Australia’s first “gigafactory” is a step closer after Queensland premier Annastacia Palaszczuk committed $3.1 million to investigate building a $2 billion lithium-ion plant in Townsville.

A gigafactory is a concept for huge plants that can produce lithium-ion batteries by the gigawatt-hour (GWh). A GWh is equivalent to one billion watts for one hour.

Electric car maker Tesla built the first gigafactory in Nevada to produce 35 GWh of batteries per year needed to power the 500,000 electric cars it plans to build annually.

“When I had the opportunity to visit Tesla’s gigafactory in Nevada during my US trade mission earlier this year, it was clear that this is an industry where early adopters stand to reap the rewards,” Premier Palaszczuk said.

Jobs and the environment are key issues in the Queensland State election, to be held on November 25.

Labor Premier Annastacia Palaszczuk is battling the Liberal National opposition and minor parties such as One Nation for a second term.

Premier Palaszczuk said the $3.1 million election promise would fund a feasibility study for the 15GWh gigafactory which could be in production by 2020.

The plant would be built on 400 hectares at the town of Woodstock, 40km south of Townsville.

A consortium called Imperium3 — which includes ASX-listed graphite play Magnis Resources (ASX:MNS) and former Macquarie banker Bill Moss’s Boston Energy and Innovation — announced the project in April.

The plant could produce either 250,000 car batteries per annum (each providing a 400km range), one million home battery units or support 300 microgrids to power small towns.

Imperium3 continued to receive strong support from local and state government members along with the private sector, Magnis told investors.

Funding discussions continued to progress with government entities and private enterprises.

Magnis’s key graphite mining project is the Nachu Graphite Project in south east Tanzania, about 220km from the sea port of Mtwara.

Graphite is a key component of lithium-ion battery production, along with cobalt and lithium.

Graphite is used in the anode of the battery and it is where oxidation takes place in the battery where electrons are freed and flow out of the battery.

Shares in Magnis closed 7 per cent higher at 52c. The company has a market cap of $286 million.