On June 9, a fire broke out at Chemical Grade Plant 3, or CGP3, at the Greenbushes lithium operation. The fire was quickly extinguished, no injuries were reported, and CGP1 and CGP2 continued to operate as normal. The following day, IGO confirmed that its FY2026 spodumene concentrate production guidance of 1.375–1.425 million tonnes remained unchanged. Chemical Grade Plant 4, or CGP4, is scheduled to commence construction in 2027. Viewed in isolation, this was a well-contained operational incident. However, the location of the fire deserves closer attention. CGP3 is not part of Greenbushes’ existing production base. It represents incremental supply currently ramping up at the far-left end of the global lithium cost curve. The project involved approximately A$880 million of investment and is designed to add around 500,000 tonnes per year of spodumene concentrate capacity. First ore was fed into the plant in December 2025, and the facility had originally been expected to reach nameplate capacity around mid-2026. The damage assessment is still under way. Neither the repair cost nor the recovery timeline has been quantified. The fact that production guidance remains unchanged should therefore be understood as an initial assessment rather than a definitive conclusion. The key question is not whether IGO has immediately revised its annual guidance. It is whether the CGP3 ramp-up schedule will be delayed. Should the market be concerned when an incremental production line at the world’s lowest-cost lithium mine experiences an operational disruption? To answer this question, it is useful to examine the role of Australian lithium mines in the broader lithium pricing mechanism. Note on the CGP3 ramp-up timeline: At IGO’s FY2026 second-quarter results briefing in late January 2026, management stated that CGP3 had received first ore in December 2025 and would require approximately five months to ramp up to nameplate capacity. Some English-language transcripts recorded management as referring to completion “by the end of the calendar year.” However, based on the timing of first ore feed, a five-month ramp-up period would imply completion around mid-2026, before the end of Australia’s FY2026 financial year. This is also consistent with the company’s previous guidance. The transcript may therefore have intended to say “by the end of the financial year.” This article adopts the mid-2026 ramp-up assumption. The timing is relevant because the June 9 fire occurred only weeks before the originally expected completion of the ramp-up. The actual impact should become clearer in IGO’s fourth-quarter report, which is expected in late July. Greenbushes: A Reference Point at the Bottom of the Cost Curve Greenbushes’ most important advantage begins with ore grade. It is one of the world’s largest and highest-grade hard-rock lithium mines currently in production. Its ore grade is approximately twice the industry average. For a spodumene operation, grade directly affects processing efficiency. To produce one tonne of SC6 concentrate, Greenbushes needs to process materially less ore than a typical mine. This provides a structural advantage across mining, beneficiation, energy consumption and tailings management. Greenbushes also benefits from scale. The operation currently has several processing facilities, with combined nominal ore-processing capacity of around 6.5 million tonnes per year and spodumene concentrate capacity of up to approximately 1.5 million tonnes per year. Once CGP3 completes its ramp-up, the mine will add a further 500,000 tonnes per year of concentrate capacity. With the mine life extended to 2045, Greenbushes combines low costs with long-term supply capacity. This explains the mine’s resilience during the lithium price downturn. During 2024 and 2025, lithium prices declined sharply. A number of higher-cost Australian mines and Chinese lepidolite projects faced production cuts or temporary shutdowns. Greenbushes, however, continued to maintain relatively strong profitability and moved ahead with the CGP3 expansion. Greenbushes does not represent the industry’s average cost. It represents the most competitive end of the global hard-rock lithium cost curve. For that reason, Greenbushes is better understood as a reference point for the bottom of the cycle. As lithium prices fall, higher-cost supply exits first, while low-cost assets remain in operation. The closer prices move toward the cost range of Greenbushes, the fewer marginal producers remain capable of operating normally, and the more advanced the supply-side clearing process becomes. This does not mean that lithium prices can never fall below the cost level of Greenbushes. In the short term, inventory pressure, liquidity conditions and market sentiment can push prices below the cost levels implied by the marginal supply curve. Greenbushes is not an absolute price floor. Its significance is that it provides a structural reference point for assessing how far supply-side clearing has progressed. Greenbushes: The Largest Producer, but with Limited Freely Traded Supply Although Greenbushes produces large volumes of spodumene concentrate, relatively little of that material enters the open spot market directly. The mine is operated by Talison Lithium. Talison is owned by Tianqi Lithium Energy Australia, or TLEA, and Albemarle. TLEA is in turn jointly owned by Tianqi Lithium and IGO. Greenbushes concentrate is primarily distributed through shareholder offtake arrangements and supplied into the downstream conversion systems of Tianqi, Albemarle and their respective partners. Under normal conditions, the material is not sold directly into the open market. Greenbushes therefore provides a useful example of why lithium supply should be analysed through several different layers: Resources → Design capacity → Actual production → Saleable volume → Freely traded spot volume Greenbushes ranks among the world’s largest producers by actual output. However, because most of its concentrate is locked into shareholder offtake arrangements, the amount available for open-market trading remains relatively limited. This means Greenbushes affects lithium pricing mainly through indirect channels. First, it determines the size of the lowest-cost portion of global lithium supply and therefore plays an important role in shaping the lithium chemical cost curve. Second, its operating costs, offtake pricing mechanism and expansion schedule provide reference points for long-term contract negotiations and price assessments in the spodumene market. By contrast, short-term spot prices are often more directly influenced by marginal resources that are not fully locked into shareholder arrangements and must actively seek buyers in the market. These include certain Australian mines, African