Wesfarmers CEO confident of Australian lithium refinery ramp-up amid challenges

Wesfarmers Ltd. is confident in the successful ramp-up of its Kwinana lithium hydroxide refinery in Western Australia despite some setbacks during fiscal 2026, CEO Rob Scott told an Aug. 27 results call.

Australian company Wesfarmers and Chile's Sociedad Química y Minera de Chile SA own 50% each of Covalent Lithium, which runs the Mt Holland mine and concentrator plus the Kwinana refinery, all in Western Australia.

Kwinana achieved first product and sales of lithium hydroxide in July 2025, but its ramp-up was "affected by intermittent odor issues throughout the year and installation of mitigation measures commenced in late financial year 2026," Wesfarmers' full-year results said.

Recovery rates for the conversion of spodumene concentrate to lithium hydroxide during the ramp-up of the Kwinana plant will improve, but are "anticipated to remain below the targeted design rate during financial year 2027," the results said.

Despite this, "we're actually quite pleased with how the refinery is performing at the moment in terms of producing high-quality product," Rob Scott, CEO of Wesfarmers, told an Aug. 27 media call covering the results.

"All aspects of the production process, from the front end to the back end, are working effectively," Scott said.

With more remediation work to do in the next six months on the odor, "we're very confident we will address that issue, and that is why we're signaling that in the second half of this financial year, we should be in a position to ramp up at a much faster rate," Scott said.

"We are adopting a fairly conservative approach here. We want to make sure we get it right before we fully ramp up, but the actual process itself is working very well," Scott said regarding the odor mitigation work.

Western Australia's other lithium refineries built in recent years have faced technical and cost challenges amid volatile lithium markets.

In November 2025, Ivan Vella, CEO and managing director of Australia's IGO Ltd., questioned the viability of Australia's lithium refining industry, given the long-running technical and cost challenges of the Kwinana lithium hydroxide facility it owns with China's Tianqi Lithium Corp.

America's Albemarle Corp. also idled the remaining operating train at the Kemerton plant in February, having paused plans there in 2024 amid a then-soft lithium market.

Western Australia's refineries do not compete with China on wages, while energy costs are also higher than China's subsidized industrial grid, James Chappelow, senior principal analyst, mine economics and emissions at S&P Global Energy, told an Aug. 6 briefing in Perth, Australia.

Australian refineries also have the cost of importing reagents and of disposing waste products like sodium sulfate waste, which Chinese refiners can turn into revenue as industrial inputs, Chappelow said.

Spodumene benefits

If Wesfarmers' refinery ramp-up is slower than expected during the second half of fiscal 2027, the company will "have the benefit that we can offset that by selling more spodumene at profit," Aaron Hood, managing director of Wesfarmers' Chemicals, Energy and Fertilisers business (WesCEF), told an Aug. 27 analyst call.

Product qualification with offtake partners is set to be finalized in the second half of fiscal 2027, following which most of the lithium hydroxide sales will be under long-term offtake arrangements with "Tier 1" customers, according to the results.

WesCEF's share of spodumene concentrate production at Mt Holland rose 44.1% to 209,000 metric tons in fiscal 2026. Its share of spodumene concentrate sales was 151,000 mt for fiscal 2026, up from 140,000 mt a year prior, according to the results. The remainder was either held as inventory or used as feedstock for Kwinana.

Lithium earnings flipped to being A$40 million in the black after a prior-year loss of A$59 million, thanks to higher spodumene market pricing and improved performance at the Mt Holland mine and concentrator, according to the 2026 results.

Platts, part of S&P Global Energy, assessed the 6% spodumene price at US$2,185/mt Aug. 26, up from US$875/mt a year prior. The lithium hydroxide price was US$20,000/mt CIF North Asia Aug. 26, up from US$9,700/mt a year before.

While Mt Holland is running above capacity, "it's difficult to be overly precise around the exact amount of spodumene that we'll be putting into our refinery," as more tons of spodumene are needed during the early stages of the ramp-up to create 1 mt of hydroxide, Scott said.

Wesfarmers hopes to continue maintaining Mt Holland above nameplate production level, and expects to sell about half of that spodumene on the market and the other half to be used by the refinery — "but that might go up and down depending on the ramp-up of the refinery," Scott said.

Wesfarmers and SQM announced in July final investment decision to expand the Mt Holland mine and concentrator and develop a new integrated ore sorting facility. The expansion will double spodumene concentrate output to 760,000 mt/y on a 100% basis, with first expansion volumes due in the first half of 2030.

Mt Holland's spodumene concentrate production is expected to be in line with its 380,000-mt nameplate capacity in fiscal 2027, with around half of this to be sold to market, according to Wesfarmers' results.