Australia has started building its biggest ever lithium processing plant.

Naturally it’s in Western Australia, and it comes at a time that confidence is growing in the state’s chances of realising its dream to play host to Australia’s battery mineral industry.

WA Premier Mark McGowan announced on Thursday that construction had started on lithium major Albemarle’s $1 billion plant in Kemerton, in the state’s south.

At full production, the plant will deliver up to 100,000 tonnes each year of premium battery grade lithium hydroxide.

Albemarle is stepping up its investment in Australia because of “a significant acceleration in demand for lithium hydroxide” from battery makers.

Lithium hydroxide is often cheaper to produce from hard rock mines than brine operations like those found in Chile.

Western Australia is the top global producer of lithium, the second largest global producer of rare earths, the third largest global producer of cobalt and the fourth largest global producer of nickel.

Albemarle has a 49 per cent stake in Talison Lithium, which operates the Greenbushes mine — the world’s largest hard rock lithium mine – 250km south of Perth.

As part of WA’s push to be right across the battery supply chain, Mr McGowan met with Albemarle in Washington in February last year to encourage the world’s largest lithium miner to build its big processing plant in WA.

The state government, which doesn’t want to miss out on the $2 trillion market opportunity, previously launched a Future Battery Industry Strategy, and formed a Lithium and Energy Materials Taskforce.

And it has been aggressive in its bid to have the new Future Battery Industries Cooperative Research Centre (FBI CRC) located in WA.

The state was shortlisted in October last year as a potential location for the CRC and an announcement on where exactly it will reside is expected to be made this month.

Association of Mining and Exploration Companies CEO Warren Pearce told Stockhead that the industry advocate is “reasonably optimistic” WA will be named the new home of the FBI CRC.

“It will still be a nationally focused CRC, just based in Perth, but given the federal government more recently announced additional funding prioritised for battery minerals, which are the CRC project grants, that’s a reasonable indication that the federal government is thinking in that space.”

“So we’re hopeful that will happen.”