Liontown Resources Scales Back Lithium Expansion Amid Market Downturn

Liontown Resources

Australian lithium producer Liontown Resources has revised its production targets for the Kathleen Valley project, a move aimed at reducing costs amid a challenging lithium market downturn. The project, initially set to reach a processing capacity of 3 million tonnes per year (t/yr) by Q1 2025, is now expected to hit a reduced capacity of 2.8 million t/yr by the end of the company's fiscal year 2027.

Strategic Shift in Expansion Plans

Liontown’s decision to scale back expansion focuses on targeting higher-margin ore to optimize profitability. The company anticipates capital expenditure reductions of A$100 million ($64 million) through cost optimization and strategic investment cuts.

• Revised capacity: 2.8 million t/yr by 2027.
• Production forecast (2028-30): 530,000 t/yr of 6% grade spodumene concentrate.
• Capital investment (January-June 2025): Estimated at A$97 million-A$113 million.

Production Guidance and Market Context

Liontown has issued production guidance for January-June 2025, forecasting 170,000-185,000 dry metric tonnes (dmt) of spodumene at unit operating costs of A$775-855/dmt on a free-on-board (fob) basis. The company produced its first spodumene concentrate earlier this year, coinciding with a global lithium market slump driven by oversupply concerns.

Industry-Wide Belt-Tightening

Liontown is not alone in navigating the lithium market downturn. Competitors such as Pilbara Minerals and Mineral Resources have also announced spodumene output reductions in response to falling prices and an oversupplied market. Despite these challenges, Liontown’s revised strategy aims to position the Kathleen Valley project for sustainable long-term growth while managing near-term financial pressures.