Lithium Industry Looks to Australia for Refining, Not Just Mining

 Lithium com­pa­nies are look­ing to re­fine the cru­cial bat­tery metal in Aus­tralia, where much of it is mined, in an ef­fort to re­duce ship­ping waste and de­velop new sup­ply chains that by­pass China.
The mar­ket for lithium—used in the pro­duc­tion of elec­tric bat­ter­ies—is tight and likely to get tighter. De­mand this year is ex­pected to be 910,000 met­ric tons of lithium car­bon­ate equiv­a­lent, or LCE, ex­ceed­ing the 900,000 tons in sup­ply. Bench­mark Min­eral In­tel­li­gence, which tracks the global bat­tery sup­ply chain, es­ti­mates that by 2030 around 2.7 mil­lion tons of LCE will be re­quired an­nu­ally, out­strip­ping sup­ply by 300,000 tons. 

Around half of all lithium is mined in Aus­tralia, mainly in the min­ing-friendly ju­ris­dic­tion of West­ern Aus­tralia. Most is shipped to China in a raw form called spo­dumene, which is about 6% lithium. Chi­nese com­pa­nies re­fine it into lithium sul­fate and then process it into the lithium hy­drox­ide used to make cath­odes for bat­ter­ies.

China plays an out­size role in bat­tery pro­duc­tion, ac­count­ing for 44% of all lithium re­fin­ing glob­ally and 70% of bat­tery cell pro­duc­tion, ac­cord­ing to Bench­mark Min­eral In­tel­li­gence. 
Tees Val­ley Lithium, or TVL, a U.K.-based re­finer is in­vest­ing in a lithium-sul­fate re­fin­ing fa­cil­ity in Aus­tralia. The ef­fort is ex­pected to re­duce the vol­ume of lithium-re­lated ma­te­ri­als shipped by about 75% to 80%. 

For Aus­tralian min­ing busi­nesses, cre­at­ing down­stream pro­cess­ing fa­cil­i­ties such as a sul­fate hub and then spread­ing the cost would help to make the en­tire sup­ply chain more ef­fi­cient, said Ross Gre­gory, part­ner at New Elec­tric Part­ners, an Aus­tralian con­sult­ing firm. The new pro­cess­ing fa­cil­i­ties will bring more tech­ni­cal knowl­edge lo­cally of chem­i­cal man­u­fac­tur­ing and help the coun­try ad­vance along the lithium sup­ply chain, he said. 
Some com­pa­nies also are build­ing Eu­ropean fa­cil­i­ties for the next stage of the process: re­fin­ing lithium sul­fate into lithium hy­drox­ide. TVL this year plans to start con­struc­tion on a lithium hy­drox­ide re­fin­ery in the north of Eng­land that is ex­pected to pro­duce by mid-2025. Oth­ers, in­clud­ing Green Lithium Re­fin­ing Ltd., are es­tab­lish­ing sim­i­lar plants in the area. 

Chi­nese lithium pro­ducer Tianqi Lithium Corp. has also es­tab­lished a hy­drox­ide plant in West­ern Aus­tralia, as a joint ven­ture with Aus­tralian miner IGO Ltd. 
These new fa­cil­i­ties would even­tu­ally sup­ply bat­tery pro­duc­tion fa­cil­i­ties in places such as Ger­many and Swe­den.

This month, TVL’s par­ent com­pany, U.K.-based Alkemy Cap­i­tal In­vest­ments PLC, an­nounced a mem­o­ran­dum of un­der­stand­ing to sup­ply lithium hy­drox­ide to Recharge In­dus­tries Pty Ltd. Recharge, an Aus­tralian bat­tery-man­u­fac­tur­ing startup, ear­lier this month was se­lected as the pre­ferred bid­der for col­lapsed U.K. ri­val British­volt.
“It’s a move to­wards an in­ter­me­di­ate strat­egy…away from mines and con­cen­trates, to build­ing value-added prod­ucts in coun­try,” said TVL Chief Ex­ec­u­tive John Walker. 

Eu­rope plans to add more re­new­able-en­ergy ca­pac­ity and wants to sup­port in­dus­tries like the au­to­mo­tive sec­tor, mean­ing build­ing out the lithium sup­ply chain will be vi­tal, say an­a­lysts. Lithium min­ing projects in Ger­many and Por­tu­gal have emerged, al­though the per­mit­ting process can be com­plex, par­tic­u­larly if there is lo­cal op­po­si­tion. A prime ex­am­ple is Rio Tinto PLC’s $2.4 bil­lion Jadar lithium project in Ser­bia, which was scrapped in early 2022 af­ter lo­cal protests.

Chem­i­cal pro­cess­ing in­stead of min­ing raw ma­te­ri­als, there­fore, looks to be the near-term so­lu­tion for Eu­rope.
“Min­ing in Eu­rope will not sig­nif­i­cantly con­tribute to meet­ing Eu­rope’s de­mand for crit­i­cal min­er­als this decade as it takes 10-15 years to reach com­mer­cial pro­duc­tion ca­pac­ity from a mine from the mo­ment a re­source dis­cov­ery is made,” said Jeff Am­r­ish Ri­toe, an in­de­pen­dent en­ergy and raw-ma­te­r­ial ad­viser. A sim­i­lar time­line has been floated to de­velop a re­cent rare-earths dis­cov­ery in Swe­den.

Mr. Ri­toe said that rel­a­tively com­plex Eu­ropean per­mit­ting rules mean that com­pa­nies will likely need to work with more min­ing-friendly ju­ris­dic­tions such as Canada and Aus­tralia to meet the ris­ing de­mand for lithium. In the mean­time, new pro­cess­ing fa­cil­i­ties can be built in three to five years, cre­at­ing more op­por­tu­ni­ties for lithium min­ing com­pa­nies.