WA lithium stocks tumble on prospect of supply glut as MinRes, Liontown and IGO announce plans to boost output

Local lithium stocks suffered self-inflicted wounds as Mineral Resources flagged a mining restart, Liontown dusted off major expansion plans and IGO signalled more growth at Greenbushes. The trio’s announcements on Thursday follow two years of successive supply cuts by WA producers amid a lithium market downturn. Market dynamics have drastically changed in recent months, with spodumene concentrate rising from below $US600 a tonne in June to more than $US2200/t as of this week. But experts agree that the market remains volatile and some investors appear to be concerned that production increases could tip the scales back towards an oversupply. MinRes’ stock finished the day down 3.8 per cent, Liontown 4.2 per cent and IGO 5.8 per cent. PLS also copped a battering, losing 4.6 per cent. Output from MinRes’ two active lithium mines is rising and a revival of its mothballed Bald Hill operation near Kambalda could soon be on the way, the Chris Ellison-led company confirmed in its December quarterly update. MinRes upgraded production forecasts for the current financial year, with Wodgina now projected to crank out between 260,000 and 280,000 dry metric tonnes of spodumene concentrate, compared to the previous band of 220,000 and 240,000dmt. Mt Marion is set to do between 190,000 and 210,000dmt, versus its previous target of 160,000 and 180,000dmt. MinRes would not dive head first into a Bald Hill restart, according to chief financial officer Mark Wilson, given lithium is “such a volatile commodity”. “What we’re doing is we’re undertaking a study on that at the moment, we’re just flagging that we’re doing that,” he said. “It’s really important that we get ourselves comfortable around the state of the lithium market going forward.” MinRes has touted Bald Hill’s ability to go from being in care and maintenance to operational in as little as four weeks, while most mothballed lithium mines can take months to be switched back on. Liontown on Thursday also joined the race to ramp up output amid resurgent prices. It dusted off plans to expand Kathleen Valley’s production by more than 40 per cent, launching a study to boost mining capacity from 2.8 million tonnes per year to about 4mpta. The study is set to be completed by the end of June and a final investment decision would follow. “This is a brownfield expansion of an operating asset, there’s a certain amount of already invested infrastructure, and all our approvals are largely in place,” Lontown chief Tony Ottaviano said during the company’s quarterly call. “This dramatically reduces our execution risk and time to market compared to a greenfield project somewhere else.” Kathleen Valley was originally supposed to be a 4mpta operation, but Liontown scaled back production plans in November 2024 to save $100 million as part of a cost-cutting crusade to survive the market downturn. Analysts on IGO’s quarterly call on Thursday were also pressing for more detail about plans to lift production from Greenbushes. Compared with its struggling peers, the South West mine has remained resilient through the lithium winter due to its sheer scale and high grade. The miner pushed through first ore through its Chemical Grade Plant 3 in December, and plans for a fourth are “in the mix”, according to chief executive Ivan Vella. He confirmed CGP3 would hit full pelt by the end of the calendar year, and that guidance would continue to be assessed as the plant — capable of producing up to 500,000t per annum of lithium mineral concentrate — picked up the pace. IGO flagged that there could be potential for “price moderation” as curtailed supply re-entered the market.