lithium resources and trader-held cargoes. This explains an apparent paradox. An additional 500,000 tonnes of Greenbushes concentrate capacity can materially change the medium-term supply-demand balance, yet its immediate impact on the spot market may be limited. Meanwhile, the shutdown or restart of a marginal mine producing only 100,000–200,000 tonnes per year can quickly influence spot quotations and market sentiment if its output is sold on a market basis. Short-term pricing is not determined solely by total production. It is also shaped by the volume of material that is freely available for negotiation and immediate transaction. The same logic applies to lithium carbonate. Price elasticity depends not only on total inventory but also on how much inventory is genuinely available for circulation. The largest producer does not necessarily exert the most direct influence over the spot market. Short-term marginal pricing is usually driven by the resources that are tradeable, negotiable and available for immediate delivery. However, shareholder offtake does not mean that Greenbushes material is completely isolated from the market. If lithium conversion plants within the Tianqi or Albemarle systems reduce operating rates, or if downstream conversion assets experience operational issues, part of the concentrate originally intended for internal consumption may re-enter the market indirectly through tolling, resale or inventory adjustments. These volumes are rarely captured in public statistics, but they can affect the actual liquidity of the spodumene market. Tracking this material requires a broader set of indicators, including shareholder conversion-plant operating rates, concentrate inventories, tolling arrangements and import flows. This type of “shadow spot supply” is harder to observe than nominal mine production, yet it can become relevant at specific points in the cycle. SC6 and Lithium Chemicals: The Direction of Price Transmission Reversed Within a Year The relationship between Australian spodumene concentrate prices and Chinese lithium chemical prices has completed a full cycle over the past year. During the first half of 2025, spodumene prices followed lithium chemical prices downward. Australian miners reduced costs materially in the first quarter but largely avoided production cuts. Mining companies remained willing to ship material, and the price of SC6 concentrate fell to around US$620 per tonne. Falling concentrate prices then placed additional pressure on lithium chemical prices, reinforcing the downward cycle. At the time, the key market question was straightforward: When would the mining sector finally reduce supply? The direction of transmission reversed in the end of third quarter. The announcement that 27 mining licences in Yichun could be cancelled, together with the suspension of the Jianxiawo mine, tightened expectations around domestic Chinese lithium supply. Lithium chemical prices moved first. SC6 prices then followed, with greater elasticity. By December, the monthly average price had recovered to around US$1,300 per tonne. Formula-based pricing mechanisms linked to lithium chemical prices allowed mining companies to capture a large share of the upside, while Chinese converters saw their processing margins squeezed. At the same time, the impairment and expansion adjustments at the Kwinana lithium hydroxide project highlighted the challenges facing Australian downstream conversion. The project has faced difficulties in cost control, production ramp-up and operational stability. TLEA’s Kwinana lithium hydroxide refinery was fully impaired in mid-2025, the second train was suspended, and IGO made clear that it would prioritize mining. These developments reinforce Australia’s role as a supplier of spodumene concentrate rather than a major lithium chemical conversion hub. As a result, the relationship between SC6 prices and Chinese lithium chemical prices is likely to remain strong. However, the speed and magnitude of transmission will continue to depend on inventories, contract formulas, shipping cycles and converter operating rates. One of the most useful indicators is the implied conversion margin between SC6 concentrate and lithium chemical spot prices. When the implied conversion margin turns negative, Chinese converters purchasing third-party concentrate are effectively losing cash on incremental production. The market then needs to rebalance through at least one of three channels: Spodumene concentrate prices decline; Lithium chemical prices rise; Converters reduce operating rates. This indicator provides a useful way to judge whether bargaining power currently sits with the mining segment or the conversion segment. Australian Mine Restarts: Lithium Prices Develop an Upper Constraint The key theme for Australian lithium mines during 2024 and 2025 was supply-side clearing. In 2026, the theme has shifted toward reactivation. As lithium prices recovered during the first half of the year and futures briefly exceeded RMB 200,000 per tonne, a series of restart decisions emerged across May and June. Project Action Timing Key Point Bald Hill, Mineral Resources Restart after approximately 18 months of suspension Restart announced in May; first concentrate expected in July Restart cost of around A$20 million Ngungaju, PLS Processing plant restart Planned for July Approximately 200,000 tonnes per year of restored output Finniss, Core Lithium Final investment decision approved; financing secured Targeting first ore in the third quarter Financing package of approximately US$205 million Kathleen Valley, Liontown Expansion under assessment Ongoing Further details pending Mt Cattlin, Rio Tinto Remains suspended Suspended since March 2025 Restart conditions remain unclear Taken together, these cases show that the true threshold for mine restart is more complex than a simple comparison between lithium prices and cash costs. Bald Hill moved from restart announcement to expected first concentrate production in around two months. The mine had remained in a production-ready care-and-maintenance state, and Mineral Resources has its own mining-services platform, allowing it to mobilize mining, crushing and haulage internally without relying heavily on external contractors. This type of asset represents the fastest-reacting segment of supply when prices recover. Finniss is a different case. The project first monetized inventories through Glencore to improve liquidity, then assembled a financing package involving convertible debt, additional borrowings and equity issuance before reaching a final investment decision. For miners with weaker balance sheets, a restart is not simply an operational decision. It is a financing event. A low-price cycle does not eliminate the resource base. It