CEFC confirms landmark commitment to Kathleen Valley lithium project
Please note: Liontown and LG Energy Solution announced a strategic partnership in July 2024, aimed at fortifying their long-term collaboration in the global lithium sector. As a result, the CEFC commitment was not required. Read the Liontown ASX statement.
13 March 2024
The CEFC is helping boost Australia’s critical mineral supply chain with a landmark commitment of up to $110 million to provide liquidity to Liontown Resources through the completion and ramp-up of its Kathleen Valley lithium project. The CEFC investment – its largest in the resources sector – will back the development of low carbon lithium spodumene production, a critical input to the clean energy supply chain.
The CEFC commitment is a part of a $550 million1 liquidity financing package from a syndicate of leading Australian and international financial institutions including the Commonwealth’s Export Finance Australia, Commonwealth Bank, National Australia Bank Limited and Société Générale. Australia’s export credit agency, Export Finance Australia, is also part of the syndicate and is providing a $120 million loan facility to the project.
Read the Liontown Resources ASX statement.
Located north of Kalgoorlie in the Eastern Goldfields of Western Australia, the greenfield Kathleen Valley Lithium Project is forecast to produce about 500 kt of six per cent spodumene concentrate annually, placing it among the largest lithium mines for output in Australia.
This investment strengthens Australia’s battery supply chain, which has a crucial role to play in our acceleration towards a net zero economy.Rob WilsonCEFC Executive Director for WA and Resources
Design of the underground mine features a low carbon approach, including 46 MW of renewable energy generation and a 17 MW battery, allowing it to be powered by at least 60 per cent renewable energy from start-up.
The project has secured substantial offtake agreements with three global foundation customers: Tesla, the Ford Motor Company and LG Energy Solution.
CEFC Executive Director for WA and Resources, Rob Wilson said: “Australia has an abundance of critical minerals and is already the world’s largest producer of spodumene.2 This important project has the potential to further shift the dynamics of lithium production in Australia while promoting leading sustainability practices in the mining sector.
“Liontown has committed to building a mining operation for the future, with 60 per cent renewable power and a biofuel-ready mine and transport fleet3. Its substantial investments in renewable energy and low carbon mining and processing demonstrate the potential to reduce the carbon intensity of our resource sector, with Australia capturing a greater proportion of the lithium value chain.
“This investment strengthens Australia’s battery supply chain, which has a crucial role to play in our acceleration towards a net zero economy. Lithium is one of several key minerals that will underpin the global energy transition, and is becoming a major export earner for Australia.”
As a growing company who has put ESG at the forefront of our decision-making, the support of CEFC is a further validation of our credentials.Tony OttavianoLiontown Resources Managing Director and Chief Executive Officer
Liontown Resources Managing Director and Chief Executive Officer Mr Tony Ottaviano said: “We greatly appreciate the support provided by the Australian Government’s Clean Energy Finance Corporation. Our world class Kathleen Valley Lithium Project is on the cusp of production and support from the Government’s green bank will secure the final steps of construction and ramp up, powering Kathleen Valley towards production.
“Kathleen Valley will produce a battery material product essential for the global transition to a net zero future with a low carbon footprint. As a growing company who has put ESG at the forefront of our decision-making, the support of CEFC is a further validation of our credentials.”
Australia accounts for approximately half the world’s lithium supply,4 with hard rock mining of spodumene – the dominant method of extraction in Australia – providing the primary raw material for batteries.
It is projected that the automotive sector will account for 87 per cent of all global lithium ion-battery demand in 20335. Aside from electric vehicle use, other sources of battery demand for lithium are also expected to experience strong growth as electrification and energy storage systems are adopted to accelerate the clean energy transition continues6. Lithium supply is forecast to show a compound annual average growth rate of 12 per cent between 2023 and 20337.
The CEFC was an early investor in lithium, committing $20m initially and then $55 million to development of the Pilbara Minerals Pilgangoora Project in Western Australia. The CEFC capital has since been repaid, to be available for ongoing investment by the CEFC.
For additional information on the role of the resources sector in the clean energy transition, refer to our report on Mining in a low emissions economy, co-developed with the Minerals Research Institute of Western Australia.
1 Excludes allowances for capitalised interest and fees
2 McKinsey & Company, Australia’s potential in the lithium market, June 9 2023.
4 Australian Government, Department of Industry, Science and Resources, Office of the Chief Economist, Resources and Energy Quarterly, December 2023. p135.
5 Wood Mackenzie, Global lithium investment horizon outlook, Q4, 2023. p31.
6 Ibid.
7 Wood Mackenzie, Global lithium investment horizon outlook, Q4, 2023. p5.
