The government’s relief scheme will be provided to Altura Mining, Galaxy Resources and Pilbara Minerals for up to 12 months or until the average realized price of spodumene concentrate is greater than or equal to $550 per tonne on a fob Australia basis.

Following the termination of the assistance scheme, the rebate will be repayable in full over a two-year period.

Currently, spodumene producers active in Western Australia are required to pay a 5% state royalty based on the realized revenue from spodumene concentrate sales.

Miners granted the assistance program will receive a 50% royalty rebate on spodumene concentrate sold over the period. The rebate is only available where the companies have an operating spodumene concentrate project and the employee count does not drop significantly from the current number.

Low spodumene prices
Spodumene mined from hard rock in Western Australia is a feedstock material used in the production of lithium chemicals that go into batteries for electric vehicles (EVs).

Spodumene is mined and crushed to form a concentrate. This mineral concentrate is then sold to chemical companies that use the feedstock to produce lithium chemicals. As a result, spodumene pricing patterns are traditionally linked to the performance of lithium chemicals prices.

Oversupply of lithium salts and subsequent price falls caused the upstream price for spodumene, 6% Li2O min, cif China to tumble over the past two-and-a-half years to reach a record low of $360-390 per tonne on October 28 this year, from a record high of $900-970 per tonne in April-June 2018, according to Fastmarkets historical pricing data.

The monthly spodumene assessment rebounded slightly to $370-390 per tonne on November 25 following rising lithium carbonate prices and bullish sentiment for next year alongside increased customers inquires.

"Over the past two years the fall in the price of spodumene concentrate has put these companies' operations at risk and their finances under pressure, this is why the McGowan Government is offering assistance.” Bill Johnston, Western Australia minister for mines and petroleum, energy, industrial relations, said.

Pilbara Minerals to buy Altura Mining’s project
The relief news came on the same day Pilbara Minerals announced it has entered into a share sale agreement with the appointed administrators of Altura Mining.

Pursuant to the share sales agreement signed on December 1 with Altura’s administrators, Pilbara Minerals has also proposed a Deed of Company Arrangement (DOCA) to the troubled miner.

Under the DOCA proposal, Pilbara Minerals will contribute A$6 million ($4.42 million) to a DOCA fund aimed at supporting entitlements owing to those Altura’s employees who have been made redundant after the Altura project was placed into care and maintenance to mitigate operational cash losses during the administration period.

The acquisition of the Altura project by Pilbara Minerals remains subject to a number of conditions, including Altura creditors' approval of the DOCA proposal and completion after Pilbara Minerals proposed A$240 million capital raising to fund the acquisition. 

Altura Mining entered receivership in October following unsuccessful attempts to refinance more than $250 million of debt owed to secured creditors, a press release published by KordaMentha, the receiver and administrator appointed, said.