eliminates the ability to finance production. The market impact of the restart wave is already visible. Lithium carbonate futures reached a two-year high of RMB 200,500 per tonne on May 13 before retreating to around RMB 160,000–170,000 per tonne in June. One reason for the pullback is that the market has begun to price in the return of idle supply. The mechanism is straightforward: Prices rise → Idle capacity restarts → Expected supply increases → Prices come under pressure The list of suspended Australian mines, once ranked by restart economics and response time, effectively becomes an upside supply curve for lithium prices. The CGP3 fire and the restart wave represent two sides of the same market. At the low-cost end of the curve, incremental Greenbushes supply has experienced an operational disruption, creating a bullish signal. At the higher-cost end, idle assets are returning to production, creating a bearish signal. From a resource perspective, lithium prices in 2026 are searching for equilibrium between these two forces. Lithium Prices in 2026 May Become More Volatile, but One-Way Trends Could Be Shorter Once prices rise, the factor that ultimately limits the upside is the speed at which idle capacity returns to the market. Bald Hill, Finniss and Ngungaju represent a broader pool of suspended or standby assets that can respond when lithium prices move sufficiently above their cash-cost thresholds and remain there for long enough. However, restart supply is not instantaneous. From the moment a restart is announced, companies need to remobilize personnel, inspect equipment, resume mining and processing, build concentrate inventories and arrange shipments. Depending on the asset, concentrate may enter the market within two months or only after several quarters. This delay creates a window during which supply disruptions can push prices higher. The suspension of the Jianxiawo mine and the CGP3 fire at Greenbushes matter not because global lithium resources have suddenly become scarce, but because short-term freely available supply has tightened while idle capacity has not yet fully returned. Compared with the previous cycle, this risk-premium window appears to be shortening. An increasing number of mines are being placed on care and maintenance rather than permanently closed. Mining-services companies, traders and downstream customers are also becoming more involved in restart financing and offtake arrangements. Once prices move back above the relevant breakeven levels, some idle assets can return more quickly. This does not necessarily mean lithium prices will become more stable. Supply disruptions can still trigger rapid price increases. However, the duration and magnitude of one-way rallies are likely to face stronger constraints from restart expectations. Prices may become more volatile in the short term, but sustained unilateral trends could become shorter. Conclusion Australian lithium mines influence lithium prices through several distinct channels. Greenbushes provides a structural reference point at the bottom of the hard-rock lithium cost curve. However, because most of its output is absorbed through shareholder offtake arrangements, it does not directly determine short-term spot pricing. Spot-market tightness is more directly influenced by marginal saleable supply: Australian mines, African resources and trader-held inventories that are available for negotiation and immediate transaction. Once lithium prices rise, the speed at which suspended assets restart becomes the key constraint on the duration of the rally. The framework can therefore be summarized in three lines: Low-cost mines provide a structural reference point for the bottom of the cycle. Freely traded supply determines short-term spot-market tightness. The speed of mine restarts determines how long an upside cycle can last. The CGP3 fire and the restart wave sit at opposite ends of this framework. One represents a disruption to low-cost incremental supply. The other represents the return of higher-cost idle capacity. Lithium prices in 2026 will continue to seek equilibrium between these two forces. Lesley Yang Senior New Energy Analyst, SMM yangle@smm.cn

On June 9, a fire broke out at Greenbushes Chemical-Grade Beneficiation Plant 3 (CGP3). The fire was quickly extinguished with no casualties, CGP1 and CGP2 continued normal operations, and IGO confirmed the next day that its FY2026 concentrate guidance of 1.375 million to 1.425 million mt remained unchanged. CGP4 is planned to commence in 2027. Judging solely by the announcement, this was a well-handled operational incident. However, the location of the fire warrants closer attention: CGP3 is not existing capacity but incremental capacity being ramped up at the far left of the global cost curve – with a total investment of about AUD 880 million, designed to add approximately 500,000 mt/year of concentrate capacity, and which only achieved first feed in December 2025 and was originally expected to reach full production by mid-this year. The damage assessment is still ongoing, repair costs and timetable are yet to be quantified, and the so-called "guidance maintained" is based only on information from the initial stage of the incident. What merits tracking going forward is not the guidance itself, but whether the timing of reaching full production will be delayed. At the world's lowest-cost mine, a new production line has had a minor incident – should the market be concerned? Today, I aim to break down and clarify this mechanism by analyzing the role of Australian ore in the lithium price formation. Note: Clarification on the timeline for CGP3 reaching full production. At its FY26 Q2 results briefing in late January 2026, IGO stated that CGP3 achieved first feed in December 2025 and that ramp-up to nominal capacity would take approximately five months. Some English transcripts recorded management's remarks as "completing ramp-up before the end of the calendar year" (end of the calendar year). However, based on the timing of first feed, five months corresponds to mid-2026, i.e., before the end of the Australian financial year (FY26), which is consistent with the company's previously disclosed guidance of "reaching full production in mid-2026." The transcript likely mistook "end of the financial year" for "end of the calendar year." This article adopts the "mid-2026 full production" timeline. This timing implies that the June 9 CGP3 fire occurred a few weeks before the originally scheduled full production, and the actual impact will be confirmed in IGO's Q4 report (expected in late July). Greenbushes: A Benchmark at the Bottom of the Cost Curve Greenbushes' most fundamental advantage lies first in its ore grade. It is one of the world's largest and highest-grade hard-rock