Local downstream lithium producers soon to be prevented from parachuting in Chinese workers and hardware

WA’s struggling lithium hydroxide producers are on the verge of being dealt another major blow with China clamping down on specialised technicians and equipment leaving its borders. Beijing will soon put lithium processing and refining in its “restricted” category of technology exports — part of a broader onshoring effort amid an escalating global trade war. The lithium restrictions would “capture almost all forms of joint ventures, licensing, technical services, and other forms of co-operation”, according to Chinese legal experts at global firm Herbert Smith Freehills. China’s Ministry of Commerce finished a public consultation period on Sunday and will now push ahead with the crackdown. It has not been revealed when these restrictions are set to come into effect and if any special exemptions have been carved out. China instigated similar bans across other industries this month, including one that hamstrung a network of factories in India that Apple uses to manufacture its phones and computers. The impending lithium restrictions does not bode well for the owners of WA’s two multibillion-dollar lithium hydroxide refineries, who have relied heavily on Chinese expertise to fix their misfiring chemical plants. Spodumene concentrate from the Greenbushes hard rock lithium mine is fed into both chemical plants and through a complicated process lithium hydroxide is created. Albemarle chief executive Ken Masters last year said WA did not have the technical proficiency and capability required to get its Kemerton refinery near Bunbury running smoothly, forcing the company to parachute engineers in from China. The Kwinana refinery, which is jointly owned by China’s Tianqi and IGO, has also been plagued by technical issues. IGO boss Ivan Vella told a WA Mining Club lunch in June last year Tianqi was increasingly tapping into China’s local industrial base to sort out the problems. The two WA refineries, which directly sustain about 800 jobs, have also been hammered by weak lithium prices. Tianqi and IGO last week paused construction on an expansion of Kwinana and flagged a big impairment of the asset. Albemarle last year significantly scaled back Kemerton, slashing hundreds of jobs. Albemarle, IGO and Tianqi all declined to comment on the Chinese export restrictions. Wesfarmers and Chile’s SQM, who are set to finish building a lithium hydroxide refinery in Kwinana by the middle of this year, could also be stung. Chamber of Minerals and Energy WA’s acting chief executive Adrienne LaBombard said WA’s mining industry relies on international trade “especially in the case of value-adding processing”. “Restrictions on Chinese battery-related technology exports have the potential to slow those efforts,” she said. “This situation underscores the importance of ongoing domestic research and development to create and commercialise low-cost production pathways for minerals, energy production and downstream processing. “CME’s recent Green Iron report called for an increase to the R&D tax incentive and an extension of eligible activities. CME also continues to advocate for the removal of barriers to both temporary and permanent skilled migration.” Association of Mining and Exploration Companies acting chief Neil van Drune echoed her sentiment. “The intellectual property as to how you actually downstream critical minerals are closely held secrets internationally,” he said. “Any change by China to re-classify gallium extraction, lithium processing and refining technologies into the restricted category, could be a concern for our industry. “To go downstream Australia needs more skills than ever.”