Lithium Industry Looks to Australia for Refining, Not Just Mining
By Yusuf Khan, Feb. 21, 2023, WSJ

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.

https://www.wsj.com/articles/lithium-industry-looks-to-australia-for-refining-not-just-mining-7cd93cd4

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