Ground Breakers: MinRes sees itself as a future 'Top 4 producer' of lithium hydroxide

MinRes sells lithium hydroxide toll-treated from its spodumene at a price of almost US$80,000/t
It wants to become a top 4 producer of lithium hydroxide, executive says
Mining up with IGO, MIN, NST and ILU all gainers

Mineral Resources (ASX:MIN) has revealed the remarkable price it received for toll treated lithium hydroxide produced from its Mount Marion spodumene in the September quarter, raking in almost US$80,000 on each tonne produced at Chinese converters.

The sales number, which saw MinRes’ 51% share of the offtake from the Mt Marion mine near Kalgoorlie converted into 3772t in a toll agreement with JV partner Ganfeng, drew an average realised lithium hydroxide price of US$79,288/t inclusive of Chinese tax.

That confirms extraordinary spot prices being reported by price agencies in Asia, with Fastmarkets reporting lithium hydroxide monohydrate prices CIF Japan, China and Korea of US$82,000/t overnight, above the month to date average of US$80.38/kg.

Mt Marion shipped 111,000t of spodumene in the September quarter, down 22% quarter on quarter amid mining of low grade transitional ore and plant shutdowns associated with an expansion to 900,000tpa.

But it has hit a big ramp up point at the Wodgina JV with Albemarle, where the company said 546,000t of ore was mined in the September quarter, up 795% QoQ, with 64,000t of spodumene produced and 66,000t shipped on a 100% basis, up 199% QoQ.

931t of lithium hydroxide was produced from MinRes’ stake.

The iron ore and lithium miner’s boss bullishly discussed his dreams to host hydroxide and even battery processing in WA, including at the site of the Wodgina mine.

While it is currently generating strong prices through toll treating, EGM of Corporate Development James Bruce told analysts today MinRes wants to be a “top 4” producer of lithium hydroxide in its own right, rather than toll treating or simply selling spodumene to Asian markets.

“We’ve got a strong intent to convert over the long term, all of our share of spodumene into hydroxide from all of our operations,” Bruce said.

“We’ve got assets that have lives that are 20 and 30 years. So we need a long term solution.

“Tolling is a great short term outcome for us, but they are short term agreements. And over the long term, the return on invested capital is definitely by making the investments in the hydroxide capacity.

“We would want to have control of those volumes into a market which is very strong, and we expect to be strong for a long time. So we see ourselves being one of the world’s top four producers in hydroxide and as a top producer, we want to have control of the outcomes for the business.”

Bowling some off-spinners?

MinRes, also a serious iron ore and mining services player with an emerging gas arm, is reputed to be considering a spin-off of its lithium assets on the NASDAQ in the States to capture the higher multiples on offer for pure play battery metals stocks from the Yanks.

Bruce was careful to sidestep questions about whether any announcements would be made on November 17 at the company’s AGM in Perth, with MinRes boss Chris Ellison notably absent from today’s sell-side call.

In its iron ore business, MinRes produced 4.5 million wet metric tonnes during the September quarter, down 3% but in line with the mine plan and its FY23 guidance of 17.2-18.8Mt.

Its realisations of 70% to the Platts 62% Fe index were a surprise to the downside given discounts for lower grade ore have been contracting in recent weeks.

MinRes achieved an average price of US$72.77/dmt, down 15% QoQ, and levels which have some industry watchers concerned for MIN’s lower margin operations like the Yilgarn iron ore province.

Bruce said there were some benefits for the small Yilgarn and Utah Valley iron ore projects though, with freight and oil prices coming down and the Aussie dollar’s weakness against the US dollar an advantage.

It is also bringing premium lump products online in the Yilgarn operations.

But the real inflection point for MinRes’ iron ore business will be the development of the 35Mtpa Onslow hub in the Pilbara over the next year, intended to deliver ore at similar cost levels to the majors.

Mineral Resources (ASX:MIN) share price today:

And a quick look at the markets

Materials up 0.73% with lithium’s IGO (ASX:IGO) and MinRes leading the way, both up more than 3%.

Northern Star (ASX:NST), BlueScope Steel (ASX:BSL) and South32 (ASX:S32) are there or thereabouts as well.

Mineral sands and rare earths hopeful Iluka Resources (ASX:ILU) meanwhile was up 2.72%.

It announced a $20 million investment in Northern Minerals (ASX:NTU) and its Browns Range rare earths project, intended to provide a third party source of rare earths supply for the $1.2 billion Eneabba Refinery in WA.