Catching the battery wave: Midstream processing key to Australia’s success

Australia needs to upgrade its role in the battery metals value chain and integrate its industry with cross-border value chains in order to capture opportunities offered by the sector.

This is one of the findings of a research project by the Future Battery Industries CRC (FBICRC) and Perth USAsia Centre to investigate existing battery value chain governance, security and sustainability, and identify economic opportunities for Australia within that framework.

FBICRC chief executive officer Stedman Ellis says that as the majority of the value-add in battery supply chains comes from the mid-stream and downstream processes, these stages offered the best returns for the Australian economy rather than sticking with the export of raw or up-stream processed ingredients for manufacturing.

Perth USAsia Centre research director Dr Jeffrey Wilson added that mid-stream processing was a natural “next step” that could be built upon existing minerals capability, making it the area in which policy efforts would generate the greatest return on investment.

“Australia will also need to take significant steps to decarbonise its operations to be able to label and differentiate itself as a producer of ‘clean’ battery materials,” he said.

“Internationally, government and business should also actively pursue international partnerships with key industry players, as success in global value chains will not be achieved by working alone.”

Ellis said the project’s report was interesting because it tied-in with a broader discussion underway in Australia in regard to supply chain security across essential goods and services.

He noted that while power grid disruptions did not occur during the COVID-19 pandemic, it was important that the uninterrupted supply of base load electricity be considered as Australia continued to transition its generation capacity to renewable sources.

“With all current renewable generation methods requiring battery storage solutions in order to be deployed at grid scale, the application of battery technology is closely linked to the growth in renewable generation,” Ellis explained.

“This reinforces the importance of Australian industry being as integrated as possible into the battery supply chain, which in turn improves the country’s resilience to future global-scale disruptions.”

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Global battery metal production has grown strongly over the last decade with the sector valued at $6.5bn in 2017.

Perth USAsia Centre’s Dr Wilson noted that Australia was uniquely positioned to capture more value in the mid-stream and downstream processing of battery materials as it had geological endowment in all six battery minerals that were identified as core to the sector — cobalt, graphite, lithium, nickel, rare earths and vanadium.

“Securing production and processing of these commodities under Australian ownership is important for Australia’s future energy security as well as that of its strategic allies, including the United States and Asian battery manufacturing hubs like South Korea and Japan,” he added.

“The current concentration at the extraction stage exposes downstream manufacturers to a heightened degree of supply risk.”

The report noted that in all but one of the minerals, a single dominant producer accounts for between half and three-quarters of all global supply.

For lithium this is Australia (58 per cent), and for cobalt it is the Democratic Republic of Congo (61 per cent). More significantly, China is the dominant producer of three out of the six battery minerals, being graphite (70 per cent), rare earths (80 per cent) and vanadium (56 per cent).

Only nickel production is diversified across the globe.

Looking ahead, the report recommended that a value-chain informed strategy should focus on building mid-stream capacity through international partnerships.

Domestic efforts should target Australia’s mid-stream processing industries while internationally, governments and businesses should actively pursue international trade, investment and technology partnerships with key global players.

This would be needed to address the key gap in Australia’s policy suite.

The research found that while 24 Australian policies focused on exploration only and a further 14 bundled exploration, mining and processing activities, just one policy — a Western Australian lithium royalty reform of 2019 — addresses the mid-stream stage.