Australia's Wesfarmers Ltd and Chilean miner SQM have approved a final investment decision for their Mt Holland lithium project in Western Australia as prices rebound for the metal used in electric vehicle batteries.
The companies last January deferred the investment decision by a year to the first quarter of 2021, as they focused on cost-cutting amid weakening lithium prices.
"We remain confident regarding the outlook for the lithium market and believe that Mt Holland is a high-quality project that will play an important role supporting increased demand for electric vehicle batteries," SQM Chief Executive Officer Ricardo Ramos said on Wednesday.
Lithium prices have bounced back from their lows and are expected to surge further, riding on booming demand for electric vehicles as production in China recovers and Europe speeds up development of its domestic market.
Wesfarmers has committed initial funding for Mt Holland, with full funding likely after receiving environmental approvals for the Kwinana refinery, expected in early 2022.
The first production of lithium hydroxide is expected in the second half of 2024 and Wesfarmers' share of capital expenditure for the development of the project will be about A$950 million ($736.54 million).
The project is operated by Covalent Lithium, a joint venture between Wesfarmers and SQM, the world's second largest lithium producer.
Following an updated definitive feasibility study, the project's capacity is expected to rise to about 50,000 tonnes of battery grade lithium hydroxide per annum from 45,000 tonnes.
(Reporting by Shruti Sonal in Bengaluru; Editing by Sriraj Kalluvila)
