SYDNEY—Australian conglomerate Wesfarmers aims to make a decision on whether to expand a lithium mine and concentrator by the second half of this calendar year, Chief Executive Rob Scott said in an interview.
Speaking after Wesfarmers reported its half-year result, Scott said the capacity of the operation in Western Australia could be doubled. Currently, it has an expected annual output of some 380,000 metric tons of spodumene concentrate.
Any decision would involve SQM, the Chilean firm that is Wesfarmers’s partner in the lithium business, called Covalent Lithium.
Prices for lithium, used in batteries for electric vehicles, have risen recently, though Scott said Wesfarmers always takes a long-term view.
He said it is too early to say how much the expansion could cost.
“We’re already well progressed on some of the approvals—the environmental approvals and other approvals required,” Scott said. “We’re undertaking some preliminary engineering works, which are really important just to better size up the project.”
Scott said Wesfarmers would also be open to expanding a refinery, which is currently being ramped up and is needed to produce battery-grade lithium hydroxide. But he said Wesfarmers would like to get the refinery running properly before making a decision. The company has flagged odor issues at the refinery that will extend the ramp-up time.
Wesfarmers posted a 9.3% rise in profit to 1.6 billion Australian dollars, equivalent to US$1.13 billion, in the fiscal first half that ended Dec. 31. But Wesfarmers shares dropped some 5.6%, the stock’s worst daily performance in several months.
Some analysts said they were concerned about the pace of sales growth at Wesfarmers’s main retail businesses, which still make up much of its earnings, as consumers continue to battle cost-of-living pressures amid persistent inflation.
Scott said hardware chain Bunnings, discount department store Kmart and office supplies chain Officeworks had dropped prices on some products recently, and that the response from customers has been good. He said there have been recent range expansions as well, citing the auto, pets and power-tool products at Bunnings.
“We were really pleased with the performance in the first half, being able to not only grow sales to the level we did, but also grow our profit at a faster rate than sales,” he said.
He added: “We don’t get too worried about day-to-day share price, and at the end of the day it’ll be our performance in the coming years that determines the value that our shareholders receive,” he said. “We’re still very optimistic on the outlook.”
Write to Mike Cherney at mike.cherney@wsj.com