lithium mines in production, with raw ore grade roughly double the industry average. For spodumene mines, grade directly determines mining and processing efficiency. To produce one tonne of SC6 concentrates, Greenbushes needs to process significantly less raw ore than typical mines, giving it natural cost advantages in mining, beneficiation, energy consumption, and tailings management. Building on its high-grade ore, Greenbushes also benefits from economies of scale. The mine site now hosts multiple beneficiation plants with a combined nominal processing capacity of approximately 6.5 million mt/year, supporting a maximum lithium concentrate capacity of up to 1.5 million mt; once CGP3 has fully ramped up, it will add roughly 500,000 mt of additional concentrate capacity. With the mine life further extended to 2045, Greenbushes not only possesses low-cost advantages but also strong long-term supply capability. This is why Greenbushes has demonstrated significant resilience during the lithium price downturn. From 2024 to 2025, as lithium prices continued to pull back, many high-cost Australian mines and Chinese lepidolite projects faced pressure to suspend or cut production, yet Greenbushes maintained relatively sound profitability and continued to advance the CGP3 expansion. It represents not the industry's average cost, but the most competitive end of the global hard-rock lithium ore cost curve. Therefore, Greenbushes serves as a useful benchmark for observing the industry bottom. When lithium prices fall, high-cost capacity exits first, while low-cost capacity continues to produce. The closer prices move to Greenbushes' cost range, the fewer marginal units of capacity can sustain normal operations in the market, and the nearer supply exits are to completion. Greenbushes Has the Largest Production, but Limited Free-Float Volume Although Greenbushes has a very large production scale, relatively little of its concentrates can enter the spot market directly. Greenbushes is operated by Talison Lithium, whose shareholders include TLEA and Albemarle, with TLEA jointly held by Tianqi Lithium and IGO. The spodumene concentrates produced at the mine are primarily allocated under shareholder offtake arrangements, flowing to lithium chemical production lines within the shareholder systems of Tianqi, Albemarle, and others, and are not normally offered for direct sale to the market. Viewed through the framework of [Resources – Designed Capacity – Actual Production – Saleable Volume – Available Spot Volume], Greenbushes is a very typical case. Its actual production ranks among the world's largest, but since most of its concentrates are locked up within its shareholder system, the volume truly available for market-based transactions is relatively limited. This also means Greenbushes' influence on market prices is mostly indirect. On one hand, it defines the scale of global low-cost lithium resource supply, which has an important impact on the lithium chemical cost curve; on the other, its operating costs, offtake pricing, and expansion pace also serve as key references for long-term lithium ore contract negotiations and price assessments. By contrast, what really influences spot lithium ore prices in the short term are typically the marginal resources not fully locked up by shareholder offtake agreements and needing to find buyers on the market. These include some Australian mines, African lithium ore, and saleable cargo held by traders. Therefore, while the addition of approximately 500,000 mt of concentrate capacity at Greenbushes will alter medium and long-term supply-demand expectations, its short-term impact on the spot market may not be particularly pronounced. In contrast, the suspension or resumption of a marginal mine with an annual output of over 100,000 mt that primarily sells on the open market could rapidly influence spot quotes and market sentiment. It is well known that short-term prices are not entirely determined by total output; rather, they depend more on the volume of material freely available for trading in the market. For example, lithium carbonate's price elasticity hinges more on the current available volume in the market. The mine with the largest output does not necessarily hold the most direct pricing power in the spot market; what truly dictates short-term marginal prices are typically resources that are available, negotiable, and require immediate transaction. However, shareholder offtake does not mean such concentrates are completely isolated from the market. When smelters within the frameworks of shareholders like Tianqi and Albemarle reduce their operating rates, or when some smelting lines operate erratically, concentrates originally intended for internal consumption may indirectly enter the market through toll processing, resales, or inventory adjustments. These cargoes are usually not publicly tallied but affect the actual circulating volume in the lithium ore market. Their tracking requires assessment by combining shareholder smelter operating rates, concentrate inventory, toll processing arrangements, and import flows. In analyzing Australian ore supply, such shadow spot cargoes are often harder to observe than a mine's nominal production, yet can significantly influence the market during specific phases. SC6 and Lithium Chemicals: Transmission Direction Reversed Once Within a Year The price transmission relationship between Australian ore concentrates (SC6, CIF China) and China's lithium chemicals has completed a full round trip over the past year. In H1 2025, ore prices followed the downtrend. In Q1, Australian mines aggressively cut costs but did not reduce production, showing a strong willingness to sell. SC6 fell all the way to around $620/mt, and the lower concentrate prices, in turn, pressured lithium chemicals downward, forming a spiral. The market's concern at the time was: When would mines finally be willing to cut? The situation reversed starting at the end of Q3. The announcement of Yichun's plan to cancel 27 mining rights, along with the suspension at Jianxiawo, tightened expectations for domestic resource supply. Lithium chemical prices moved first, and SC6 followed with an uptrend that proved even more elastic—by December, the average price had already returned to around $1,300/mt. Formula pricing, linked to lithium chemical prices, allowed the mining side to capture the bulk of the upside gains, while the tolling margins of Chinese smelters were instead compressed. Meanwhile, the impairment and expansion adjustments at the Kwinana project reflect that lithium chemical conversion in Australia continues to face high hurdles in terms of cost control, production ramp-up, and operational stability. TLEA's Kwinana lithium hydroxide plant was fully impaired in