While excitement around Western Australia’s burgeoning battery minerals sector continues to gain momentum, analysts have warned local industry against a gung-ho approach to downstream processing.

US lithium expert Joe Lowry threw cold water over WA’s ambitions to start manufacturing lithium-ion batteries, advising the domestic market to “make the chemicals first and do that right”.

Speaking at a Perth lithium market update conference in May, Mr Lowry said WA wouldn’t be able to match the manufacturing power of experienced producers like China, South Korea and Japan.

In his personal blog, Mr Lowry went on to say there were stakeholders in the “common-sense camp, but it seems many others in Australia are still suffering from a Southern Hemisphere version of Great Expectations.”

Weighing in on the debate, the Chamber of Commerce and Industry of WA (CCIWA) has also cautioned the minerals sector against pushing too far down the value stream.

In a November report, WA’s Future in the Lithium Battery Value Chain, the CCIWA recommended the local sector play to its strengths by focusing on the production of key lithium-ion battery minerals.

“The idea of a WA battery industry may be unachievable against strong competition from China and elsewhere,” the report said.

“WA’s mixed historical success in value-adding to its mineral production and comparative disadvantage in low margin manufacturing are reasons for caution.”

Chief Scientist of Western Australia Peter Klinken said while these comments weren’t unreasonable, and although it wouldn’t be easy to establish a battery production industry locally, the idea had to be explored at the very least.

“You can’t instantaneously go from zero to 100,” he said. “It’s a staged process in my view, but it’s certainly one we need to consider and not just a case of saying ‘we can’t do it’.

“We are starting to make the lithium hydroxide and nickel sulphate and now there are companies actively talking about going to the next step with making battery precursors.

“It’s not something which is going to happen overnight, but I don’t think we should dismiss it. If it all stacks up, we should absolutely go for it.”

Finding the right market

Although the Australian mining sector has traditionally been ‘dig-up and ship-o ’ focussed and lacks experience when it comes to downstream processing, Regional Development Australia Perth CEO Colleen Yates said the domestic market had certain advantages over international competitors.

One of the brains behind last year’s seminal Lithium Valley report, which presented the case for battery manufacture in WA, Ms Yates said Australia was too far behind the

likes of China to participate in manufacturing batteries for electric vehicles, but had the potential to excel in battery production for niche industries.

“If we change our focus to what we already do best – which is highly specialised manufacturing – and we capture those battery-reliant industries that value protection of their IP and design, we can organically grow our battery cell future and become world-class leaders in that space,” she said.

“Here we have the opportunity to push for advanced manufacturing in our state to capture greater value and diversify the economy.”

Ms Yates said it was about broadening the battery supply chain and offering a new product other countries couldn’t.

“I believe we need to move the conversation around batteries towards diversifying the global supply chain,” she said. “Australia can offer the world low sovereign risk, specialised technological advancements, fairly robust industrial relations and address global environmental/ community concerns.

“Additionally, our technology and know-how are impressive – and contrary to the popular belief that Australia is expensive to operate in, such as costs for power, we can offer good rates.

“During a recent trip to the EU Commission, I was told that on average European companies pay around 18 euros ($.30) cents per KwH for power – here in WA we can offer it for around 10 cents.”

According to Mr Klinken, one of the reasons Australia is so far behind other countries in the value-adding space has been the lack of a clear plan or strategy in the past.

“There hasn’t been consistent support for change, it has come in bursts,” he said. “There’s a bit of support and then it has been withdrawn.

“For any industry or business, if you’re going to invest you need consistency. Planning in this area has been inconsistent.

“But I’ve noticed a significant change attitude just in the last 18 months. The WA Government has played an important role in coming up with a strategy that says ‘here we are, we’re open for business, come and talk to us’. ”

Battery minerals projects start to take shape

Companies have traditionally been quite reluctant to downstream process in Australia, but sentiment is changing.

Just last month, Kibaran Resources said it would seek to secure funding and environmental approvals for a graphite processing plant at the Kwinana Industrial Area, 30km south of Perth.

The announcement came o  the back of an engineering study which forecast the project would be financially and technically robust, with an upfront capital cost of US$22.8 ($32.7) million for an initial capacity of 5000 tonnes per annum.

A further US$49.2 million ($70.8 million) would then be spent to expand production to 20,000 tonnes per annum of battery-grade graphite to help meet what Kibaran predicts will be a rising global demand for more geographically diversified and environmentally sustainable sources of high-quality supply.

Kibaran is also planning to include research and development capabilities within the proposed Kwinana facility to support the advancement of further downstream activities and assist Australia’s ambition to become a regional lithium-ion battery manufacturing centre.

A final investment decision is expected to be made in the first half of 2020.

The Kibaran project is representative of the increasing number of downstream developments in WA.

The state’s first lithium hydroxide plant is poised to produce its first tonnes of concentrate in the second half of this year.

As a first-stage project, Tianqi Lithium’s Kwinana-based operation will initially produce 24,000 tonnes of lithium hydroxide per annum before expanding to a 48,000-tonne capacity.

Albemarle, Tianqi’s Greenbushes joint-venture partner, has also invested serious capital into WA, starting construction on its $1 billion lithium-processing facility in March.

The Kemerton plant, 17km north of Bunbury, will produce an incredible 100,000 tonnes per annum of battery-grade lithium hydroxide once fully operational.

While some industry players have moved quickly to take advantage of the rising demand for battery minerals, others with less capital to play with are taking a more cautious approach to downstream processing.

In March, diversified player Neometals announced it would delay the feasibility study on its Kalgoorlie lithium hydroxide plant due to unexpected costs and softening lithium prices.

An investment decision was initially expected by mid-2019, but now it is unclear how long the delay will be while Neometals waits for market conditions to improve.

Pilbara Minerals is also undecided on the specifics of its proposed lithium refinery.

The company is unsure whether downstream facilities that would process ore from its Pilgangoora lithium-tantalum project near Port Hedland will be built in WA.

As reported by The West Australian in June, Pilbara Minerals boss Ken Brinsden said while hosting a lithium refinery in Australia was one of the solutions, “it equally could go elsewhere”.

Mr Klinken argued, however, that this was not the time for the mining sector to take a risk-aversive approach – instead it was the moment for the local industry to get its mojo back.

“We just need to get our confidence back and realise these wonderful opportunities,” he said.

“This is a unique moment in time to bring industry and government together in my view.

“There are so many things that are happening and it is moving at a rapid pace – we really need to make sure that we are participating in this brave new world.”

Image: Joe Lowry. Credit: The West Australian.