Sydney, May 26th (Argus) - Australian lithium producer Mineral Resources and its 50% Chinese joint venture partner Jiangxi Ganfeng Lithium have reached a final investment decision on a $490 million (351 million US dollars) expansion project for their Mt Marion lithium mine in Western Australia.
The company said on May 26th that the expansion will increase the annual production of 6% grade spodumene concentrate from 5 million tons to 6 million tons.
The investment includes $220 million for the development of underground mines, $240 million for the construction of a flotation plant, and $30 million for the construction of non-processing infrastructure.
The company will start construction from July to September. It is expected that the mine will come into production within 12 months after the start of construction and gradually increase production over the next six months.
Before reaching the final investment decision on May 19th, the company stated that the ore from the underground mine would supplement the output from the open-pit mine being mined simultaneously and contribute up to 40% of the processing feed. This would extend the remaining mine life (10 years) by another six years.
The company's general manager, Chris Ellison, said that the flotation plant would eliminate the SC3.5 product from Mineral Resources' product portfolio and produce at least SC5 grade products.
The company stated that the disruption to the mine's existing operations caused by the construction would be minimized.
Assuming the price of SC6 is $2700 per ton, the company expects that the investment in the mine expansion will be fully recovered in less than a year.
Due to Zimbabwe's export restrictions on lithium concentrate from February to April and strong demand from China, spodumene prices have risen steadily in recent months.
Argus' latest assessment price of Australian off-shore SC6 on May 19th was $2661 per ton, lower than $2811 per ton on May 12th.
MinRes listed the increase in lithium prices as a key reason for restarting the operation of its West Australian Bald Hill mine last week.
