Often referred to as “white gold” and essential for rechargeable batteries, lithium is notably light enough to float on water. However, its price has dramatically decreased over the last year. This decline is attributed to a drop in electric vehicle sales globally and an oversupply of lithium ore in the market, resulting in a significant decrease in the cost of lithium compounds—over 75% since June 2023.
Australia, as the world’s largest lithium ore producer, which accounted for 52% of global output last year, has felt the brunt of this price drop. The country possesses the second-largest lithium reserves after Chile, mainly located in Western Australia and partially in the Northern Territory.
As lithium prices plummet, many mines have faced shutdowns. For instance, Core Lithium, based in Adelaide, suspended operations at its Finniss site near Darwin in January due to “weak market conditions,” resulting in 150 job losses. Additionally, US company Albemarle announced in August that it would reduce production at its Kemerton lithium processing plant, leading to over 300 job cuts.
This month, Arcadium Lithium has also decided to mothball its Mt Cattlin mine in Western Australia, citing low prices as a reason for the shutdown. However, not all producers are halting operations; some remain optimistic about future demand and potential price increases. For instance, Pilbara Minerals plans to boost its lithium ore production by an additional 50% in the coming year. The company’s managing director, Dale Henderson, expressed confidence in the long-term outlook for the lithium market.
Investment firm Jevons Global’s founder, Kingsley Jones, highlighted the strategic importance of lithium in the transition to greener energy, as the demand for storage batteries for renewable energy rises. Despite this, analysts caution that the oversupply may keep lithium prices under pressure until at least 2028.
Another Australian firm, Liontown Resources, has initiated lithium production at its Kathleen Valley mine, which sources up to 60% of its energy from solar panels. The Australian government has invested A$230 million in this facility, supporting its environmentally friendly approach.
Recent reports indicate that extracting lithium ore in Australia is energy-intensive, requiring three times the energy needed in other major lithium-producing nations. This is largely due to the hard-rock mining method used in Australia, compared to the brine evaporation method utilized in Chile and Argentina.
The form of lithium exported by Australia—almost exclusively as spodumene concentrate—is partially processed. Prices for this product have followed the significant decline seen in refined lithium, hitting their lowest since August 2021. Chinese companies refine spodumene into solid lithium and the two key lithium compounds for batteries, lithium hydroxide and lithium carbonate. The price disparity between these products has prompted Australian firms to explore building their own lithium refineries, moving towards local refining instead of exporting most spodumene concentrate.
The first commercial production of refined lithium in Australia began in 2022, with IGO producing battery-grade lithium hydroxide at its Kwinana Refinery. Covalent Lithium is also constructing a refinery, while Albemarle continues refining operations even as it scales back production.
There’s a consensus among some experts that developing local lithium refining capabilities could diminish China’s current dominance in the lithium market, where it accounts for around 60% of global refining. However, Jones advocates for Australia to be more welcoming to Chinese investments in the lithium sector, pointing out the adverse effects of Australia’s recent more cautious investment strategy.
In conjunction with these efforts, Australian researchers are working on environmentally friendly lithium extraction methods to address the significant emissions produced by current processes. A new technique being developed aims to eliminate harmful emissions while enhancing efficiency in lithium production.
Moreover, there is a push for increased lithium recycling within Australia. Companies like Lithium Australia are pioneering efforts to process end-of-life batteries to recover lithium and other metals for reuse, fostering a more sustainable approach to battery production and recycling in the country.