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LITHIUM MINING Australia tries to break its dependence on China

By Natasha Frost

The New York Times

Deep in rural Western Australia, Pilbara Minerals’ vast processing plant looms above the red dirt, quivering as tons of a lithium ore slurry move through its pipes.

The plant turns the ore from a nearby quarry into spodumene, a greenish crystalline powder that is about 6% lithium and sells for about $5,700 a ton. From there, the spodumene is shipped to China, where it is further refined so it can be used in the batteries that power goods like cellphones and electric cars.

Australia mines about 53% of the world’s supply of lithium, and virtually all of it is sold to China. But now the Australian government wants to break the world’s dependence on China for processing the minerals driving the green revolution.

Pilbara Minerals, the country’s largest independent lithium miner, is among the companies exploring a new model for producing battery chemicals — done closer to where the lithium is mined and sold to allies like the United States and South Korea.

The challenges of getting such an industry underway are daunting. China has an enormous head start, with years of experience and hundreds of lithium refining plants, and a steadily tightening grip on the world’s battery- making facilities. Australia’s more rigorous workplace standards will also make it harder to compete with China on price, analysts said, even as some in Australia have argued that they will result in a more trustworthy, premium product.

“Consumers will vote using their feet, and they will buy electric vehicles, or even solar panels at home, based on the costs,” said Marina Zhang, a researcher at the Australia-China Relations Institute at the University of Technology Sydney.

Pilbara Minerals is working with the Australian tech company Calix on a project to refine spodumene to a lithium phosphate salt — a key step in readying the material used in batteries. The companies are expected to make a final decision by the end of the year whether to invest up to 70 million Australian dollars, or around $47 million, to build a demonstration plant.

Dale Henderson, the CEO of Pilbara Minerals, and other proponents have argued that refining lithium at home would create jobs, reduce the impact of shipping — 94% of shipped spodumene is thrown out as waste — and secure supply chains for battery chemicals amid rising geopolitical tensions.

Refining lithium would also allow Australia to tap into the Inflation Reduction Act, the Biden administration policy enacted last year. The law aims to cut into China’s green energy dominance by offering loans or subsidies to companies in countries, like Australia, that have free trade agreements with the United States.

At the Group of Seven summit last weekend, President Joe Biden and Prime Minister Anthony Albanese of Australia jointly announced projects intended to strengthen the supply chain for “critical minerals” used in clean energy.

The Australian government has already put hundreds of millions of dollars toward supporting the lithium refining industry, betting that customers will seek out lithium supply from a country that is more environmentally friendly and has a strong rule of law.

“If you have more of the supply chain in a country which has very strong governance, and a very, very safe and trustworthy business environment, then consumers can have more confidence in the products that they buy,” said Allison Britt, a director at Geoscience Australia, a government agency.

A government report last year forecast that 20% of global lithium refining could take place in Australia by 2027, up from less than 1%. In some cases, top officials have set even loftier goals.

“I want to make sure that we use the lithium and nickel and other products that we have to make batteries here,” Albanese said in a speech. “That’s part of the vision of protecting our national economy going forward.”

But Australia would have to make significant strides to get closer to China in refining.

Australia has two facilities to produce battery-grade lithium hydroxide, used to make cathodes, with a third under construction. All have suffered from major construction delays related to labor shortages, as well as cost overruns.

The largest facility, co-owned by the American chemical maker Albemarle and Australian miner Mineral Resources, is being expanded with the goal of becoming “one of the world’s largest lithium production facilities,” according to a statement from Albemarle. Last year it produced its first battery-grade lithium hydroxide — more than a year behind schedule.

A big challenge facing Australia is cost. The investment needed to establish a lithium hydroxide plant is roughly 21/2 times higher in Australia than in China, said John Stover, a portfolio manager at Tribeca Investment Partners, citing data from the bank UBS.

 

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