Highlights

  • Wesfarmers (ASX:WES) and SQM approved an expansion of the Mt Holland lithium operation through their Covalent Lithium joint venture.
  • The project is expected to increase spodumene concentrate production capacity to approximately 760,000 tonnes per annum.
  • Wesfarmers has committed additional Capital while lithium prices remain below previous peak levels.
  • The expansion extends Wesfarmers’ exposure to battery materials through its Chemicals, Energy and Fertilisers division.

Wesfarmers (ASX:WES), best known for businesses including Bunnings, Kmart and Officeworks, is continuing to build exposure to battery materials through its lithium operations in Western Australia.

The company and partner SQM have approved an expansion of the Mt Holland lithium project, marking a significant step in the development of its resources portfolio. The decision increases future production capacity but also exposes Wesfarmers to the long-term challenges of lithium pricing, project execution and global Supply conditions.

What Happened

On 21–22 July 2026, Wesfarmers and SQM announced a Final Investment Decision (FID) to expand the Mt Holland lithium project through their 50/50 joint venture, Covalent Lithium.

The expansion includes construction of a second concentrator and an ore-sorting Facility designed to recover additional material from existing resources.

The project decision was made while lithium prices remain below previous peak levels, reflecting Wesfarmers’ focus on long-term production capability rather than short-term Commodity conditions.

The expansion is expected to increase the scale of the Mt Holland operation and strengthen Wesfarmers’ position within the battery-materials sector.

The Numbers Investors Need to Know

The Mt Holland expansion is expected to increase spodumene concentrate production from approximately 380,000 tonnes per annum to around 760,000 tonnes per annum on a 100% basis.

The ore-sorting facility is expected to contribute approximately three million tonnes of additional spodumene concentrate over the life of the operation by processing material that may otherwise not have been recovered.

Wesfarmers expects its share of expansion Capital Expenditure to be between A$645 million and A$715 million, excluding capitalised interest.

Construction of the second concentrator is expected to begin in the second half of 2027, with first production targeted for the first half of 2030.

Why This Matters

The Mt Holland expansion increases Wesfarmers’ exposure to lithium through its Chemicals, Energy and Fertilisers division.

The company’s lithium strategy includes the Mt Holland mine and concentrator, along with the Kwinana lithium hydroxide refinery, which provides exposure further along the battery-materials supply chain.

Increasing production capacity allows Wesfarmers and SQM to target greater scale and potentially lower unit costs over the life of the project.

However, the commercial outcome will depend on future lithium prices, Demand growth and the competitive landscape.

The Bull Case

The positive case for Wesfarmers (ASX:WES) is based on building a larger lithium operation with potential cost benefits from increased scale.

The second concentrator and ore-sorting facility are expected to improve resource utilisation and increase production capacity.

The integration between Mt Holland and the Kwinana lithium hydroxide refinery provides exposure across multiple stages of the battery-material supply chain.

If lithium demand continues to expand over the coming decade, increased production capacity could provide additional Earnings contribution for Wesfarmers.

The Risks

Wesfarmers (ASX:WES)’s lithium strategy faces risks including commodity price volatility, project execution challenges, global supply growth and uncertainty around future demand.

Lithium prices have experienced significant fluctuations, and future project returns will depend on market conditions when Mt Holland reaches expanded production.

Global supply remains a key factor, with increased production from multiple regions potentially affecting pricing.

The project also involves a long construction timeline, with first production from the expansion not expected until 2030. Cost increases, commissioning challenges and operational issues could affect expected returns.

What Comes Next

The next steps involve detailed engineering, approvals and preparation for construction activities expected to begin in the second half of 2027.

Investors will monitor developments at Mt Holland, progress at the Kwinana refinery, lithium price trends and WesCEF earnings contributions from the lithium business.

The longer-term performance of the project will depend on market conditions during the period leading up to expanded production.

Bottom Line

Wesfarmers (ASX:WES) is increasing its commitment to lithium through the Mt Holland expansion, adding further scale to its battery-materials strategy.

The project provides potential long-term exposure to lithium demand and expands Wesfarmers’ resources presence beyond its traditional retail operations.

However, the investment outcome remains dependent on factors including lithium pricing, project execution and global supply dynamics.

The expansion represents a long-term strategic decision, with the value creation potential expected to become clearer as construction progresses and production approaches.