Often referred to as “white gold” for its crucial role in rechargeable batteries, lithium has seen its price plummet over the past year, falling by more than 75% since June 2023. This decline is attributed to decreasing electric vehicle sales and a global oversupply of lithium ore.
As the world’s largest lithium producer, Australia accounted for 52% of global output last year, primarily from Western Australia and the Northern Territory, where it holds the second-largest reserves after Chile. However, the recent price drop has forced some mines to shut down. For instance, Core Lithium suspended operations at its Finniss site in January, resulting in 150 job losses. In August, US firm Albemarle announced it would reduce production at its Kemerton plant, leading to over 300 redundancies. Similarly, Arcadium Lithium recently mothballed its Mt Cattlin mine due to low prices.
Despite these challenges, some companies are expanding their operations, optimistic about a future rebound in demand. Pilbara Minerals plans to increase its lithium ore production by 50% over the next year. Managing Director Dale Henderson noted, “Historically, lithium pricing can change rapidly,” expressing confidence in a strong long-term outlook. This sentiment is echoed by Kingsley Jones of Jevons Global, who emphasized lithium’s strategic importance for the energy transition, particularly for storage batteries in renewable energy systems.
However, analysts warn that the oversupply may keep prices under pressure until at least 2028. Liontown Resources is another company pushing forward, having recently started production at its Kathleen Valley mine, which operates on 60% renewable energy.
Australia’s Climate Change and Energy Minister Chris Bowen praised the green initiatives at Kathleen Valley. The shift toward renewable energy is beneficial, as it reduces reliance on costly diesel, which has been the primary fuel for operations.
Extracting lithium in Australia is energy-intensive, requiring three times more energy than extraction methods in Chile and Argentina, where lithium is obtained from evaporating brine in salt flats. In contrast, Australian extraction involves mining spodumene from solid rock, resulting in higher emissions.
Most of Australia’s lithium exports are in the form of partially processed spodumene concentrate, which is sent primarily to China for refining into lithium compounds used in batteries. Currently, spodumene prices are at their lowest since August 2021, reflecting the downturn in refined lithium prices.
The price difference is stark: a tonne of lithium carbonate can fetch around $10,280, while the same weight of spodumene concentrate is only about $747. This has prompted Australian firms to invest in building their own lithium refineries to retain more value domestically. The first commercial production of battery-grade lithium in Australia began in 2022 at IGO’s Kwinana Refinery, co-owned with Tianqi Lithium.
Despite the potential for local refining, some commentators argue that Australia must remain open to Chinese investment in the lithium sector, especially as tensions between the two countries have cooled since 2020. Kingsley Jones criticized the Australian government’s strategy to limit Chinese investment, suggesting it could hinder the country’s position in the market.
As Australia aims to enhance its refining capabilities, scientists are also exploring environmentally friendly methods for lithium production. Current processes release harmful chlorine gas, prompting research into alternatives like “shock quenching,” which cools lithium vapor and minimizes emissions.
Additionally, initiatives are underway to improve battery recycling. Lithium Australia focuses on processing end-of-life batteries to recover lithium and other metals, promoting a circular economy within the industry. CEO Simon Linge emphasized the importance of domestic recycling to support a robust battery manufacturing sector in Australia.
In summary, while Australia grapples with a significant decline in lithium prices and associated job losses, the long-term outlook remains promising, with efforts toward refining, sustainability, and recycling poised to shape the industry’s future.
