S&P/ASX 200 Index (ASX: XJO) lithium stock IGO Ltd (ASX: IGO) is charging higher today.
IGO shares closed yesterday trading for $5.21 In morning trade on Friday, shares are swapping hands for $5.36 apiece, up 2.8%.
For some context, the ASX 200 is up 0.3% at this same time.
Here's what's happening.
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ASX 200 lithium stock mothballs refinery project
This morning, IGO released its latest update on its joint venture Kwinana Lithium Hydroxide Refinery, located in the Northern Territory. The ASX 200 lithium stock holds the refinery via its 49% interest in Tianqi Lithium Energy Australia (TLEA).
Amid ongoing weak lithium prices and various technical issues encountered during the ramp-up in 2024, the JV partners reported they have agreed to cease all works and activities on Lithium Hydroxide Plant 2 (LHP2) at Kwinana.
The market has been aware of technical issues at the refinery for some time now, and investors look to be taking the news in stride today.
On 23 December, the ASX 200 lithium stock reported that due to weak market conditions for lithium hydroxide chemicals, TLEA had experienced a build in lithium hydroxide inventory at Kwinana over recent months. Management noted they expected these market dynamics to persist in the short to medium term.
IGO said at the time:
A major shutdown at Kwinana was performed during October 2024 to conduct scheduled maintenance as well as implementing several key rectification and debottlenecking projects designed to deliver improvements to production performance from Lithium Hydroxide Plant 1 (LHP1).
The works completed during the shutdown have resulted in improved performance from LHP1, however it is expected that full realisation of the improvements will be likely to occur in March 2025.
The company added, "On the basis of current market conditions, the continued ramp-up of LHP1, and lower product sales, IGO does not expect TLEA to be in a position to pay a dividend to shareholders during FY25."
On Monday, 20 January, IGO warned investors about a pending "substantial pre-tax impairment" relating to Kwinana in the first half of the 2025 financial year (H1 FY 2025).
"IGO has been assessing the carrying value of Kwinana," the ASX 200 lithium stock reported.
The miner stated:
While the impairment testing process remains incomplete and the company is working to determine the quantum of the impairment, IGO expects to recognise an additional share of net loss from TLEA in respect of a substantial pre-tax impairment in its financial results for the half year ended 31 December 2024.
IGO is scheduled to release its H1 FY 2025 results on 20 February.
