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Australia Tries to Break Its Dependence on China for Lithium Mining

Deep in the Western Australian countryside, Pilbara Minerals’ sprawling processing plant rises above red soil, quivering with its massive lithium ore slurry as it moves through its pipes.

The factory turns ore mined in a nearby quarry into spodumene, a greenish crystalline powder containing about 6% lithium, and sells it for $1. About $5,700 per ton. From there, the spodumene will be shipped to China, where it will be further refined so that it can be used in batteries that power products such as mobile phones and electric vehicles.

Australia mines about 53% of the world’s lithium supply, 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 that drive the green revolution.

Pilbara Minerals, the country’s largest independent lithium miner, is exploring new models for battery chemicals production close to where lithium is mined and sold to allies such as the United States and South Korea. is one of the companies that

Launching such an industry presents a daunting task. With years of experience and hundreds of lithium refining plants, China’s steadily increasing dominance over global battery manufacturing facilities is off to a very head start. Analysts say Australia’s stricter workplace standards will also make it harder to compete with China on price, but in some parts of Australia it will result in more reliable and premium products. claims.

“Consumers will vote with their feet and buy electric cars or solar panels in their homes depending on the cost,” said Marina Chan, a researcher at the Institute of Australia-China Relations at the University of Technology Sydney.

Pilbara Minerals is working with Australian tech company Calix on a project to refine spodumene into lithium phosphate salts. This is an important step for preparing the materials used in batteries. The two companies are expected to make a final decision by the end of the year on whether to invest up to A$70 million, or around $47 million. Build a demonstration plant.

Pilbara Minerals CEO Dale Henderson and other advocates say that refining lithium domestically creates jobs and reduces the impact of shipping (94 percent of spodumene shipped). are thrown away as waste), which it claims secures the battery chemistry supply chain amid rising prices. geopolitical tensions.

Refining lithium would also allow Australia to take advantage of the Inflation Control Act, a policy enacted last year by the Biden administration. The law aims to put China’s green energy dominance at stake by providing loans and subsidies to companies in countries that have free trade agreements with the United States, such as Australia.

At the G7 summit last weekend, President Biden met with Australian Prime Minister Anthony Albanese. Joint announcement A project aimed at strengthening the supply chain of “important minerals” used for clean energy.

The Australian government has already invest hundreds of millions of dollars They are leaning towards supporting the lithium refining industry, betting that customers will seek lithium supplies from countries that are greener and have a stronger rule of law.

“If there are more supply chains in a country with very strong governance and a very safe and trustworthy business environment, consumers will feel more confident about the products they buy,” said the company’s director. Alison Britt said. Geoscience Australia is a government agency.

government report last year We forecast that 20% of the world’s lithium refining could be done in Australia by 2027, up from less than 1%. In some cases, top executives set even higher goals.

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

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

So far, Australia has only two facilities producing battery-grade lithium hydroxide used to make cathodes, with a third under construction.everyone has suffered Significant construction delay It is related to labor shortages and cost overruns.

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

A major challenge facing Australia is cost. John Stover, portfolio manager at Tribeca Investment Partners, citing data from bank UBS, said the investment required to set up a lithium hydroxide plant is about 2.5 times higher in Australia than in China.

“Historically, Australia has shipped unprocessed ore to other countries for processing,” he said. “I think that mindset change is going to be difficult.”

Chris Ellison, owner of Mineral Resources, said the government needs to make it easier for foreign companies to invest in Australian lithium refining through incentives such as funding and tax breaks.

“They are getting subsidies from the U.S. government to build in Europe, the U.S., and places like Vietnam,” he said in an investor presentation in February. “The Australian government needs to join the party on this matter.”

The Australian government also needs to consider serious geopolitical concerns. Corey Lee Bell, of the Australia-China Relations Institute at the University of Technology Sydney, said lithium could help relations with China.

“If we cut that supply, I think that would be a very big problem,” said Dr. Bell.

But Australia has hinted that it may be comfortable doing so.

Australia’s Minister of Resources, Madeleine King, said in a speech last month that the country has a key role to play in preventing the “concentration” of its vital minerals industry in China, which it said was “vulnerability, instability and trust.” It is linked to low sexuality,” he said. The government also suggested it could limit foreign ownership of key mineral resources.

In 2020, the previously friendly relationship between Australia and China was turned upside down when then-Prime Minister Scott Morrison ordered an investigation into the cause of the coronavirus pandemic. China then blocked some imports from Australia, such as coal and wine. Australia has escalated the dispute to the World Trade Organization and revoked Victoria’s eligibility to participate in China’s Belt and Road Initiative.

There have been signs of easing tensions in recent months. China announced last week that it would lift restrictions. Suspension of Australian timber imports After ending an unofficial embargo on Australian coal.

But the relationship remains rocky. Ross Gregory, a partner at advisory firm New Electric Partners, said Australia “needs to have a little more say in the fate of its resources”.

Joe Rowley, founder of advisory firm Global Lithium, said despite the barriers, Australia’s control of raw materials gives it an opportunity to assert influence further down the supply chain.

“He who has the stone wins,” Lowry said. “And Australia has rock.”

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