Image: Tianqi Lithium Australia.
BY ELIZABETH FABRI
WA spodumene producers are moving downstream to cash-in on sky-high lithium hydroxide prices. But is the capital spend on processing infrastructure worth the risk?
2017 was a game-changer for the WA lithium industry.
In 2016 there was just a few producing mines in the State; in 2018 this number looks set to explode as investors pour capital into the swarm of lithium mines now at various stages of development.
The Neometals and Mineral Resources Mt Marion JV entered production in late 2016, followed shortly by Galaxy Resources’ Mt Cattlin project which exported its first shipment of lithium concentrate in January 2017.
Next cabs off the rank are Pilbara Minerals’ and Altura Mining’s identically named Pilgangoora projects, and Tawana Resources’ Bald Hill project, which are in the final stages of construction and due to come online in 2018.
Then there’s Kidman Resources’ Earl Grey project, which could hit the start button on production as early as 2019.
Further south, an expansion at Talison’s long-established Greenbushes mine was also making headway.
However, producers are also looking beyond lithium concentrate supply towards ready-for-market, battery-grade lithium to fuel the impending electric vehicle boom.
“I think globally, the significant shortage in the next five years is going to be in downstream processing and not in resources,” Tianqi Australia general manager Phil Thick said.
“There’s more than adequate resources around the world to supply the exponential growth in demand expected in the next eight or nine years, but there’s not a lot of investment in plants like we’re building, and that’s where the big gap will be.”
Mr Thick is talking about Tianqi Australia’s Kwinana Lithium Plant – currently under construction – which will become Australia’s first lithium hydroxide processing facility.
The Kwinana Lithium Plant’s $400 million first stage will produce lithium hydroxide from spodumene mined at the Greenbushes operation, with commissioning set for late 2018.
The $300 million second stage received board approval in October and will double plant capacity to 48,000 tonnes of lithium hydroxide per annum.
A number of WA miners were following in Tianqi’s footsteps with plans to build plants to process lithium concentrate, worth about $1000 a tonne, into battery-grade lithium hydroxide, which fetches 10 times that amount.
Kidman Resources recently teamed up with Chilean lithium major SQM to build a chemical plant at its planned Earl Gray mine that will generate up to 200 jobs during construction and 180 full-time operational jobs.
Mt Marion’s joint venture partners were also looking to develop a lithium hydroxide plant at their mine, while Pilbara Minerals and Altura Mining were considering building plants in Asia.
In November, Albemarle (which had a stake in Greenbushes) also sought Government permission to build a new one-train downstream processing plant near Bunbury capable of producing 20,000tpa.
Mr Thick said he was aware Albemarle was also setting its sights on a staged expansion of the facility with an additional four trains and output of 100,000tpa.
“They said they were expecting the first plant to be producing in 2020,” he said.
“They’re trying to take advantage of the same thing we’re taking advantage of, which is this shortfall that we’re expecting in processing quantities.”
Downstream processing: the risks
However, investing in lithium processing facilities was not all smooth sailing.
“There’s significant risk,” Mr Thick said.
“We’ve been running two plants in China for 20 years so we know the process and the chemistry probably better than anyone in the world – and it’s still a challenge.
“For companies that haven’t done this before and are talking about going into this space, there is risk associated with it. It’s not a guaranteed result or an easy process.”
Mr Thick said it all came down to the quality of the product, and electric vehicles being the largest driver of global lithium demand needed the highest quality available.
“You have got to get your chemistry right, you have got to get processing spot on and there’s a lot of variables in that; right from the quality of the ore you’re starting with, to how well you know the process and how experienced you are with it,” he said.
“We have been doing it for a long time and we’re still improving and finding opportunities to get better at it.
“That gives us a strong advantage over others that are just entering for the first time.”
There’s also the risk a replacement for lithium ion batteries could take over —for example sodium ion, aluminium graphite and gold nanowire currently in the research phase – but Mr Thick said this was not a concern.
“We recognise there is a lot of work being done around the world on research around what is going to be the next big thing that replaces lithium ion batteries,” he said.
“We probably expect at some point they’re going to find that but it’s taken about 20 years for lithium ion batteries to be the go to technology for just about all storage requirements and that’s becoming pretty deeply embedded in facilities and industries around the world, particularly the electric vehicle industry.
