Lithium Australia looks abroad to relocate pilot plant

Lithium Australia ASX LIT relocate pilot plant abroad
Lithium Australia is reassessing the pilot plant location to optimise technical and financial benefits.

Lithium Australia (ASX: LIT) will assess all viable options, including looking abroad to trial the production of lithium-iron-phosphate from recycled mine waste following the Australian government’s decision to cut back on support for developing new technologies.

The company today announced that trade-off studies had commenced to reduce the capital costs of its proposed large-scale pilot plant, with both size and location being reassessed.

According to Lithium Australia, the changing policies of the federal government have had a significant impact on the company’s future plans and have made operating in the country “less favourable when compared with many other locations”.

“Plant location has a significant impact on both capital and operating costs,” the company stated.

“This is not only so with respect to direct costs, but also the research and development assistance packages and taxation regimes in various jurisdictions.”

Lithium Australia has not yet hinted at possible new locations for the pilot plant but said it would take into account the “principal financial considerations together with intangibles such as the ability to manage research and development in offshore jurisdictions”.

The company currently has alliances and projects in Mexico, Canada and Germany, where it officially secured 100% of the Sadisdorf lithium-tin-tungsten project earlier this month.

Meanwhile, the company said its plans to rescale the plant facilities to cut down on costs were “well advanced”.

It said despite the additional engineering requirements of resizing the plant, it remained confident that “the studies required for commitment to construction of the plant will be complete in the coming quarter”.

Of paramount importance in the rescaling of the plant is the incorporation of available industrial components, which the company said would ensure operations could be scaled up to commercial capacity with components that had a positive production history with the specified application.

Lithium Australia managing director Adrian Griffin said it was unfortunate that changes in government policy have had such an impact on the company’s research and development plans.

“Changing our pilot strategy and reducing capital exposure is in the interests of all shareholders,” he said.

In its update to the market today, the company also advised that the $18.27 million convertible note facility it had secured with Arena Investors in March has now been terminated.

“The planned reduction of capital exposure has placed Lithium Australia in a position within which the [facility]… is presently not the optimal funding mechanism for Lithium Australia’s immediate requirements,” it stated.

Griffin said the company aimed to relocate its research and development activities “in a jurisdiction that would provide the greatest practical benefits” and looked forward to engaging Arena as a key investor in any future relationship.

Danica has extensive experience writing and editing business news in the Oceanic and Southeast Asian regions. She has written across a range of industries including oil and gas, mining, energy, science and research, retail and travel. Danica has covered small and large cap companies listed on the Australian, Singapore, Hong Kong, Indian, London and Toronto exchanges.