnes to Tianqi during the quarter. Shares in IGO were up 7.9 per cent to finish at $7.91 on the back of the positive lithium progress. Across its business, IGO reported an underlying earnings loss of $15m for the quarter but said it held a strong cash position of $276m, plus $720m of undrawn debt. This is the first quarterly underlying earnings loss for IGO since pre-2010.