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IGO, Tianqi Lithium stop work at a Kwinana lithium

hydroxide

plant

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IGO shares up as much as 4.6%

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The announcement removes an overhang - Citi

(Rewrites paragraph 1, adds share moves in paragraph 2, analyst

note in paragraphs 4-5)

By Shivangi Lahiri

Jan 24 (Reuters) - Shares of IGO rose on

Friday, after the lithium producer reached an agreement with its

Chinese joint-venture partner Tianqi Lithium to

cease all works at one of its lithium hydroxide plants in

Western Australia.

Shares of the Australian battery metal producer were up as

much as 4.6% to A$5.450, as of 0039 GMT.

IGO warned of an additional net loss in its first-half

results earlier this week, citing a decline in value of its

troubled Kwinana refinery, which includes lithium hydroxide

plant 2 that was expected to produce 24,000 metric tons per

year, but has been plagued by design issues and weak lithium

pricing.

Citi analysts noted that the announcement was "not a

surprise and removes an overhang".

The focus now shifts to other performing assets in Kwinana,

they said, adding that investor sentiment towards Kwinana is

already weak, and stopping downstream activities could simplify

the capital return story.

Some mines that produce lithium, used in electric vehicle

batteries, have curtailed operations or delayed expansions after

a 90% drop in prices over the last two years, while other

loss-making mines have maintained production, largely because

they have the support of Chinese battery-makers.

A growing list of producers have been reviewing lithium

operations in Australia since last year amid a rout in prices

that is expected to result in more production cuts, which

included the likes of Arcadium Lithium ( ARLTF ) and Albemarle

.

Tianqi Lithium, in a separate announcement on Thursday,

determined in a board meeting that "continuing with the

construction of Lithium Hydroxide Project Train II is not

economically viable".

On Friday, it stated it sees a total impairment provision of

around 1.412 billion yuan ($193.74 million) "for construction in

progress and right-of-use assets" at the plant.

($1 = 7.2880 Chinese yuan renminbi)