Has Australian lithium been left in the lurch?

Only a few years ago, lithium prices were at record highs, with lithium carbonate prices reaching a peak price of about (US$80,000/t). Since then, the industry has experienced quite the crash, with prices now around (US$8,000/t).

With such a stark price drop, one would expect the response to be just as clear. But looking at Australia’s lithium industry, you may not know which way is up or down, with operations shuddering alongside major cash injections and mine roll outs.

In July, IGO (ASX: IGO) underwrote its entire stake in the Kwinana, WA refinery, citing serious uncertainty in the project’s future. This refinery, which would have served to jumpstart Australia’s processing pipeline for the critical mineral, was a notable endeavour for the miner. The uncertainty for the refinery — which is overseen by Tianqi Lithium Energy Australia (TLEA), the joint venture between IGO (49%) and Tianqi Lithium Corporation (51%) — serves as a wakeup call for some, as even the China-backed project flailed under the difficult price environment.

But other streams of Australia’s lithium industry are seemingly unencumbered by looming oversupply and depressed prices, with the recent opening of Liontown Resources’ (ASX: LTR) Kathleen Valley mine, the first underground lithium operation in Australia.

“Perversely the Lithium wannabes, particularly the hard-rock-spodumene players, are seeing large-scale Chinese shutdowns in capacity as good news, particularly as it then spurred a ‘dead cat bounce’ rally in Lithium prices and share prices,” Hallgarten + Company strategist/principal Christopher Ecclestone said.

Mr Ecclestone predicts a period of cleansing in the lithium mining space, with less efficient producers being forced out of the market amidst a “brutal” market correction.

Despite depressed pricing, lithium still remains critical to electrification, lining the road for the energy transition.

Lithium-ion batteries are expected to drive a surge in demand for critical battery materials lithium, cobalt and graphite. These essential minerals present significant concentration and sustainability concerns across their supply chains, meaning research, development and demonstration activity will need a boost, both domestically and globally, to ensure the robust and ethical supply required for the energy transition.

The IEA estimates that lithium demand will see eightfold growth by 2040 due to its crucial role in batteries. Despite this, lithium’s downturn in prices is potentially discouraging activity and investment in the sector.

Detailed project-by-project analysis suggests that announced projects are sufficient to meet only 50% of lithium requirements in 2035 in a scenario in which countries worldwide meet their national climate goals, according to the IEA.

But the shocking price spike has had lasting impacts on the industry, most notably in the form of oversupply. Demand growth is still strong but is currently dwarfed by the growth in supply.

The time it took to construct new facilities and ramp up production has meant that peak supply is only now being reached years after the call for increased production.

With producers so far unwilling to curtail production in the lithium chemical market, the surplus will continue to grow until at least 2027, and the market risks being oversupplied for a long time, according to Wood Mackenzie’s lithium research director Allan Pedersen.

Further development of low-cost processing pathways will be needed to address the price problem and meet anticipated future demand.

Another way to address the issue could be to allow stockpiles to build up to be sold in the future when prices are stronger. Another scenario could see governments limiting production to save on operational costs.

So, what will be done and who will take the hit? Ask a miner, an economist or an executive and you’re likely to get three different answers.

Mr Ecclestone shares his take on some of the problems facing the lithium market with The Australian Mining Review.

Problem 1. Australia lacks integrated industrial strategy due to absence of domestic car industry.

Supply has rapidly grown across the industry as producers responded to record-high prices. The largest surge was seen in China, where the majority of consumers are located and high production volumes are ideal.

“The problem is that Australia doesn’t fit into a very integrated industrial strategy, because it got rid of its account industry,” Mr Ecclestone said.

“Without that industry, you’ve removed the demand. The politicians would argue, the demand is there; the demand is the man in the street who is buying these cars. What we lack is only the manufacturing part, which we were not good at anyway.”

Australia isn’t the only major economy that lacks essential portions of the electric vehicle (EV) industry. Many lower-income and lower-middle-income countries also lack current EV interest or infrastructure.

“The Global South is largely disinterested and demotivated with regards to the [EV] ‘revolution’,” Mr Ecclestone said.

“Virtually you can’t find a charging point. This is because there are no EVs, so nobody bothers to build a charging point. The government is not interested in building charging points.

“EV mandates in the Global South literally don’t exist because governments think that they are decadent Western impositions. Economies like that are actually oil generators so they’re not feeling the need to get rid of demand for their own product.

“Additionally, some of these countries, South Africa being good example, have really dodgy electricity systems. It’s easier to go to a service station and be sure that you can fill up your car with petrol in South Africa than it is to plug in your EV at night and be sure that there’s not going to be some sort of rolling blackout, meaning your EV hasn’t charged at all in the night.”

