Australia has until 2019 to pick up its game on lithium, says expert

Link copied to
clipboard

Australia captures only half a per cent of the lithium value chain — and must move downstream into processing if we are to benefit from the electric car revolution.

That’s the conclusion of infrastructure advisor InfraNomics.

“We can’t think in history of another strategic material that actually contributes so little to the country of origin,” InfraNomics director Cameron Edwards told a gathering of investors and mining companies in Perth yesterday.

“Even if we continue on the same pathway, by 2025 we’ll be capturing less than what we we’re capturing today.”

Lithium is one of the much-loved battery metals that is expected to see big growth from electric car makers.

>> Scroll down for a table of ASX-listed stocks offering exposure to lithium

The International Energy Agency estimates that the number of electric cars on the road will reach at least 125 million – but could be as high as 220 million – by 2030.

The federal and Western Australian governments have recently thrown their support behind the lithium sector, but Mr Edwards says that’s not enough to capture full value from the market.

Lithium refining is the answer

The key to growing the industry, according to Mr Edwards, is secondary processing.

“Secondary processing is moving beyond the lithium hydroxide, lithium carbonate and it’s about how we bring these companies – which are primarily Japanese, Korean and Chinese – to Australia to operate here,” he said at the Association of Mining and Exploration Companies (AMEC) convention yesterday.

Western Australia already does some refining — but it’s only small scale.

Chinese-backed Tianqi Lithium is spending more than $700 million on building a two-stage lithium processing plant in Kwinana to produce 48,000 tonnes annually.

China, meanwhile, accounts for the bulk of global refining, with a 73 per cent share.

“China has had an integrated policy, a holistic policy, for many years and that’s why they have an integrated value chain and capture the majority of the value of lithium,” Mr Edwards said.

“We in Australia are not there yet. It would be wise, I suppose, for the governments to work with other countries to improve the vertical integration of supply chains for the benefits of all.”

Mr Edwards says governments and industry must work together because the window of opportunity for Australia to step up and take a greater share of the lithium market is closing.

“It’s very important that happens in the next 12 to 18 months – maximum 18 months,” he said.

“We’re in that window already. It’s most likely going to close sometime in 2019.”

Government action 

Federal Resources Minister Matthew Canavan and Western Australian Mines Minister Bill Johnston have both vowed to do everything they can to help grow Australia’s lithium industry.

“I do commend the work AMEC are doing, particularly about lithium,” Mr Canavan said on day one of the AMEC Convention.

“I will be catching up with them … to talk about what the federal government might be able to do to help facilitate further investment in the lithium supply chain here in Western Australia and of course right across the country.

“Because we are the world’s largest producer of lithium. We’ve trebled production in the last eight years and there is of course huge future opportunities in that sector.”

Mr Johnston, who has been tasked with heading up Western Australian Premier Mark McGowan’s new lithium and battery metals taskforce, said there is a “revolution happening around the world”.

“At the moment 99 per cent of motor vehicles sold have an internal combustion engine,” he told delegates.

“Regardless of any economic decisions, there’s been policy decisions of governments elsewhere in the world that shows there’s going to be more electric cars used in the future.

“Perhaps 30 or 40 per cent of motor vehicles within 20 years will have electric motors. That is an enormous opportunity for us here in Western Australia.”

• Bookmark this link for small cap breaking news
• Discuss small cap news in our Facebook group
• Follow us on Facebook or Twitter
• Subscribe to our daily newsletter

The first order of business for the Western Australian government’s recently formed lithium taskforce is to pull together a “roadmap on the future of the industry” over the next six months.

Mr Johnston has also agreed to put $6 million towards funding an energy industry Cooperative Research Centre if the federal government decides to build the $50 million facility in Western Australia.

The federal government, meanwhile, has inked an agreement with the US to partner on critical metals.

The US government recently finalised the list of 35 metals it considers critical, and it includes lithium.

“There is enormous opportunity here to expand our minerals sector because of new demand for minerals for new technologies,” Mr Canavan said.

“I often use the example of a mobile phone, which is made up of 25 different minerals and metals – much more complex than a steam turbine – and we produce 18 of them here in Australia.

“Of the 35 critical minerals the United States has identified, we are in the top five in the world for reserves for 13 of those and we are in the top five for 12 of those minerals in terms of production as well.

“So we’ve got an enormous opportunity to partner with the US here to develop our industries.”

Here’s a recent table of ASX-listed stocks offering exposure to lithium:

share

• 
• 
• 
• 

Link copied to
clipboard

SUBSCRIBE

Get the latest Stockhead news delivered free to your inbox.

Name*

Email*

This field is hidden when viewing the form

Email Lists

Morning Update

Lunch Update

Market Close Update

Weekend Update

Spotlight

Email

This field is for validation purposes and should be left unchanged.

It's free. Unsubscribe whenever you want.

By proceeding, you confirm you understand that we handle personal information in accordance with our Privacy Policy.

You might be interested in

Mining

The Father of Cadia: Majors have pledged $300 million to find the next gold giant in NSW's Lachlan Fold Belt

September 12, 2024 | Josh Chiat

News

Rise and Shine: Everything you need to know before the ASX opens

August 15, 2024 | Gregor Stronach

News

Closing Bell: ASX climbs as Tech takes charge; CBA, AGL gain on earnings, LiveHire doubles

August 14, 2024 | Eddy Sunarto