Lithium, often referred to as “white gold” and vital for rechargeable batteries, has witnessed a dramatic price decline over the past year, dropping by more than 75% since June 2023. This downturn is largely attributed to a combination of decreasing global sales of electric vehicles and an oversupply of lithium ore worldwide.
Australia, which dominates global lithium production by contributing 52% of the total last year, has particularly felt the impact of falling prices. The country holds the second-largest lithium reserves after Chile, primarily located in Western Australia.
The plummeting lithium prices have prompted some companies to suspend operations. For instance, Core Lithium announced in January that it was halting mining at its Finniss site near Darwin, resulting in the loss of 150 jobs. In August, US company Albemarle revealed it would scale back production at its Kemerton plant, leading to over 300 job losses. More recently, Arcadium Lithium stated it would temporarily close its Mt Cattlin mine due to low prices.
Despite these challenges, some firms remain optimistic and are pursuing expansions. Pilbara Minerals plans to increase its lithium ore production by 50% over the next year, confident that the global demand for lithium will eventually rebound. Similarly, Liontown Resources has begun production at its Kathleen Valley mine, which partially relies on solar energy.
Australia’s commitment to renewable energy sources is beneficial in reducing operational costs and emissions, a significant consideration given that lithium extraction in Australia requires considerably more energy than in countries like Chile and Argentina. The extraction method, involving hard-rock mining, results in higher energy consumption and environmental emissions compared to brine extraction.
Moreover, the current market dynamics are influencing Australian firms to establish their lithium refining capabilities. In 2022-23, nearly all lithium was exported as spodumene concentrate. The first commercial production of battery-grade lithium hydroxide in Australia occurred in 2022, and other companies are following suit.
While the development of lithium refining in Australia may lessen China’s dominance in the global lithium market, experts suggest that Australia should be more open to Chinese investments in the sector. Relations between the two nations have been strained, particularly following the Australian government’s block on a sale of a lithium mine to a Chinese company, citing advice from the Foreign Investment Review Board.
Innovation in refining methods is underway as Australian researchers seek more environmentally friendly processes. Current methods face criticism for producing harmful emissions, prompting efforts to mitigate environmental impacts.
As Australia aims to bolster its lithium industry and explore battery recycling, companies are focusing on sustainable practices to ensure the country can produce and recycle its own batteries effectively, eliminating wastage and reinforcing its position in the global market.