Jurisdictions will need to focus on more than supply and price to address lithium’s woes. Manufacturing industries need to be supported, charging infrastructure needs to be optimised, power grids need to be secured — amongst other issues — to ensure the lithium industry has solid ground to stand on.

Problem 2. Oversupply is occurring at the battery level, not the mine level.

Despite being a major producer of spodumene, Australia lacks domestic processing capabilities needed to refine these products for use in the battery supply chain.

Australia is heavily reliant on overseas processors, like those located in China, meaning most of our lithium is exported. Not only does this create an issue of reliance on foreign operators, but it’s a missed opportunity for Australia to add value to its lithium industry and minimise costs and risks when prices are less than ideal.

“Australia is essentially selling lithium either as concentrate or as a more advanced product to foreigners. This means that Australia is ultimately dependent upon those foreigners being interested in taking a product that stays mainly in Australia,” Mr Ecclestone said.

“When it comes down to it, the product is the same everywhere. Australian lithium won’t fetch a better price just because it’s made in Australia. There is an enormous global mosh pit out there on pricing, and it’s not a good mosh pit at the moment, because we have this problem of oversupply.

“There’s no oversupply at the mine level. I would suggest that there’s an oversupply at the battery level.

“Since the start of rise of the lithium-ion battery as a key part of the EV revolution, the perception has arisen that producers need to tie up with end-users or at least battery makers.

“Perceptions have also oscillated as to who [has the control] in these relationships. One-to-many relationships between producers and users were replaced with one-to-one relationships or at least ‘most favoured offtaker’ arrangements.”

Mr Ecclestone says now the boot is on the other foot.

Problem 3. Underground lithium mining is cost intensive

Mr Ecclestone warns that hard-rock mining may not be the way forward for lithium.

“Let us face a fact here that most, if not all, of the hard-rock lithium miners are headed for the graveyard of history, short of a massive rally in lithium,” he said.

“We see the lithium story as somewhat akin to the decision game of Rock/Paper/Scissors/Brine, in which one category eliminates some, or all, of the others.

“Once again, lithium brines are the winners and stone (in this case spodumene/lepidolite/micas) is at a distinct, and potentially fatal, disadvantage.

“This rings the death knell on many underground projects and those that are in outlandish locations.”

Australian lithium projects facing financial difficulties due to price fluctuations, furthering the need for interventions such as government support or investment into more cost-effective processing.

Despite these challenges, the lithium industry continues to innovate and adapt, attempting to enable critical energy transition technologies in environmentally friendly, cost effective and efficient ways across brines and hard-rock operations and up and down the value chain.

In the sixth instalment of our Critical Minerals Outlook series, The Australian Mining Review spotlights more perspectives across the industry on the state of lithium and its related technologies.

Lithium prospects

Finniss lithium operation

Overview: Core Lithium’s (ASX: CXO) flagship asset — the Finniss lithium operation — is a hard-rock lithium project on the Northern Territory’s Cox Peninsula, located 88km south-west by sealed road from the Darwin Port.

It is a highly attractive, low-cost underground mining operation with a 20-year life following completion of the restart study in May 2025. Finniss represents a high confidence mine plan with the first 10 years of operations backed by ore reserves of 10.73mt at 1.29% lithium oxide.

The simplified and debottlenecked process flowsheet allows for an operating cost reduction of 33% to $40–$46/t (from $69/t) with increased production of 7% through higher throughput producing a nameplate production of 205ktpa spodumene concentrate 6 equivalent coarse-grained concentrate.

Underground mining capitalises on the high-grade, continuous and steeply dipping orebodies that are open at depth

Status: Core is finalising the acquisition and ownership of the crushing plant, completing the shift to full ownership of all site infrastructure and reducing estimated future crushing costs by half.

Following the release of the restart study, Core hosted a group of equity analysts and investors at Finniss in June 2025 with a tour of existing site infrastructure and outlining plans to further develop and enhance the project’s assets.

An updated ore reserve and exploration targets for the Blackbeard and BP33 Deeps was also completed to support the restart study.

Potential: Core Lithium is an Australian mining and exploration company that commenced spodumene concentrate production from its Finniss operation (Grants open pit mine and dense media separation (DMS) plant) in early 2023. The BP33 underground project, located approximately 5km from the Grants open pit mine, is the second mine proposed to be developed at Finniss. Core also holds a portfolio of tenements in the Northern Territory and South Australia which are prospective for a variety of commodities, including base metals, rare earth elements, gold and uranium. Core remains in a strong financial position with no debt.

The restart study demonstrates a robust base case operation with an updated mine life of 20 years and future extension potential. Finniss boasts exceptional potential to grow beyond this base case production estimate.