Australian initiatives to challenge China on lithium processing

Australian initiatives to challenge China on lithium processing

Fri, 04/05/2018 - 15:18
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McGowan

WA Premier Mark McGowan with Deputy Premier Roger Cook (back left) and Mines Minister Bill Johnston at Kidman's launch in Kwinana.

Kidman facility

Kidman Resources and Chilean chemicals conglomerate SQM have committed to build a lithium processing facility in Kwinana, the latest in a series of initiatives in Western Australia to challenge China’s dominance in the sector.

The companies had been evaluating establishing the facility, which will have an initial capacity of 44,000 tonnes of lithium hydroxide or 37,000 tonnes of lithium carbonate annually, at sites in Kwinana, Bunbury and Kalgoorlie.

Around 400 jobs are expected to be created during the refinery’s construction phase, which is expected to kick off midway through 2019.

The facility, which will be constructed under a 50:50 joint venture known as Western Australia Lithium, will convert lithium ore from Kidman and SQM’s Mt Holland joint venture near Southern Cross.

Kidman managing director Martin Donohue said the selection of the Kwinana site was a major step forward in the company’s ambition of becoming a significant lithium processor.

“The benefits of the Kwinana site vastly outweigh those of the other sites we considered,” Mr Donohue said in a statement to the ASX.

“Importantly, this announcement follows our recent comments regarding the high level of interest we have experienced from various parties seeking refined lithium offtake.”

Market analysts have noted in recent months that while there are plenty of operations promising new lithium supply, including Australian players Pilbara Minerals, Altura Mining, Galaxy Resources, Mineral Resources, Core Exploration, Orocobre and Tawana Resources, processing facilities are in higher demand.

Analysis by Roskill shows that China is the dominant country in terms of conversion from lithium ore, known in the industry as spodumene, as well as lithium brines, to hydroxide or carbonate.

Around 41 per cent of the world’s lithium carbonate is processed in China, primarily by market leaders Tianqi Lithium and Ganfeng Lithium.

SQM currently accounts for 24 per cent of global production.

However, Roskill said around 785,000 tonnes of lithium carbonate equivalent will be needed each year by 2025, driven by upticks in the production of electric vehicles and power storage applications, but only around 750,000 tonnes is expected to be produced annually by that time.

Tianqi has moved to address that shortfall, building not only a $700 million processing facility in Kwinana, in close proximity to the Kidman-SQM proposal, but also two additional plants in China.

WA-based lithium miner Neometals is evaluating the prospects of constructing a lithium hydroxide plant near Kalgoorlie, announcing to the ASX earlier this week the appointment of Germany’s M+W Group to conduct an engineering study for the plant.

Neometals, which has offtake agreements in place with Ganfeng for production for the first stage of operations at its Mt Marion mine, is expected to make a final decision on whether to go ahead with the facility early next year.

The company is seeking to build the processing facility to gain a cost advantage over its competitors, particularly in transport, shipping and duty savings.

United States-based chemicals producer Albermarle is also planning a WA facility, after having committed to spend $560 million developing a lithium conversion plant near Bunbury.

Diversified mining group Mineral Resources is also exploring the possibility of constructing a WA lithium plant, at its Wodgina operation in the Pilbara, at which it launched a sales campaign for a minority stake earlier this month.

Another ASX-listed lithium producer, Argentina-focused Orocobre, is expected to make a decision on whether to proceed with a $US300 million expansion of its processing facility at its Olaroz operation midway through this year.

If Orocobre decides to proceed, it expects the plant to be operational by the second half of 2019.

Orocobre is also advancing plans to construct a lithium hydroxide plant in Japan, in joint venture with Toyota Tshuho Corporation.

The Western Australian state government also announced that it would continue to support the establishment of the state as an investment destination for downstream processing, committing $5.5 million in the upcoming state budget to support the development of technology metals and renewable energy sources.

“Our reserves of lithium, nickel, cobalt and other metals required for new technologies, combined with our technical skills and our close proximity to Asia, means WA is well-placed to capitalise on the growing battery market,” Mines and Petroleum Minister Bill Johnston said.