‘No pathway’: IGO sees no hope for Kwinana refinery and in talks on future after copping brutal $955m loss

Losses from a trouble-plagued refinery that IGO says has “no pathway” to making money in the long-term and woeful lithium prices have left the miner massively in the red and investors without a dividend.

The Ivan Vella-led business plunged from a narrow $3 million profit in 2024 to a “disappointing” $955m net loss for the financial year.

A previously signalled blight on its balance sheet of $642m — caused by a writedown of the entire value of a misfiring Kwinana lithium hydroxide refinery — was the main driver behind the loss. Writedowns on exploration assets of $115m and rehabilitation provisions in the order of $58m were also contributors.

IGO and its joint venture partner Tianqi are at odds over what to do next with the ailing asset, with Mr Vella telling analysts during a results call on Thursday that the company wanted to see an eventual return from the plant before investing more money into it.

“The issues that we see as IGO in the cost structure, and I guess ultimately our view that there isn’t a pathway to acceptable long-term investment returns.” he said.

“We are ultimately accountable to you as our shareholders . . . If there was value to be had there we’d be pursuing it. We’re not silly. It’s not something we’re going to make a rash call on.”

But the CEO would not detail what attempts IGO had made to negotiate a new joint venture following claims from Tianqi’s chief executive Frank Ha that it was yet to receive a proposal to sever ties with the loss-making chemical plant.

Tianqi is the controlling shareholder in the Tianqi Lithium Energy Australia that owns the refinery.

“I don’t want to get into a broader conversation about those discussions. They are active and ongoing,” Mr Vella said. “There is an open conversation.

“Clearly, they have a different view on the viability and the future of the asset, and that’s OK.”

Lithium hydroxide production from Kwinana fell short of full-year targets of between 7000t and 8000t, producing 6782t. Despite that, it’s been budgeted to produce between 9000t and 11000t of refined lithium product in 2026.

The Tianqi-operated TLEA owns the Kwinana refinery outright and also holds a 51 per cent interest in the lucrative Greenbushes lithium mine in WA’s South West.

But total revenue from that asset — of which IGO gets a 24.99 per cent slice — fell from $4.63 billion to $1.78b for the year as the price paid for a tonne of spodumene dropped from $US2192/t to $US783/t.

As a result of the loss and IGO’s underlying free cash flow shrinking substantially from $713m to $49m, the miner elected not to pay a dividend for the year. Shareholders had received a 37¢ per share payout in 2024.

IGO’s shares were trading 4.86 per cent lower on Thursday morning at $5.09.