Pilbara to put Ngungaju into care and maintenance amid spodumene price woes

In response to the continued low lithium price environment, Pilbara Minerals will place its Ngungaju spodumene concentrate plant into care and maintenance from December 2024.

The Australian lithium major will refocus its efforts on the lower cost Pilgan plant which is also a part of its Pilgangoora operations in Western Australia.

This is the latest Australian miner to pull back on operations in response to low prices. Spodumene prices are currently at $740 per tonne, a 71.54% drop compared to 12 months ago, according to Benchmark’s Lithium Price Assessment.

“With these lower prices, and oversupply, the market has been waiting for some supply response,” said Claudia Cook, a lithium analyst at Benchmark. “It’s expected that this won’t be the last of the supply response, as the oversupply and low price environment looks set to continue into the new year.”

Pilbara is still continuing with their other expansion plans which are due to add around 40,000 tonnes LCE per year of capacity to Pilgangoora when complete.

What does this mean for the lithium market?

Why are Australian miners particularly hard hit by low prices?

Hard rock assets are typically at the higher end of the cost curve, especially compared to many brine projects. As such, the supply response to the low lithium price environment has mainly come from hardrock assets.

Australia is also home to most of the operating non-integrated miners–that is spodumene miners who do not also produce lithium chemicals. As non-integrated producers can sell their feedstock to the open market they can be much more exposed to market conditions.

Pilbara’s announcement is the latest in a string of Australian projects that have been pushed back or placed into care and maintenance.

How is the low spodumene price impacting miners?

“This trend has not been confined to just Australia, it’s global,” Cook said. “The lower price environment is resulting in project’s coming offline, reducing output and timelines being pushed out, as projects struggle with financing and a lower than expected demand.”

The continued decline in lithium prices has put pressure on projects at the higher end of the cost curve. Cook notes that several such projects are operating at or below cost.

“This mothballing exercise likely shows that Pilbara, in line with Benchmark’s view, does not believe the price will pick up significantly in the near term,” Cook said.