By Charles Pitts
Wesfarmers and its joint venture partner, Chile’s SQM, have signaled a major vote of confidence in the long-term fundamentals of the electric vehicle (EV) supply chain by approving a A$1.4 billion (US$900 million) expansion of the Mount Holland lithium project. The decision, announced by the Covalent Lithium joint venture, aims to double the mine’s spodumene concentrate output by 2030, positioning the Western Australian operation as one of the world’s most significant lithium hubs.
The expansion comes at a critical juncture for the industry. While spot prices for lithium have faced downward pressure over the last 18 months, the move by Wesfarmers and SQM reflects a strategic focus on the next decade of demand rather than near-term market volatility. The approval will see the construction of a second concentrator and a new integrated ore-sorting facility at the site, effectively doubling production capacity from 380,000 tonnes per annum (tpa) to 760,000 tpa of spodumene concentrate.
Doubling Down on the Low-Cost Curve
The Mount Holland project, located in the Yilgarn region of Western Australia, is already one of the largest hard-rock lithium deposits in the world. By doubling its output, Covalent Lithium is looking to cement its position at the lower end of the global cost curve.
Wesfarmers’ Managing Director Rob Scott noted that while the project came online during a period of price “languish,” the long-term outlook remains “really positive.” The group’s share of the expansion capital expenditure is estimated between A$645 million and A$715 million, which will be funded through existing cash reserves and debt facilities. SQM will contribute an equivalent amount, estimated at roughly US$450–$500 million.
The technical scope of the expansion is substantial. Construction is scheduled to begin in the second half of 2027, with the first volumes of the expanded capacity expected to hit the market in the first half of 2030. This timeline aligns with industry expectations of a structural supply-demand gap emerging as the current wave of surplus is absorbed by the global transition to renewable energy and EV adoption.
Lithium News: Navigating the 2026 Price Forecast
For investors and operators, the timing of this expansion is tied closely to the broader lithium news cycle. While the market currently faces headwinds, analysts are closely watching the 2026–2027 window as a potential turning point.
The following table outlines current industry price forecasts for 2026, which serve as a benchmark for the project’s medium-term economics before the expansion capacity comes online in 2030.
Lithium Price Forecast 2026: Base Case Outlook
| Product Category | 2026 Forecast (US$/t) | Source/Analyst View |
|---|---|---|
| Spodumene Concentrate (6%) | $969 | Goldman Sachs (Older deck) |
| Lithium Hydroxide (China) | $14,275 | Goldman Sachs (Industry standard) |
| Lithium Carbonate (Average) | $8,900 – $10,250 | Revised Goldman Sachs / Market Consensus |
| Spodumene 6% (Long-run) | $1,185 | Anchor price for large-scale producers |
Note: Data represents industry consensus and analyst projections as of July 2026. Realized prices may vary based on contract terms and regional premiums.
While some revisions have seen the 2026 lithium price forecast moderate compared to the highs of 2022, the Mount Holland project benefits from its integrated nature. Part of the spodumene output is designated for the Kwinana lithium hydroxide refinery, which has a nameplate capacity of 50,000 tpa: enough to supply roughly one million EV batteries annually.
Strategic Integration and the Kwinana Connection
One of the unique advantages of the Covalent Lithium joint venture is the synergy between the Mount Holland mine and the Kwinana refinery. While the mine expansion will double spodumene production to 760,000 tpa, the refinery capacity is currently slated to remain at 50,000 tpa of battery-grade lithium hydroxide.
This means that by 2030, a significant portion of the additional spodumene concentrate will be sold directly to third-party refiners, predominantly in Asia. This dual-track strategy provides Covalent with maximum flexibility: they can capture the high margins of downstream processing while also benefiting from the high-volume export of raw concentrate.
The decision to expand at the mine level first: rather than the refinery: mirrors trends seen in other sectors, such as the copper supply deficit, where securing the primary resource is the priority. By locking in a massive spodumene supply base, Wesfarmers and SQM preserve the option to expand the Kwinana refinery in later phases should market conditions warrant further downstream investment.
Western Australia: A Stable Jurisdiction for Critical Minerals
The choice to double down on Western Australia is not accidental. In an era of heightened geopolitical risk and resource nationalism, the stability of the Australian regulatory environment remains a top-tier asset.
“Australia remains the most attractive jurisdiction for lithium investment due to its established infrastructure, skilled workforce, and clear legal framework,” said an SQM executive during the project update. This stability is increasingly valuable as other major producers face policy shifts, such as those seen in the nickel market outlook in Indonesia or regulatory changes in the Lithium Triangle of South America.
Operational excellence at Mount Holland is also being driven by technology. The site utilizes autonomous haulage systems and advanced telemetry to optimize fleet management. This technological edge is essential for maintaining a low-cost profile in a competitive global market.
Spodumene: The Engine of the Energy Transition
Spodumene remains the preferred feedstock for the production of high-purity lithium hydroxide, which is essential for high-nickel cathode chemistries used in long-range EVs. Unlike brine-based lithium, which typically produces carbonate first, hard-rock spodumene can be converted directly to hydroxide, offering a more efficient pathway for battery manufacturers.
The 760,000 tpa target represents a massive increase in the global supply of high-quality concentrate. For Wesfarmers, this transition from a retail-heavy conglomerate to a significant player in critical minerals is a historical shift. Since the project’s inception, the company has emphasized that its entry into lithium was a long-term play on sustainability and the energy nexus.
2030 Outlook and Beyond
The Mount Holland expansion is more than just a capital project; it is a signal of market maturity. The lithium industry is moving past its “wild west” phase of extreme price spikes and into a phase of disciplined, large-scale industrial growth.
By the time the first expanded volumes are produced in 2030, the global EV market is expected to be several times larger than it is today. Wesfarmers and SQM are betting that being a low-cost, high-volume producer in a stable jurisdiction will be the winning formula for the next decade of mining.
For operators and investors, the lesson from Mount Holland is clear: the current price cycle is a secondary concern compared to the structural necessity of securing spodumene supply. As the project moves into its construction phase in 2027, all eyes will be on how this additional capacity reshapes the global lithium landscape.
