Galaxy suffers Chinese labour woes
THE BOURSE WHISPERER: Perth-based lithium company Galaxy Resources has learnt that labour shortages are not confined within Australian borders.
The company has had to revise commissioning schedule of its Jiangsu lithium carbonate project due to construction and fabrication labour shortages in China’s Jiangsu region.
The project’s Engineering, Procurement, Construction Management (EPCM) contractor, Hatch Engineering has provided Galaxy with a revised schedule and budget plan for Jiangsu.
The new schedule indicates the project to be 76% complete with the back half of the Jiangsu plant, which includes purification, drying, micronising and bagging, to be completed with commissioning to commence during the third quarter 2011.
The front half of the plant, which includes calcination, sulphation, leaching and precipitation, is expected to be completed with commissioning to commence during Q4 2011.
The tightening of the project schedule has been caused by pressure applied to the skilled labour market in China’s Jiangsu region, which has resulted in delays to construction and equipment delivery.
China’s western provinces have suffered a reduction in skilled labour returning to east coast projects like Jiangsu post-Chinese New Year.
Labour shortages have also adversely impacted equipment and plant suppliers and their ability to deliver to the Jiangsu project on time.
As well as suffering labour woes Galaxy has also had to make late changes to the plant design from the local approval process.
These resulted in an increase in plant power capacity and alterations to equipment delivery timeframes, which added pressure to the Jiangsu schedule and budget.
As per the revised schedule, the remainder of the Jiangsu plant, including calcination, sulphation, leaching and precipitation, will be completed with commissioning to commence during Q4 2011.
The revised capital budget has grown to A$99.8 million from the previous estimate A$72.5m, representing a 36% increase in Australian dollar terms.
Most of the increase relates to a rise in material requirements, such as concrete, steel and process equipment, which have emerged as design details were finalised.
In the company’s release to the Australian Securities Exchange, Galaxy Resources managing director Iggy Tan said the previous estimation of material quantities and design changes was the result of the company’s strategic decision to build the Jiangsu plant on an accelerated basis, paralleling both the design and construction process.
He went on to say the market demand for higher purity lithium (>99.5%) persuaded the company to add a secondary purification circuit to the original design.
Tan said no further capital raising will be required to complete the construction and start-up of Jiangsu as a contingency was incorporated in the previous A$120 million raising last quarter.