mid-2025, with the second-phase construction halted, and IGO has clearly shifted its priority to mining. The role of Australian ore in the industry chain has been refixed as a supplier of concentrates, and the linkage between SC6 and Chinese lithium chemical prices will only tighten going forward, not decouple. The implied smelting margin—calculated by multiplying SC6 by the processing coefficient and comparing it to spot lithium chemical prices—has turned negative, meaning Chinese smelters using externally purchased ore are losing cash. Either ore prices must pull back or lithium chemical prices must rise; one of the two is inevitable. This indicator is the most powerful gauge of whether mines or lithium chemicals hold more pricing power. Australian Mine Production Resumptions: Price Breaks Through the Ceiling The key words for Australian ore in 2024-2025 were market exits, while in 2026 they have become revivals. Lithium prices have been climbing steadily since the beginning of the year, with futures prices once surpassing 200,000 yuan/mt, triggering a series of production resumptions in May and June: Project Action Timing Notes Bald Hill (MinRes) Resumed production after an 18-month shutdown Announced in May, first concentrates expected in Jul Restart cost approximately A$20 million Ngungaju Plant (PLS) Restart Planned for Jul Resuming roughly 200,000 mt/year Finniss (Core Lithium) FID approved, financing secured Targeting first ore in Q3 Financing approximately $205 million Kathleen Valley (Liontown) Evaluating expansion In progress — Mt Cattlin (Rio Tinto) Remains shut down From Mar 2025 to present Restart conditions not yet clarified Looking at these cases together, the real threshold for resuming production is more complex than simply having prices exceed cash costs. Bald Hill took only about two months from announcement to first ore because it had maintained a production-ready state throughout the shutdown, and MinRes's own mining services division could internally mobilize all operations—mining, crushing, and transport—without needing to wait for external contractors. Assets of this type are the quickest-responding supply when prices rise. Finniss, by contrast, was an entirely different situation: it first sold inventory to Glencore in exchange for liquidity, then cobbled together three financing instruments—convertible bonds, debt, and a share placement—before reaching FID. For mines with fragile balance sheets, resuming production is not an operational decision but a financing event; what low-price cycles destroy is not resources, but financing capacity. The market consequences of the resumption wave are already visible. Lithium carbonate hit a two-year high of 200,500 yuan/mt on May 13, then pulled back to the 160,000–170,000 yuan range in June, partly because the market saw resumption supply coming back. The logic is straightforward: when prices rise, idle capacity resumes production, supply expectations increase, and prices pull back. That list of idle capacity in Australia, when sorted, essentially forms the supply curve above lithium prices. The CGP3 fire and this wave of production resumptions are actually two sides of the same market: disruption to the incremental supply at the far left of the cost curve is bullish, while idle capacity at the right end accelerating its return is bearish. Looking at lithium prices this year from the resource perspective, equilibrium is being sought between these two forces. Lithium prices in 2026 are expected to fluctuate more frequently, but one-sided market moves will be shorter. After prices rise, what truly caps the height of the rally is the speed at which idle capacity re-enters the market. Projects under care and maintenance or on standby, such as Bald Hill, Finniss, and Ngungaju, essentially constitute elastic supply above lithium prices. When lithium prices return above the cash costs of these projects and stay there long enough, mines have the incentive to resume production. But production resumptions do not happen instantly. From the announcement of a restart to the rehiring of personnel, equipment maintenance, resumption of mining and processing, inventory buildup, and finally, the entry of concentrates into the market, it typically takes from two months to several quarters. This time lag is the window during which supply disruptions can drive prices higher. The suspension at Jianxiawo and the CGP3 fire at Greenbushes were able to affect market sentiment not because of a sudden global shortage of lithium resources, but because of a reduction in short-term available supply while idle capacity had yet to return. Compared to the previous cycle, it is worth noting that the window for risk premiums arising from resource-side disruptions is shortening. A growing number of mines are opting for care and maintenance rather than permanent closure; mining service companies, traders, and downstream enterprises are also participating in restart financing and offtake arrangements. As long as prices return above the break-even line, some idle capacity can resume more quickly. This means that in the future, lithium prices may still rise rapidly following supply disruptions, but the duration and height of one-sided market moves will be more easily constrained by production resumption expectations. Prices may not necessarily become more stable, but supply feedback could be faster. SMM New Energy Analyst Yang Le

Amidst the backdrop of the Trump administration's increased tariffs on aluminum imports and disruptions to Middle Eastern supplies, global mining giant Rio Tinto's Canadian aluminum business is experiencing an unexpected boost. The company stated that its aluminum exports to the United States have recovered to pre-tariff levels, making the US once again the primary market for Canadian aluminum products. Last year, the Trump administration raised aluminum import tariffs to 50%, forcing Rio Tinto to divert more Canadian aluminum sales to Europe. However, due to continued tight domestic aluminum supplies in the US, coupled with the shutdown of some Gulf smelters due to the Middle East wars and disruptions to shipping through the Strait of Hormuz, US aluminum prices surged.

According to foreign media reports, Rio Tinto has begun commissioning its AP60 smelter expansion project in Quebec, Canada. The $1.5 billion project, launched in March, is expected to be completed by the end of 2026, at which time 96 new electrolytic cells will be operational. The expansion will increase the plant's annual primary aluminum production capacity by approximately 160,000 tons, bringing its total output to 220,000 tons. AP60 technology is a low-carbon technology that produces fewer greenhouse gas emissions per ton of aluminum compared to the industry average.

