World’s largest lithium producer to construct $1b plant in Western Australia

As the future of Western Australia’s proposed Kwinana-based lithium valley remains on tenterhooks, the world’s largest lithium producer, Albemarle, is set to give the state a boost with news it has received environmental approvals to build its proposed $1 billion lithium hydroxide plant in the state’s south west.

The news follows the Environmental Protection Authority’s conditional approval in June.

WA Premier Mark McGowan officially announced the state government had given the green light on Friday, saying the new lithium plant is likely to create more than 1,000 jobs in the region.

Albemarle’s lithium hydroxide facility will be built at Kemerton, which is about 17km from Bunbury and, once operational, is expected to be WA’s largest lithium hydroxide plant.

The Kemerton plant will process 1 million tonnes per annum of spodumene concentrate sourced from Albemarle’s 49%-owned Greenbushes mine.

New York-listed Albemarle owns a 49% stake in Talison Lithium, which operates the Greenbushes asset, with Tianqi Lithium holding the other 51%.

Earlier this year, Talison said it would be expanding Greenbushes so that it will produce up to 2Mt of spodumene concentrate annually.

Greenbushes is estimated to host the world’s largest known lithium spodumene reserves and has a current mine life of 40-years.

The proposed plant at Kemerton will initially produce 20,000tpa lithium hydroxide from the Greenbushes spodumene, but Albemarle anticipates expanding this to 100,000tpa of lithium hydroxide.

According to WA environment minister Stephen Dawson, Albemarle’s proposed lithium hydroxide plant was given the green light after a “thorough assessment”.

In anticipation of securing final approvals, Albemarle started calling on WA companies in June to step in and help build the plant after listing numerous work packages on WA’s Chamber of Commerce and Industry’s (CCI) gateway.

An Albemarle spokeswoman told CCI the company had hoped to break ground in September and that she anticipated the construction phase would open up 500 jobs. A further 500 jobs are expected to be created once the plant is up and running.

Albemarle anticipates it will commission the plant in 2020, which will have an initial life of 25 years.

Lithium valley hangs in the balance

Earlier this year, the Regional Development Australia (RDA) released a report establishing the case for a WA-based Lithium Valley, which would involve downstream processing of the state’s energy metals and increasing Australia’s exposure to the value chain, which is estimated to tip $2 trillion by 2025.

In response the report and strong industry support, the WA Government set up the Lithium and Energy Materials Industry Taskforce to “capitalise on WA’s unique resources and growth in the lithium-ion battery sector”.

However, the Australian Government has been reluctant to throw its weight behind a WA-based lithium valley, leaving many industry stake holders admonishing the body for its lack of interest and accusing it of potentially losing WA and Australia a “once in a life-time opportunity”.

Albemarle’s $1 billion plant will be the state’s second lithium hydroxide processing facility, with Tianqi constructing a two-stage $700 million lithium hydroxide plant in Kwinana.

Additionally, Kidman Resources (ASX: KDR) and its joint venture partner Chilean-based SQM have proposed a lithium carbonate or lithium hydroxide operation.

Although these plants are a boon for the state, WA chief scientist Prof Peter Klinken cautions more investment in downstream refining and battery manufacturing is needed to capture a wider section of the value chain.

Prof Klinken told Small Caps it would be “bordering on tragic” not to take advantage of this unique opportunity for WA.

“We’re missing out on something like 99.5% of the value of batteries. We have all the elements and we only get 0.5% of the value out of all of this.”

“That doesn’t seem to make a lot of economic sense to me,” he said.

“We’ve got a window, and we have to make sure we act and grasp the opportunities before the window closes,” he explained.

R&D rebate cap

Since the report was released, the Association of Mining and Exploration Companies (AMEC), RDA, major universities and other prominent stakeholders have been campaigning the Federal Government to back the proposed lithium valley and have been calling on it to reverse a research and development (R&D) cap it imposed this year.

Prior to the R&D policy change, the rebate did not have a ceiling. However, the rebate is now stunted at $4 million for companies that attract less than $20 million a year in revenue.

According to Lithium Australia’s (ASX: LIT) managing director Adrian Griffin, the R&D rebate ceiling would “destroy any hope” of establishing a lithium valley, with more investment incentives available to battery technology developers in other areas including the European Union.

To-date, campaigners have had little success with the issue and the Federal Government responded in September saying the R&D rebate changes were here to stay.