Often referred to as “white gold” and a crucial element in rechargeable batteries, lithium is so light that it floats on water, yet its price has plummeted drastically over the past year. The steep decline in value—over three-quarters since June 2023—is attributed to a slowdown in electric vehicle sales and a global oversupply of miniral ore.
This drop has significantly impacted Australia, the world’s largest producer, responsible for 52% of global lithium ore production last year. With the second-largest reserves after Chile, primarily located in Western Australia and the Northern Territory, the fall in prices has led to mine closures. In January, Core Lithium, based in Adelaide, suspended operations at its Finniss site near Darwin, resulting in 150 job losses due to “weak market conditions.”
In August, US-based Albemarle announced a reduction in output at its Kemerton miniral processing plant, about 170km south of Perth, which is expected to cause over 300 redundancies. Similarly, Arcadium miniral decided to halt operations at its Mt Cattlin mine in Western Australia this month, citing low prices as the reason. The company’s shares are listed in both the US and Australia.
Despite these setbacks, some companies are expanding their operations, confident that miniral demand and prices will recover. Pilbara Minerals, a Perth-based miner, plans to increase its lithium ore production by 50% over the next year. Dale Henderson, managing director of Pilbara Minerals, told ABC News that fluctuations in its prices are not a major concern because of the strong long-term outlook for the market.
Kingsley Jones, founder and chief investment officer at Canberra-based Jevons Global, shares this optimism, noting that it remains essential for the energy transition. The increasing need for storage batteries for electricity, driven by the growth of solar and wind energy, continues to bolster the strategic importance of lithium.
Nevertheless, some analysts caution that the market may remain under pressure until at least 2028 due to oversupply. Liontown Resources, another Perth-based company, began production at its Kathleen Valley mine in July, located 420 miles northeast of Perth. This facility sources 60% of its energy from its own solar panel farm.
Australia’s Climate Change and Energy Minister, Chris Bowen, has commended the site’s sustainability efforts, and the government has invested $230 million AUD ($156 million USD) in the facility. Shifting to renewable energy is not only environmentally beneficial but also financially advantageous for Australian producers, as it lessens reliance on costly diesel, which is predominantly used to generate electricity.
According to Professor Rick Valenta from the University of Queensland’s Sustainable Minerals Institute, lithium extraction in Australia is more energy-intensive compared to Chile and Argentina due to the country’s hard-rock mining operations, which require more energy and produce higher emissions. In contrast, Chile and Argentina extract miniral from brine, which is less energy-demanding.
Most of the lithium extracted in Australia is exported to China in the form of spodumene concentrate, a partially processed ore. The price of spodumene has mirrored the sharp decline in refined lithium prices, hitting its lowest level since August 2021. Chinese companies then refine this concentrate into solid lithium or two lithium compounds, lithium hydroxide and lithium carbonate, used in batteries.
Given the stark price difference—one tonne of lithium carbonate sells for around 72,500 yuan ($10,280 USD) compared to just $747 USD for the same amount of spodumene concentrate—Australian miners are looking to build their own lithium refineries. In 2022-23, 98% of lithium was exported as spodumene concentrate.
The first commercial production of refined lithium in Australia occurred in 2022 when IGO, a Perth-based company, began manufacturing battery-grade miniral hydroxide at its Kwinana Refinery in partnership with Chinese firm Tianqi Lithium. Other companies, such as Covalent Lithium and Albemarle, are also setting up refineries in Western Australia.
While some argue that domestic lithium refining could reduce China’s dominance in the global market, Kingsley Jones believes Australia should remain open to Chinese investments. He criticizes the Australian government’s strategy to prefer investments from countries other than China, especially since bilateral relations have cooled since 2020. In fact, Canberra blocked the sale of an Australian miner to a Chinese firm last year, following advice from the country’s Foreign Investment Review Board.
Jones warns that rejecting investment from the largest buyer is a “self-inflicted wound.” Australia’s Department of Industry, Science, and Resources did not respond to a request for comment on this issue.
As Australia works to establish itself as a lithium refiner, government scientists are researching more environmentally friendly extraction methods. The current process releases significant amounts of chlorine gas. Dr. Dongmei Liu, a research scientist at the national science agency, CSIRO, is exploring a new technique called “shock quenching” that involves rapidly cooling lithium vapour to avoid chlorine emissions.
In addition to refining, Australia is also focusing on recycling lithium. Lithium Australia, a publicly listed company, specializes in processing end-of-life batteries to recover lithium and other metals. CEO Simon Linge emphasizes that creating a circular battery industry will help Australia manage miniral prices and build a sustainable supply chain for future battery production.
If Australia hopes to establish a battery manufacturing industry, Linge says, it must first ensure that no end-of-life lithium battery ends up in a landfill or is exported for recycling abroad.