“We think even if something comes up in the next couple of years as a replacement for lithium it would be 10-15 years before that’s fully commercialised and an effective replacement.
“We’ve got no concern in the short term about lithium ion batteries remaining the absolute driving force for electric vehicles and for general power storage.
“That’s why we’re investing so much money in it.”
Yet, Mr Thick said he was disappointed that Australia was “so slow” in embracing the rollout of electric vehicles.
“We use distance and range of vehicles as an excuse for not being more aggressive in this space because Australia is so large,” he said.
“But electric vehicles in their standard form only have a 200-250km range and about 90 per cent of Australians that live around city areas are very rarely going into the country, so there’s no excuse for us being as slow as what we are.
“I suspect when the large car manufacturers that we depend upon are producing much larger quantities of electric vehicles we’ll have to get on board with that.”
Building a WA lithium hub
All going well, WA is set to become the lithium capital of the world.
While much of the new lithium mining activity will be happening up in the Pilbara, Kwinana had its name up in lights as a potential lithium processing hub for the State.
Miners such as Kidman and Neometals were considering options to build their prospective processing plants in the town, 38km south of Perth’s CBD.
“Kwinana is a really great place to build this type of plant because you have got all of the inputs into the plant that you need, like caustic soda and sulphuric acid [which are] all available on the strip there,” Mr Thick said.
“You’ve got electricity, gas, water all in the quality and quantity that you need, and then you’re close to Fremantle Port for export.
“Probably the most important thing is a ready supply of world-trained experienced people to man the plant, because there’s been a lot of similar activity in Kwinana for years, and there are people who are keen to get into this new industry.”
Mr Thick said the company was “extremely excited” it was leading the charge and hopeful companies such as Albemarle would follow through with their plans to develop downstream facilities to get a reasonable percentage of battery-grade product out of the State.
“We’re fully supportive of other players following us downstream, and if we can set up WA as a significant hub that would be great,” he said.
“We already supply more than a third of the world’s lithium in concentrate form, but if we could get the percentage of processed material out of this State up to similar levels that would be fantastic.”
IN March 2017, Talison Lithium (a joint venture between Albemarle and Tianqi Lithium, the parent company of Tianqi Lithium Australia) announced a $320 million expansion to double production at its Greenbushes mine.
The historic mine, 250km south of Perth and about 90km south east of the Port of Bunbury, has produced lithium for more than 25 years and tantalum since the 1940s, and under an expansion will expand LCE capacity from 80,000mtpa to more than 160,000mtpa.
The mine currently produced about 65,000 tonnes of lithium carbonate equivalent each year.
Commissioning of the expansion was expected to begin in the second quarter of 2019.
However, the expansion plans have since been muddled by an ongoing legal dispute between Talison and Global Advanced Metals, which claims the upgrade will waste the mine’s tantalum resource, over which it has rights.
Tianqi Lithium Australia general manager Phil Thick said while he couldn’t comment on the legal action, as far has he knew the Greenbushes expansion was “progressing and on schedule”.
KWINANA PLANT CONSTRUCTION
CONSTRUCTION is ramping up fast at Tianqi’s Kwinana lithium plant, with Stage 1 of the project now about 45 per cent complete.
“We’re just starting to receive all of the large equipment on site,” Mr Thick said.
“About 20 tanks fabricated locally have all been delivered and installed, all the concrete work is complete and the structural steel work in the plant is going up fairly rapidly.
“All of the main buildings; the office building, the control room building, warehouses, are about 70-80 per cent complete with windows starting to go in, roofs on.”
Mr Thick said he had people visiting at least once a week from all over the world, including a recent visit from Tianqi’s founding chairman Jiang Weiping and chief executive Vivian Wu.
“They were very impressed,” he said.
“There is no doubt that their visit, which was made before the decision for Stage 2, was very critical because it gave them a high degree of comfort around the quality of what we were doing and how well it was progressing.”
Mr Thick said the four major contracts for long lead items of equipment for the $300 million Stage 2, had now all been let and signed for a total of about $50 million.
Stage 1 is due to be complete in late 2018, with Stage 2 commissioning to begin a year later in the fourth quarter of 2019.