WA encouraged to become battery supply chain hub

Western Australia (WA) should focus on becoming a major global supply chain hub for battery metals and downstream chemicals, according to a report released today in the Australian state. But it should not venture into the cathode and battery manufacturing sector that is dominated by China and other Asian countries.

Western Australia's Future in the Lithium Battery Value Chain was commissioned by the Chamber of Commerce and Industry of WA (CCI) in partnership with the Chamber of Minerals and Energy of WA, the Nickel West subsidiary of UK-Australian resources firm BHP, lithium producer Neometals, electricity distributor Synergy and the City of Kwinana.

WA is the world's largest producer of lithium from hard rock deposits and is also a producer of nickel, cobalt and manganese, other key ingredients in the making of lithium-ion batteries for electric vehicles and energy storage.

"The report reveals that Western Australia is well positioned to benefit from current and new opportunities in the global battery supply chain, with demand for lithium set to quadruple by 2025 on the back of electric vehicles fast becoming mainstream," said CCI chief executive Chris Rodwell.

"Maximising Western Australia's value in the lithium battery boom means playing to the state's strengths, and this report identifies that expanding our role from primary mineral production all the way down the chain to manufacturing batteries isn't the answer."

Using iron ore as an analogy, Rodwell said that even though WA is the world's largest exporter of seaborne iron ore, this does not mean it would be globally competitive in the manufacturing of steel.

"The same goes for lithium and being competitive in manufacturing lithium batteries compared to other more established and low-cost nations," he added, stressing that WA should expand down the battery value chain where it is competitive.

Apart from hosting the world's largest hard rock lithium resources, WA is becoming a significant exporter of lithium concentrate and increasingly a producer of downstream lithium hydroxide for cathode and battery manufacturers.

China's Tianqi Lithium is building a hydroxide plant at Kwinana, south of Perth, while US-based Albermarle is considering a similar plant further down the coast. Joint-venture partners Kidman Resources and Chile's SQM have announced plans for a 45,000 t/yr lithium hydroxide refinery at Kwinana and Perth-based resources firms Mineral Resources and Neometals are both planning lithium hydroxide plants.

BHP's Nickel West is building a 100,000 t/yr nickel sulphate plant with a cobalt sulphate circuit and is considering doubling this output to 200,000 t/yr.

"Western Australia is positioned to capitalise on opportunities for lithium hydroxide and nickel sulphate. Current and planned investment in domestic processing capacity will also see our minerals converted into chemicals, which is a big step for the state," said Chamber of Minerals and Energy chief executive Paul Everingham.

If all of the more advanced lithium projects in WA come on stream, the state's lithium concentrate production will increase to approximately 4.1mn t/yr, the report said. The extent to which this production will be converted to lithium hydroxide through domestic processing capacity or exported to conversion plants in China will depend on investment in conversion capacity.

In response to expanding demand for nickel-rich battery chemistries, demand for class 1 nickel feedstock from nickel sulphate conversion plants is expected to increase substantially. Nickel briquettes and powders that are more readily convertible to nickel sulphate inputs for the lithium-ion battery supply chain comprise around 10pc of global nickel production. WA is a major producer of this important subset of nickel product, accounting for around 45pc of the 230,000t of class 1 nickel briquettes and powders produced globally.

WA is seen as an important alternative source of cobalt to the Democratic Republic of Congo, which has around 60pc of the world's known reserves and is the biggest global producer. The Murrin Murrin nickel laterite operation in WA produces significant volumes of cobalt as a co-product, with otherWA nickel projects producing smaller volumes of cobalt by-product.

"We have mastered the first step of producing raw materials and are now progressing to downstream chemicals, but cathode and battery manufacture is not suitable for Western Australia as it requires significant research and development, specific technical skills and deep pockets," said Neometals chief operating officer Mike Tamlin, which is planning a lithium hydroxide plant at Kalgoorlie and setting up a lithium-ion battery recycling operation to extract lithium, cobalt, nickel, manganese and copper.

"The battery industry is the most demanding master, the devil is in the detail of impurities. Our intellectual property is going into purification circuits to ensure that we product the best quality downstream chemicals that we can."