Lithium deals cast doubt on Australia’s onshore battery material refining dream

Australia’s bid to become a major refiner of battery-ready chemicals is taking a knock as smaller producers look to form joint ventures with major Asian conglomerates to manufacture lithium hydroxide overseas.

Liontown Resources, which is developing the Kathleen Valley project in the northern Goldfields, announced an agreement with Japanese trading company Sumitomo on Monday to explore production of lithium hydroxide in Japan.

It follows a move by Pilbara Minerals, which has partnered with South Korea’s POSCO, to manufacture the highly-refined product in the Asian nation.

Producing lithium hydroxide in Australia was “a big bet to make”, Liontown chief executive Tony Ottaviano said Monday in an interview at the Diggers & Dealers conference in Kalgoorlie.

While lithium hydroxide is used in nickel-cobalt-manganese batteries, it’s still uncertain whether this type will continue to dominate. Future market demand was “too fluid and dynamic” to predict, Mr Ottaviano said.

The Federal Government has ambitions to help break China’s stranglehold on the battery supply chain — a priority for the US and other Western governments — to help fuel the electric vehicle boom. While the nation produces more than half of the world’s lithium, it ships almost all of it to China in the form of bulky, low-grade ore, where it is refined into a delicate, battery-grade chemical.

The current Australian lithium hydroxide refineries — operated south of Perth by China’s Tianqi Lithium and US company Albemarle — have struggled to meet production targets. WA-based conglomerate Wesfarmers is due to start production next year. In May, POSCO said it was 40 per cent cheaper to build a lithium processing plant in South Korea than Australia due to cheaper labour and materials costs, according to the Australian Financial Review.

Nascent lithium miners in Australia aren’t rejecting onshore processing altogether. But instead of ultra-refined lithium hydroxide, they are exploring less refined products that are easier and cheaper to produce.

Bloomberg