The supply of Western Australian lithium has certainly fuelled the acceleration of the battery revolution that is taking place around the world. Even with WA’s ability to bring new materials to market, demand is still outpacing supply. As a result, there has been a significant growth in lithium carbonate equivalent (LCE) prices from a multiyear base of approximately US$8k/t to around US$16k/t. Cobalt’s growth has been more spectacular rising from approximately US$22k/t to current prices over US$80k/t (see further information in Appendix C – Current and Planned Energy Metals Investment). 42 WA has the potential to remain a major global supplier by continuing to expand supply. Another advantage for WA is the customer preference for lithium hydroxide (as opposed to lithium carbonate) as a supply material for battery cells. Since lithium hydroxide is best produced from hard rock spodumene (as found in WA), WA has a material and technological advantage when compared with less-valued lithium carbonate despite carbonate’s lower production cost when extracted from brines such as those found in South America. Hard rock mining has a number of distinct advantages over brine production. Brine production requires an evaporative process through the use of ponds that are dependent on weather conditions to extract lithium salts that can be extracted for a profit, averaging around 200 to 1,400 milligrams per litre producing a 1% to 2% lithium concentrate. Hard rock extraction relies on traditional methods of drilling and processing which can take place near mine or near market and can deliver anywhere between a 1% to 6% concentrate. 43 Currently 100% of WA’s low value lithium concentrate (spodumene) is exported to China for processing. This is in the process
of changing with lithium refining plants like Tianqi, SQM/ Kidman and Albemarle. China’s early recognition of the battery and power industry transformation resulted in the adoption of a holistic policy approach including investing in operating mines and establishing long-term production off-takes. At present, the vast majority of future lithium extraction in WA is already committed to foreign buyers. As miners are capital constrained this has often been necessary to underwrite the development of mines, however, it restricts the opportunities for local “value add” in future, unless concessions are secured or government policy is changed to encourage investment towards local downstream processing and battery cell production. With WA’s extensive resources of rare earth materials, combined with reserves of boron and other minerals, there is the potential to process these minerals domestically. This also allows for the further downstream domestic manufacture of permanent magnets for turbines and motors with the potential to expand manufacturing further downstream. Outside of China, rare earths production is primarily undertaken by Australian producer Lynas Corporation as a significant non- Chinese supplier, though their main off-take agreement is with China. Lynas’ refining plant is in Malaysia. There are several other Australian-based resource REE projects that could assist Australia solidify its position as the main commercial alternative to China in the production of REE. Expected to go into production in mid- 2018, Northern Minerals’ Browns Range REE project, located 160 kilometres south-east of Halls Creek in WA’s East Kimberley region, will produce 573 tonnes of total rare earth oxides per year, of which 50 tonnes will be dysprosium. 44 Although only a portion of the
42 Department of Mines, Industry Regulations and Safety (2017), 2017 Major Commodities Resources File, http://www.dmp.wa.gov.au/About-Us-Careers/Latest-Statistics-Release-4081.aspx . (Accessed: 01 May 2018) 43 LePan, Nicholas (2018), "Hard Rock Lithium Versus Brine: 4 Juniors to Play This Space", Smallcap Power, 18 May 2018, https://smallcappower.com/community-contribution/community-articles/hard-rock-lithium-deposits/ . (Accessed 29 May 2018) 44 Australian Financial Review (2018), "Northern Minerals eyes role in global EV boom", Australian Financial Re - view, 30 May 2018, http://todayspaper.smedia.com.au/afr/shared/ShowArticle.aspx?doc=AFR/2018/05/30&enti- ty=Ar03502&sk=74292D9E&mode=text . (Accessed: 30 May 2018)
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