Over the past half-century of industrialisation, the global seaborne iron ore market consolidated around a duopoly dominated by Australia's Pilbara region and Brazil's Carajás and Iron Quadrangle districts. However, driven by macroeconomic cycle evolution, a structural shift in China's growth engine, and the steel industry's irreversible push toward low-carbon and green transformation, this traditional supply map is undergoing an unprecedented reshaping. On 26 November 2025, the first commercial vessel loaded with Simandou iron ore departed from the Port of Mabarya, marking the official commissioning of Guinea's Simandou Iron Ore Project — the world's largest undeveloped high-grade greenfield iron ore deposit by reserve. This milestone signals that the African continent, long relegated to secondary status, is progressively emerging as a significant new force in the global ferrous metals market. Africa's iron ore resources are widely regarded as the third-largest iron ore supply region globally, after Brazil's Carajás and Australia's Pilbara. With an estimated 13.8% share of global iron ore resources, and representing the most significant supply-side growth driver over the next five years, shifts in African iron ore dynamics will be a key determinant of international iron ore pricing over the long term. I. Global Iron Ore Market Background According to SMM research data, global iron ore production in 2025 is estimated at approximately 2.472 billion tonnes (bt). Africa contributes roughly 95 million tonnes (Mt), representing close to 4% of global output. As major mining projects progressively come on stream, Africa's iron ore production capacity is forecast to double by 2030, reaching approximately 259 Mt. Assuming no production curtailments elsewhere, Africa's global market share could rise to nearly 10%, while the overall global iron ore supply surplus is projected to widen to approximately 220 Mt. Although the international iron ore market has already entered a prolonged loose supply cycle, the substantive supply shock from African iron ore is expected to materialise gradually over the next five years. In the near term, Africa's estimated incremental shipment of approximately 15 Mt in 2026 — bolstered by its superior high-grade characteristics — is expected to be absorbed relatively smoothly by steelmakers seeking low-carbon blending feedstocks, resulting in a relatively moderate impact on absolute benchmark pricing. The critical inflection point is projected to fall in 2028–2029. As rail and port infrastructure currently under construction in West Africa is fully commissioned, a surge in high-grade iron ore output will exert heavy downward pressure on the right-hand side of the global iron ore cost curve. This will not only systematically compress the iron ore price floor but will trigger intense structural displacement — squeezing the operating margin of low-grade, high-cost producers. The current price downcycle is expected to persist through 2028. When international ore prices breach the USD 90/tonne marginal cost support level, higher-cost non-mainstream small and mid-size mines will be forced into curtailment and exit. The resulting supply shakeout will reshape the global iron ore supply structure into a multi-oligopoly dominated by ultra-large, low-cost operations (including the new African mines), complemented by quality mid-tier producers. II. Africa's Current Market Landscape: South Africa as Dominant Producer, West Africa Expanding Aggressively Building on the global context, this section focuses on Africa's overall iron ore landscape. As the primary driver of supply growth over the next five years, Africa's iron ore production is concentrated in West Africa and South Africa, currently dominated by three key countries. South Africa South Africa is the continent's largest producer, with 2025 output reaching approximately 67 Mt and export shipments maintaining an overwhelming 65% share of total African iron ore exports. However, South Africa's iron ore sector faces structural constraints limiting its organic growth headroom. As other emerging African resource nations commission significant new projects, South Africa's share of total African export volumes is projected to face sustained compression. Mauritania Mauritania is Africa's second-largest iron ore producer, with 2025 output of 15 Mt and export volumes of approximately 12 Mt, representing approximately 12% of the African market. Strategically situated adjacent to the Atlantic Ocean with high-grade iron ore deposits deep within the Sahara Desert, Mauritania possesses highly advantageous geographic and mineralogical characteristics. Its proximity to European and Middle Eastern markets — both in urgent need of green industrial raw materials — provides ideal conditions for the country to become a hub for global green metallurgy capacity relocation. Mauritania is expected to emerge as a highly promising iron ore supply nation going forward. Sierra Leone Sierra Leone is another important regional supply pole, with projected 2025 output also reaching approximately 12 Mt, holding a stable share of approximately 12% in the African export market. Chinese-invested iron ore mines within the country are actively scaling up their operations. Trade Flow Overview Based on full-year 2024 trade data, the proportion of African iron ore shipped to China is relatively low compared to traditional mainstream ore origins, at approximately 60%. The broader Pan-Asian market — encompassing China, Japan, and South Korea — absorbs approximately 70% of total African iron ore shipments. Western European countries, led by the Netherlands and Germany, constitute Africa's core secondary destination, accounting for close to 14% of trade flows. The remaining marginal trade flows are broadly diversified, extending to emerging steelmaking capacity clusters in the Middle East, including Bahrain, Oman, and Saudi Arabia. Key Corporate Players At the corporate level, South Africa's Kumba Iron Ore and Assmang rank as Africa's largest and second-largest iron ore producers, with annual output of approximately 37 Mt and 17 Mt respectively. Kumba Iron Ore: Kumba's mining operations — including the Sishen mine — are globally recognised for producing high-grade fines (Fe >62%) and metallurgically superior premium lump ore (Fe 65.2%). Under the prevailing trend of blast furnace (BF) emission reduction, this type of direct-charge lump ore — which reduces sintering-related carbon emissions — commands strong market demand and a substantial price premium. Assmang: Assmang similarly holds high-quality iron ore assets, operated as a 50:50 joint venture between African Rainbow Minerals (ARM) and Assore. Its Assmang Fines and Assmang Lump products (Fe 64–65%) are also direct-charge, high-quality