IGO Shares Drop as Kwinana Lithium Refinery Faces Major Impairment

Shares of IGO Ltd (ASX:IGO) plunged 12% to A$4.40 on Wednesday after the Australian miner warned of a significant impairment charge of A$70 million to A$90 million related to its troubled Kwinana lithium hydroxide refinery. The company cited ongoing operational challenges and limited confidence in achieving sustainable improvements at the facility.

The Kwinana refinery, operated through a joint venture, delivered only 35% of its nameplate capacity during the June quarter, pushing annual production below guidance. As a result, IGO confirmed that Train 1 at the refinery will be fully impaired, raising concerns among investors about the project’s long-term viability.

Despite the lithium segment struggles, IGO reported stronger overall financial performance, with underlying quarterly EBITDA rising to A$62.3 million, up from A$34 million in the previous quarter. The improvement was driven by increased nickel and spodumene sales, which partially offset weakness in lithium operations.

CEO Ivan Vella stated that the company is collaborating with its joint venture partner to assess future options for the Kwinana project, emphasizing the need to determine the most viable path forward amid ongoing challenges in the lithium market.

The announcement underscores broader pressures in the lithium sector as falling prices and high production costs impact profitability. Market participants will closely monitor IGO’s strategy for optimizing its lithium assets while maintaining focus on core nickel and spodumene operations, which have shown resilience despite the refinery’s setbacks.

The sharp drop in IGO’s share price highlights investor concern over the refinery’s future and its potential effect on the company’s growth plans amid volatile conditions in the global battery materials market.