Lithium:from rocks to chemicals

By Anthony Fensom

Australia’s lithium miners have enjoyed a stand-out year, with record exports and high prices helping the key battery metal seize the spotlight. Yet, with the nation grabbing a leading share of global production, the focus is now on moving into downstream processing to capture even more value.

The value of the nation’s lithium exports hit a record $19.5 billion in fiscal 2023, on the back of a near-tripling in prices and with a 44 per cent increase in exports. Yet, 96 per cent was exported to China largely as spodumene (lithium) concentrate, also highlighting the nation’s dependence on a single export market, according to data provided by the Office of the Chief Economist.

Rising mine production in Australia has been driven by the expansion of existing lithium mines, including Greenbushes, Mount Cattlin, Mount Marion, Pilgangoora and Wodgina, the Office of the Chief Economist reported in its June 2023 Resources and Energy Quarterly.

Additional production is underway at Finniss, and is expected to commence at Mount Holland and Kathleen Valley, the report said, with other lithium deposits also expected to add to supply from 2025.

Domestic refining

Australia is developing capacity to refine lithium domestically, albeit from a low base. Production of lithium hydroxide is expected to total 5.8 kilotons in fiscal 2023, reflecting the start of production at the Kwinana plant.

Commercial production was declared at Kwinana’s lithium hydroxide refinery in the December 2022 quarter, with early works underway on a second train, according to IGO. Kemerton’s lithium hydroxide refinery expected production at its second train in the September 2023 quarter, with plans to build a third and fourth train.

A second lithium hydroxide refinery at Kwinana is under construction, with first production expected in 2024, according to the report.

Australia’s total lithium hydroxide production is expected to grow to 56 kilotons in fiscal 2024, and to 89 kilotons by fiscal 2025, suggesting that 15 per cent of Australian spodumene could be refined domestically instead of being exported to Asia; however, the Australian industry’s move downstream has not been completely smooth sailing. 

The Kwinana refinery produced ‘well below expectation’ in the June 2023 quarter after a series of technical setbacks, while a new refinery at Mount Holland has been pushed back to 2024.

Nevertheless, the federal government has backed miners’ plans to move downstream.

‘We must look to grow our downstream capabilities in areas of competitive advantage by enabling more processing and refining of minerals onshore in Australia, and realise the benefits derived from value-adding to our resources,’ Australia’s Minister for Resources, the Hon. Madeleine King MP, said in the federal government’s Critical Minerals Strategy 2023–2030.

By 2030, electric vehicles could represent more than 60 per cent of vehicles sold globally, with demand for battery metals, such as lithium, expected to increase by 40 times the 2020 levels by 2040. As a result, the world will need around 50 new lithium mines to meet emissions-reduction goals by 2030, the strategy said.

Critical minerals mining could add $71.2 billion to Australia’s gross domestic product by 2040, but this could nearly double to $133.5 billion if the nation builds downstream refining and processing capacity, according to the strategy.

The federal government will support such initiatives through various funds, including the National Reconstruction Fund, which includes $1 billion for ‘value-add in resources’, and the Northern Australia Infrastructure Facility, which will allocate $500 million towards critical minerals projects.

Backing such moves, a report by analysts McKinsey found that Australian lithium hydroxide plants could be the world’s lowest-cost producers over the life cycle of the assets, despite higher-construction costs than in Asia and the Americas.

The conversion of all of Australia’s spodumene concentrate production into lithium hydroxide could unlock annual revenues worth up to $9.6 billion, McKinsey said in its Australia’s potential in the lithium market report.

McKinsey expects lithium hydroxide to overtake lithium carbonate as the most-consumed form of the metal between 2026 and 2030. While demand for lithium carbonate is expected to grow by about 2.65 times between 2022 and 2030, demand for lithium hydroxide could surge eightfold over the same period.

Downstream drive offshore

In Quebec, Canada, Sayona Mining has flagged plans to move downstream, through the potential production of lithium carbonate or hydroxide. Such a plant would likely be the first fully integrated operation in North America, according to the company.

Production of spodumene concentrate at its North American Lithium (NAL) operation commenced in March 2023, with the first shipment to the international lithium market in August.

In June 2023, the Brisbane-based company released a report suggesting that a standalone lithium carbonate plant at NAL could be worth as much as $3.2 billion, with the value of a fully integrated mining operation exceeding $5 billion.

Another Australian miner, Lake Resources, has promoted plans to sustainably produce lithium carbonate using direct lithium extraction (DLE) at its flagship Kachi project in Argentina.

In June 2023, Lake Resources announced a two-phase development approach, targeting production of 50 kilotons per annum of battery-grade lithium carbonate by 2030. The first production is expected in 2027, based on technology partner Lilac Solutions’ DLE technology.

In August, the company said it remained on track to complete a definitive feasibility study for its Kachi project by December 2023. Lake Resources has undertaken further drilling at Kachi, with the results continuing to confirm the ‘large-scale and quality of lithium-bearing brine’.

Elsewhere, Pilbara Minerals is building a lithium hydroxide plant in South Korea with its partner Posco, arguing that the project will cost 40 per cent less than in Australia. Brisbane-based Allkem reported that its Naraha lithium hydroxide plant in Japan achieved its first production of lithium hydroxide in late 2022.

‘The outlook for lithium demand is excellent, as the global energy transition gains traction, and more supply is crucial to support this clean energy drive,’ says David Dickson, Lake Resources Managing Director and CEO.

For Australian miners, the drive downstream is expected to further cement an increasingly key role in the global lithium industry – from mining to processing. 

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