materials. However, the company's key bottleneck lies not at the pithead but on the rail. Heavy dependence on Transnet Freight Rail (TFR) for haulage means logistics constraints frequently cap its achievable shipment volumes. SNIM (Société Nationale Industrielle et Minière): Mauritania's state-owned mining company is Africa's third-largest iron ore producer after the two South African majors. Unlike mainstream Australian and Brazilian ores, SNIM products occupy a distinctive niche in terms of physicochemical specifications and market segment. Its most widely traded product, TZFC fines, is characterised by extremely low alumina (Al2O3) and phosphorus (P) content. As an excellent blending ore, major steelmakers regularly blend SNIM fines with high-alumina Australian fines (such as certain Pilbara blend products) to significantly dilute the impurity ratio in the burden, thereby optimising blast furnace performance metrics. III. Africa's Market Transformation: Major Producers Facing Stagnation; Emerging Projects as Primary Growth Drivers Where does future growth lie? According to SMM observations, Africa is expected to undergo a significant structural transformation within the next five years. Multiple large-scale iron ore projects across the continent are currently under construction, with scheduled commissioning prior to 2030. Based on our modelling, African iron ore supply is forecast to grow substantially from the current approximately 95 Mt to 260 Mt over five years — a cumulative increase of 85%. The market structure is also expected to shift from South Africa-dominated Western-oriented exports to a Guinea-led export paradigm. Guinea — Simandou Iron Ore Project The primary growth driver will be Guinea's renowned Simandou iron ore project, jointly developed by multiple entities and representing the world's largest undeveloped high-grade open-pit hematite deposit. The project holds reserves in excess of 5 billion tonnes (bt) and a designed production capacity of 120 Mt per annum, making it the project with the greatest strategic potential to reshape the existing iron ore market structure. Since first ore shipments in late November 2025, cumulative exports from the principal export hub — the Port of Mabarya — reached approximately 1.6 Mt through Q1 2026. Blocks 1 & 2, developed under the Winning Consortium Simandou (WCS), have successfully commenced production, with 2026 capacity expected to reach nameplate and ramp-up to 60 Mt per annum projected over the next two to three years. Blocks 3 & 4, led by Simfer (a Rio Tinto and Baowu joint venture), are forecast to commission in Q1 2026, with estimated 2026 shipments of 5 Mt and a 30-month ramp-up timeline to reach 60 Mt per annum. In aggregate, Guinea is projected to achieve 120 Mt per annum before 2030, becoming the world's second-largest single iron ore project by capacity — second only to Vale's S11D project in Brazil (designed capacity of 200 Mt post-expansion, expected by 2030). Other African Countries — Key Development Projects Other nations — including Liberia, Gabon, Sierra Leone, and the Republic of Congo — all have iron ore projects under development. Projects scheduled for commissioning before 2030 account for a combined planned capacity of approximately 46 Mt. The largest single project is ArcelorMittal Liberia's (AML) Tokadeh Phase II, expected to commission in H2 2026 and reach a nameplate capacity of 20 Mt per annum by year-end, producing iron ore concentrate with an estimated grade exceeding Fe 66%. Given that AML's European steelmaking capacity cannot absorb such a large volume increment in the near term, the majority of Tokadeh's output is expected to enter the international seaborne market, exerting pricing pressure on the iron ore concentrate segment. South Africa — Structural Constraints on Production Growth South Africa's output is expected to remain broadly stable in the 63–67 Mt range, with mild downside risk. The primary underlying cause is the country's heavy dependence on the heavy-haul Sishen–Saldanha Bay rail corridor, operated by Transnet Freight Rail (TFR). In recent years, TFR has suffered a severe reduction in effective haulage capacity due to locomotive fleet shortages, frequent cable theft incidents, and chronic infrastructure underinvestment, materially constraining the rail transport of major bulk commodities including iron ore and coal. In its FY2025 annual results published in February 2026, Kumba Iron Ore — South Africa's dominant iron ore producer — reported total finished goods inventory of 7.5 Mt, up from 6.9 Mt at end-2024. With rail haulage capacity unable to match mine production, South Africa's major iron ore producers have been compelled to stockpile large volumes at mine sites. To avoid inventory saturation, miners have been forced to proactively revise production guidance downward. While producers are actively addressing haulage constraints, the deeply entrenched structural issues on the rail network are unlikely to be resolved in the short term. Mauritania — SNIM Long-Term Strategic Growth Blueprint Post-2030, attention turns to SNIM's strategic growth roadmap. Under its Horizon 1 programme, the company plans to raise annual production capacity to 45 Mt by 2031, through the implementation of lean manufacturing practices, equipment and technology upgrades, and the co-development of new mineral reserves. Of this total, 20 Mt will be produced under SNIM's wholly owned capacity, while the remaining 25 Mt will be realised through joint ventures with international capital partners. SNIM has further set a long-term target to expand annual capacity to 80 Mt by 2045 under its Horizon 3 plan. Democratic Republic of Congo (DRC) — MIFOR (Grand Est Iron Ore Project) On 26 March 2026, the DRC and China signed a Memorandum of Understanding designating the MIFOR project as a priority flagship initiative. The deposit is estimated to hold cumulative resources of 15–20 bt, with an average grade exceeding Fe 60% — a potential scale approximately 2.5 times that of Guinea's Simandou. Phase I capital expenditure is estimated at USD 28.9 billion, encompassing the construction of a heavy-haul railway and the utilisation of Congo River navigation, ultimately linking to a deep-water port at Banana on the Atlantic coast. Phase I design capacity stands at 50 Mt per annum, with a long-term target of scaling to 300 Mt per annum. These projects collectively underscore Africa's inevitable emergence as an indispensable iron ore supply source for the global steel industry. IV. Global Steel Industry Chain Transformation: Can Africa, as a Hub for High-Grade Ore, Enable DRI Production? High-Grade Ore as a DRI Feedstock Advantage Notably, the majority of Africa's current and planned iron ore projects produce ore at average total iron (Fe) grades