Lithium, often dubbed “white gold” for its crucial role in rechargeable batteries, has experienced a significant price drop, plummeting more than 75% since June 2023. This decline is attributed primarily to decreasing global electric vehicle sales and an oversupply of lithium ore in the market.
As the world’s leading lithium producer, Australia accounted for 52% of global output last year. The country possesses substantial reserves of this vital mineral, predominantly located in Western Australia and partially in the Northern Territory. However, the dramatic decrease in lithium prices has had adverse effects on the industry, leading to mine closures and job losses. In January, Core Lithium announced it was suspending operations at its Finniss site, resulting in 150 job cuts due to “weak market conditions.” Similarly, US firm Albemarle stated it would scale back production at its Kemerton processing plant, anticipating over 300 layoffs.
This trend continued with Arcadium Lithium’s recent decision to mothball its Mt Cattlin mine, attributing the move to low prices. Despite some companies retracting operations, others remain optimistic about future demand for lithium. For instance, Pilbara Minerals plans to increase its production by 50% over the next year, with managing director Dale Henderson expressing confidence in the long-term market outlook.
Investment experts highlight the strategic importance of lithium in the transition to renewable energy, particularly for electricity storage. Pilbara Minerals and Liontown Resources are among companies pursuing increased lithium production, with Liontown’s Kathleen Valley mine powered significantly by its solar panel farm, attracting praise and investment from the Australian government.
While Australia grapples with high extraction energy costs compared to other producing nations like Chile and Argentina, efforts are underway to enhance lithium refining capabilities domestically. As the country’s reliance on expensive diesel fuels for mining operations is reduced through renewable energy, several Australian firms are working to establish lithium refineries to capture more value from the production process.
Historically, the majority of lithium exported from Australia has been in the form of spodumene concentrate, but the first refined lithium was produced in 2022 at IGO’s Kwinana Refinery. Developing refining capabilities could also help mitigate China’s dominance in the lithium market, which currently controls 60% of global refining.
However, some analysts caution that the oversupply issue may continue to put pressure on prices until at least 2028. While the Australian government has become cautious about Chinese investments in the lithium sector, experts argue that fostering relationships with major buyers and investors may be crucial for the country’s mining and refining industries.
In parallel with these developments, Australian scientists are exploring innovative and environmentally friendly lithium extraction methods to reduce the carbon footprint of the industry. A new process called “shock quenching” is being researched to eliminate harmful chlorine gas emissions associated with traditional refining methods.
Additionally, initiatives for recycling lithium batteries are gaining traction, aiming to establish a circular battery economy in Australia. This approach not only addresses economic pressures but also enhances the country’s sovereign capabilities in battery production and recycling, ultimately promoting sustainability in the industry.