As the world’s largest lithium producer and exporter, Australia is positioned to take full advantage of growing demand.
An impressive 52 percent of the world’s lithium comes from Australia, and by 2028, the country’s revenue from exporting the commodity is expected to reach a value of more than AU$22 billion. While prices for the battery metal have fallen off from recent highs, some experts believe that the green energy transition will allow lithium to maintain momentum well into the future.
Lithium is most often found in the mineral spodumene, from which it must be extracted, processed and refined. It is used in aluminium or magnesium alloys for applications such as building aircraft or trains, serving as a strengthening and lightening agent.
But a key use of lithium is in rechargeable batteries for electronic devices such as cell phones, cameras, laptops and, of course, electric vehicles (EVs). It is the last of these applications that has investors most excited — lithium is critical to EV production, as its unique properties help create the lightweight batteries they need to function.
Demand for EVs is on the rise as automakers pledge to up their electric lines. BloombergNEF expects global passenger EV sales to increase 21 percent in 2024 to reach 16.7 million units, and 70 percent of those units are expected to be fully electric.
Currently, 85 percent of lithium consumption worldwide is attributed to rechargeable battery manufacturing, representing an excellent opportunity for Australia, the world’s top lithium producer. The nation has already seen recent successes due to the EV boom, and with analysts bullish on lithium’s future, the nation is ready to capitalise on the growing market.
With all of these factors in mind, investors may be wise to look toward Australia, a country brimming with abundant lithium reserves, for possible investment opportunities moving forward.
Where are Australia’s largest lithium mines?
Most of Australia’s lithium resources are located in Western Australia, where there are several robust hard-rock deposits. A typical lithium deposit in Australia will have a grade of between 1 and 3 percent lithium oxide.
Lithium mined in Australia comes mainly from spodumene, though it can be found in other minerals as well, such as lepidolite. In 2023, Australia reported total output of 86,000 tonnes of lithium, above its 2022 total of 74,700 tonnes. The country’s lithium production numbers first began spiking around 2018 thanks to accelerating output from two spodumene projects launched in 2017.
Australia has several lithium mines that are currently in production, including the Greenbushes mine, which is the largest operational lithium mine globally. Greenbushes was launched in 1983 and has been processing lithium since 1985.
Since then, the project has expanded greatly, even gaining a second lithium-processing plant in 2019. Greenbushes is recognised as the “longest continuously operated mining area in Western Australia,” and is owned by joint venture partners Tianqi Lithium (SZSE:002466), IGO (ASX:IGO,OTC Pink:IPGDF) and Albemarle (NYSE:ALB). The mine produces about 1.5 million tonnes of lithium spodumene annually.
Another key lithium mine in Australia is Mount Marion, a joint venture between Mineral Resources (ASX:MIN,OTC Pink:MALRF) and Ganfeng Lithium (OTC Pink:GNENF,SZSE:002460,HKEX:1772). The mine is located in the Yilgarn Craton, southwest of Kalgoorlie. The joint venture partners recently upgraded Mount Marion’s annual plant capacity to 900,000 tonnes.
Mineral Resources also has an interest in the Wodgina lithium mine, which launched operations in Kemerton, Western Australia, in April 2017, but was put on care and maintenance two years later. Mineral Resources and Albemarle created the MARBL joint venture to bring Wodgina back online as the lithium market heated back up, and it reentered production in 2022 with Mineral Resources as the operator. This asset has two production sites, each of which has annual output of around 25,000 tonnes of lithium hydroxide. Mineral Resources signed an agreement in February 2023 to increase its ownership from 40 percent to 50 percent, with Albemarle owning the remaining interest.
Thanks to the production from Mount Marion and Wodgina, Mineral Resources reached a new record for spodumene production shipments in its the first quarter of its 2024 fiscal year.
The Pilgangoora project, which is fully owned by Pilbara Minerals (ASX:PLS,OTC Pink:PILBF), is located in Western Australia’s Pilbara region, close to Port Hedland. The mine’s location is auspicious, considering that the Pilgangoora orebody is one of the largest lithium deposits globally. Additionally, Pilgangoora’s two operational processing plants allow for increased production capacity, enabling the mine to better meet the market’s current demands. The project is undergoing further expansion initiatives as the company aims to tap into the full potential of its lithium reserves.
The Mount Cattlin mine, owned by Allkem, a subsidiary of Arcadium Lithium (NYSE:ALTM), is located near Ravensthorpe in the Great Southern region of Western Australia. The asset produced about 131,000 tonnes of spodumene concentrate in its 2023 fiscal year. Guidance for its 2024 fiscal year is set at a range of 210,000 to 230,000 tonnes.
Additionally, the Northern Territory-based Finniss lithium project, owned by Core Lithium (ASX:CXO,OTC Pink:CXOXF), produced its first spodumene lithium concentrate in February 2023. The company’s current focus is on establishing Finniss as a multi-mine operation as it ramps up at the Grants open-pit mine; it is targeting the March quarter of 2024 for a final investment decision at the BP33 underground project, a potential second mine at Finniss.
What is the future for Australian lithium supply?
One major upcoming lithium operation is the Western Australian Mount Holland lithium mine, which is owned by Covalent Lithium, a joint venture between Wesfarmers (ASX:WES,OTC Pink:WFAFF) and SQM (NYSE:SQM). Spodumene production is targeted to begin in 2024, with expected annual production of 380,000 tonnes. Once the full site is online, Covalent anticipates production of around 50,000 tonnes of lithium hydroxide annually across a 47 year lifespan.
Mount Holland isn’t the only Australian lithium operation under development right now. The country is seeing the expansion of many of its key lithium projects, as well as the development of new deposits, in order to keep up with growing demand from consumers.
At Greenbushes, for example, a third chemical plant is under construction and will have a production capacity of 500,000 tonnes of spodumene concentrate, with completion anticipated in the 2025 fiscal year.
Western Australia’s Kathleen Valley deposit is an up-and-coming lithium deposit owned by Liontown Resources (ASX:LTR,OTC Pink:LINRF) and located near Kalgoorlie. A feasibility study was completed in the winter of 2021, with projections for annual production of 500,000 tonnes beginning in mid-2024.
Pilbara Minerals started the next stage of the Pilgangoora plant expansion in March 2023, making the decision to increase the production capacity of the Pilgangoora project by about 47 percent, from 680,000 tonnes of spodumene concentrate per annum to 1,000,000 tonnes per annum. In its December 2023 quarterly report, the company shared that this project is still on track to reach this target by the March 2025 quarter.
This is an updated version of an article first published by the Investing News Network in 2022.
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Securities Disclosure: I, Melissa Pistilli, currently hold no direct investment interest in any company mentioned in this article.
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