ASX lithium shares including Mineral Resources Ltd (ASX: MIN) have been thrown a $150 million funding lifeline, courtesy of the Western Australian government.
This comes after a raft of Aussie lithium miners have been forced to suspend operations at core mines as the price they receive for their product has often fallen below the cost to produce it.
Amid rapid growth in global lithium supply and slowing growth in demand from the EV battery markets, lithium prices have cratered over the past two years, heaping pressure on ASX lithium shares.
In November 2022, spodumene (a lithium bearing mineral) was trading north of US$8,000 per tonne. Today, that same tonne is worth about US$815.
Ouch!
The crashing price has seen Mineral Resources suspend mining at Bald Hill, while rival Liontown Resources Ltd (ASX: LTR) has cut back production at Kathleen Valley.
Pilbara Minerals Ltd (ASX: PLS) has also reduced production at Pilgangoora.
Core Lithium Ltd (ASX: CXO) was among the first miners to announce a suspension of mining operations at its Finniss mine. Though with Finniss and most of Core Lithium's key projects located in the Northern Territory, it's unlikely the company will benefit from the WA government's support package.
IGO Ltd (ASX: IGO) has yet to follow suit in suspending operations. But lower lithium prices saw the miner's quarterly revenue (Q1 FY 2025) plunge 39% to $143 million.
Investor reaction to the funding news has been minimal this morning, with some ASX lithium shares edging higher while others are dipping into the red.
Image source: Getty Images
ASX lithium shares getting support to weather the storm
Fearing the loss of thousands of mining related jobs in his state, WA Premier Roger Cook announced the $150 million funding package, which could be accessed by all ASX lithium shares in the state.
In announcing the support funding, Cook said (quoted by The Australian Financial Review):
Lithium forms an incredibly important part of not only decarbonising our own economy but supporting the entire global decarbonisation effort. We're very aware of the challenges the lithium industry is facing at the moment, and it's in every Western Australian's interest the industry gets the assistance it needs.
WA resources minister David Michael added, "It's important they are given every chance to remain globally competitive during this challenging period. We're hoping this package will get them through the next couple of years."
Part of the package is comprised of a $50 million interest-free government loan facility.
Government fees will also be suspended for water and energy providers servicing ASX lithium shares to ease the costs of downstream processing. The miners will also be temporarily exempted from port charges and tenement fees.
The package isn't a free gift, however.
Lithium miners opting to tap into the interest free loans will need to repay them over two years, commencing in June 2026 or when the spodumene price tops US$1,1000 per tonne for two quarters in a row.
Every little bit helps
Liontown shares haven't escaped the painful sell off.
The ASX lithium share is down 54% in 2024, trading at 77 cents a share.
Liontown managing director Tony Ottaviano was therefore pleased with WA's funding announcement.
According to Ottaviano (quoted by the AFR):
Every little bit helps. We're not going to apologise for making sure that we're in the most robust position through this cycle. Whatever levers we need to pull, within reason, we will pull.
As it relates to Liontown, we're very pleased that it acknowledges companies in start-up, in ramp up, where we haven't been able to yet amortise our fixed costs, and we're in a unique position as we ramp up, and the government's acknowledged it.