predominantly above 65%, with extremely low impurity content. This scarce, high-grade ore is the ideal feedstock for the Direct Reduced Iron (DRI) process. As the DRI-Electric Arc Furnace (EAF) green steel route gains traction across Europe, the Americas, and China, demand for iron ore at Fe 65% and above will grow exponentially on the demand side. This will confer a substantial 'grade premium' on major projects, including South Africa's Kumba, Guinea's Simandou, and other future African producers. Over the longer term, iron ore pricing benchmarks are inexorably shifting away from the traditional Platts 62% Fe index, and African ore producers will gain bargaining leverage when renewing long-term supply agreements, thereby reshaping the global industry chain profit distribution structure. DRI Investment Pipeline in Africa In alignment with global carbon neutrality objectives, international investors — encouraged by local governments — are actively deploying capital into high value-added downstream processing facilities, including DRI plants and high-grade pellet facilities, aimed at leveraging Africa's abundant high-grade iron ore resources and vast renewable energy potential for DRI production. According to SMM observations, Africa is projected to add approximately 20 Mt of DRI capacity by 2030. The largest single project is a Libyan integrated DRI complex, jointly developed by Turkish steelmaker Tosyali and the Libyan National Steel Company, with a total design capacity of 8.1 Mt. China's Decarbonisation Push and the Global Green Steel Transition As China advances its dual carbon targets — carbon peaking by 2030 and carbon neutrality by 2060 — the domestic steelmaking sector is undergoing significant adjustment. The traditional carbon-intensive Blast Furnace–Basic Oxygen Furnace (BF-BOF) long route faces increasingly stringent capacity replacement policies and environmental regulations. Simultaneously, the global trade system is accelerating the imposition of carbon costs, most notably through the EU Carbon Border Adjustment Mechanism (CBAM), compelling global steel supply chains to accelerate the transition from the source toward a low-carbon, ultimately zero-carbon 'green steel' era. In the context of this irreversible transition, the DRI-EAF short-route process has become the most commercially viable decarbonisation pathway. To meet surging global demand for green steel, market projections indicate that global DRI designed production capacity will need to expand by hundreds of millions of tonnes during the 2030s. This scale of expansion will profoundly alter the global steel supply structure: the share of traditional hot metal (pig iron) production will progressively decline, while low-carbon DRI supply will directly determine the competitiveness of major economies in the global green steel market. In particular, 'hydrogen metallurgy' — using green hydrogen to replace natural gas and coking coal as the reductant in iron ore reduction — is widely recognised by the industry as the core technology for achieving ultimate zero-carbon steelmaking. Africa as the Future 'Green Iron' Production Hub Represented by world-class high-grade iron ore projects such as Guinea's Simandou, the progressive commissioning of these mega-mines is expected to inject over 100 Mt of high-grade iron ore per year into the global market, substantially alleviating the global scarcity of DRI-grade ore. More critically, North Africa and West Africa possess world-leading solar and wind energy potential, enabling large-scale, low-cost green hydrogen production in situ. This perfect combination of 'high-grade ore + low-cost green hydrogen' is increasingly inclinng multinational capital and steel majors toward establishing DRI production lines directly on African soil — reducing iron ore to low-carbon Hot Briquetted Iron (HBI) on-site for ocean transport to EAF facilities in Asia and Europe. Africa is thus formally transitioning from its historical role as a raw material exporter to become an indispensable link in the green iron production chain of the future.

Rio Tinto has started commissioning its USD1.5 billion AP60 aluminum smelter expansion at the Arvida plant in Quebec, Canada, with full start-up expected by the end of 2026. The project will add around 160,000 tones of annual primary aluminum capacity, increasing total AP60 production capacity to 220,000 tones per year. Rio Tinto said the AP60 technology, combined with Canadian hydropower, generates only one-sixth of the industry-average greenhouse gas emissions per tone of aluminum and can reduce particulate emissions by up to 90%. Markets believe the project will further strengthen North America’s low-carbon primary aluminum supply capability.

[SMM Aluminum Express News] Contact Energy has signed a non-binding power supply agreement with Rio Tinto to support the restart of the idle Line 4 potline at the New Zealand Aluminum Smelter in Tiwai Point. The restart would require around 50 MW of additional electricity and add approximately 30,000 tpy of aluminum production, while supporting development of Contact’s Southland Wind Farm. Rio Tinto estimates the project could generate around NZ$100 million annually in additional export revenue for New Zealand.

[SMM Aluminum Express News] The Canadian government will invest C$100 million into the ELYSIS low-carbon aluminum technology project, supporting Rio Tinto’s C$440 million demonstration plant in Quebec. The project aims to advance industrial-scale deployment and commercialization of emissions-free aluminum smelting technology, strengthening Canada’s low-carbon aluminum supply chain and supporting industries including aerospace, automotive, defense, energy, and infrastructure. The investment is also expected to help maintain around 5,000 jobs across Canada.

[SMM Aluminum Express News] Rio Tinto said its aluminum exports to the United States have rebounded to near pre-tariff levels, with North American shipments returning to around 80% of sales after previously falling to the mid-60% range following US import tariffs on Canadian aluminum. The recovery has been supported by elevated US aluminum premiums and tight North American supply, helping offset tariff-related costs and restore trade flows from Rio Tinto’s Quebec smelters into the US market.

[SMM Aluminum Express News] Rio Tinto has begun commissioning its US$1.5 billion AP60 low-carbon aluminium smelter expansion at Complexe Arvida in Quebec. The project will add 160,000 tpy of primary aluminium capacity through 96 new AP60 pots, lifting AP60 production to 220,000 tpy by the end of 2026. The expansion, together with a planned recycling centre, is expected to offset production losses from the closure of older Arvida potlines while strengthening North America’s low-carbon aluminium supply.