Western Australia's (WA) state government has capped all lithium royalties at 5pc.
WA is the world's largest producer of hard rock lithium ore (spodumene) and the world's largest lithium exporter.
While most of its spodumene is processed into concentrate and exported to China through offtake agreements, increasing amounts are being converted into lithium hydroxide, the chemical preferred by electric vehicle battery manufacturers. Lithium hydroxide is priced at around $12,000/t compared with a current contract price of around $600/t for concentrate.
To stimulate downstream processing, a 5pc feedstock royalty rate for lithium hydroxide and lithium carbonate, is being introduced. It applies where downstream lithium products are the first products sold and the feedstock is spodumene concentrate.
WA produced 288,000t of lithium carbonate equivalent in the 2018-19 fiscal year ending 30 June and earned $1.4bn from lithium exports.
China's Tianqi Lithium has doubled its lithium hydroxide plant to 48,000 t/yr at Kwinana near Perth, while US-based Albemarle is building a 50,000 t/yr facility at Kemerton in southwest WA. Chile's SQM and Australian industrial conglomerate Wesfarmers also have plans for building a lithium hydroxide plant at Kwinana.
