Deep in rural Western Australia, the Pilbara Minerals processing plant looms over the red earth, shaking as tons of lithium ore slurry passes through its pipes.
The plant converts ore from a nearby quarry into spodumene, a greenish crystalline powder that contains about 6 percent lithium and sells for about $5,700 a ton. From there, the spodumene is shipped to China, where it is further refined so it can be used in batteries that power products like cell phones and electric cars.
Australia mines about 53 percent of the world’s lithium supply, with virtually all of it being sold to China.
Pilbara Minerals, the nation’s largest independent lithium miner, is among companies exploring a new model for producing battery chemicals — made closer to where lithium is mined and sold to allies like the United States and South Korea.
The challenges of starting such an industry are daunting. China has a huge advantage, with years of experience and hundreds of lithium refining plants, and tighter control over the world’s battery manufacturing facilities. Australia’s tougher labor standards will also make it harder to compete with China on price, analysts said, even as some in Australia have argued they will result in a more reliable premium product.
“Consumers will buy electric vehicles, or even home solar panels, based on cost,” said Marina Zhang, a researcher at the University of Technology Sydney.
Pilbara Minerals is working with Australian technology company Calix on a project to refine spodumene into a lithium phosphate salt — a key step in preparing the material used in batteries. The companies are expected to make a final decision by the end of the year on whether to invest up to $47 million to build a demonstration plant.
Dale Henderson, chief executive of Pilbara Minerals, and other supporters have argued that refining lithium at home would create jobs, reduce the impact of shipping — 94 percent of shipped spodumene ends up as waste — and secure supply chains for the chemicals. for batteries amid rising geopolitical tensions.
The Australian Government has already invested hundreds of millions of dollars to support the lithium refining industry, betting that customers will seek lithium supply from a country that is more environmentally friendly and has a strong rule of law.
A government report last year forecast that 20 percent of the world’s lithium refining could take place in Australia by 2027, versus less than 1 percent. So far, Australia has just two facilities to produce battery-grade lithium hydroxide, used to make cathodes, with a third under construction. All have suffered significant construction delays and cost overruns.
The largest facility, owned by US chemical maker Albemarle and Australian miner Mineral Resources, is being expanded to refine lithium, Albemarle said.
The investment required to set up a lithium hydroxide plant is two and a half times higher in Australia than in China, said John Stover, a portfolio manager at Tribeca Investment Partners. “Historically, Australia has shipped raw ore to other countries for processing,” he said. That change “is going to be complicated.”
Chris Ellison, owner of Mineral Resources, said the government should make it easier for foreign companies to invest in Australian lithium refining via incentives.
“The US government offers them grants to build in Europe, the United States and places like Vietnam,” he said in February. “We need the Australian government to come to the party.”
Australia must also weigh acute geopolitical concerns. Lithium is critical to the country’s relationship with China, said Corey Lee Bell, a China expert at the University of Technology Sydney.
“If we were to cut off that supply, I think that would be a very, very big deal,” Bell said.
NATASHA FROST
THE NEW YORK TIMES
BBC-NEWS-SRC: http://www.nytsyn.com/subscribed/stories/6757746, IMPORTING DATE: 2023-06-12 20:50:05
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