Good News & Bad News, page-39938

In WA, a lesson inthe tough reality of processing lithium

Albemarle’s emerging plant is a living example that realityis much harder than Australia’s rhetoric about more downstream processing inlithium hydroxide

Amid the cow paddocks and gum trees 160km south of Perth, 2000hectares of land are designated as a strategic industrial estate to supportheavy industry and downstream processing.

“It’s your opportunity,” declares the large orange sign for thefreeway turnoff to Kemerton Industrial Park.

But US lithium giant Albemarle is one of the few companies tohave taken up that opportunity in the four decades since Kemerton was set up asa priority industrial area with a buffer zone of another 5000 plus hectares ofbushland.

Albemarle’s large chemical processing plant rising up on 80hectares of land at Kemerton is one of three lithium hydroxide plants now underconstruction or operating in Western Australia.

These projects are rare evidence that enthusiasm for Australia’smove into downstream processing of critical minerals translates into more thanan appealing political fantasy. But the soothing notion of a world going greenand decarbonising still requires complex, often hazardous, chemicalmanufacturing industries.

Albemarle is one of the very fewcompanies in the world that possesses the highly specialised technology andintellectual property to produce lithium hydroxide – a crucial component forlithium EV batteries.

Except for Chile’s SQM, the others are all Chinese and Albemarleitself operates four lithium hydroxide plants in China.

China’s Tianqi and Australian-owned IGO also have a lithiumhydroxide facility ramping up operations at Kwinana, closer to Perth. Wesfarmers is partnering with SQM to build another lithium hydroxide plant at Kwinana with production due to start next year.

The quality of the hard rock lithium deposit at WA’s Greenbushesmine – in which Albemarle is a 49 per cent owner along with Tianqi and IGO –persuaded the US company to build its own chemical plant an hour away atKemerton to further process the lithium spodumene concentrate.

This is also a convenient means of diversifying crucial supply chain materials away from China, which is a sensitive issue in the US and for customers wanting to know the sources of all components. Australia is the world’s largest supplier of lithium

With the WA plants the only three outside China processingspodumene, delays and big cost increases were inevitable, particularly in aCOVID and post COVID era.

Training of a new workforce responsible for a sophisticated,complicated chemical process – along with the need to meet specific Australia’sstandards and regulations – is arduous. Albemarle has had to import its Chinesetechnical specialist teams from China and US engineers to assist with a plantbased on a Chinese design.

Construction started in 2019, just ahead of WA’s COVID borderclosures, meaning its chief operating officer, American Walt Sopp, was stuck inChina. But from 2022, the plant has started exporting lithium hydroxide samplesto meet car and battery manufacturer standards in markets including Japan,South Korea and soon, the US.

On site,trucks deliver spodumene into giant sheds and containers to undergo chemicalprocesses such as calcination and acid roasting at temperatures of over 1000degrees. Leaching and separating, causticising, crystallising and thenpackaging complete a two- to three-day process to deliver lithium hydroxide infine white powder form.

That Albemarle is a $US17 billion globally integrated companyand not just an Australian lithium miner makes it less vulnerable to the recent price collapse creating havoc for other WA lithium miners and the odd billionaire. Albemarle’s customers should also benefit from generous subsidies under the US Inflation Reduction Act.

Not that Albemarle is immune to price gyrations. US headquartersmust be delighted it pulled out from the contest for Liontown Resources last October. In January, it announced indefinite delay for a fourth processing train, adding to the third being built and the two currently ramping up production.

The goal is still to produce 100,000 metric tonnes a year fromKemerton, supporting manufacturing of 2.4 million EVs elsewhere.

This is on a very different scale to Australia’s reliance on theexport of massive quantities of LNG or around 1 billion tonnes of iron ore fromWA annually. The global market for lithium hydroxide is currently only around 1million tonnes a year. But it is still key to Australia’s hopes to encouragemore domestic manufacturing.

The shortage of housing in WA means Albemarle has built its ownaccommodation village nearby for hundreds of temporary construction workers –although the great majority of its 600 to 700 permanent employees are localresidents.

What is proving even more complicated is navigating the rulesfor the basics of shared infrastructure like rail and power in a country thatis already extremely high cost.

For all the talk of governments needing to improve approvals andcommon user infrastructure rather than “picking winners”, Kemerton is an objectlesson in the sort of delay and frustration that can only discourage timely,discretionary business investment.

Despite Kemerton’s long history, for example, it still has norail line to the port of Fremantle. A new government study into a potentialrail link between Greenbushes and a (non-container capable) port at Bunburydoesn’t even include a 10km spur to a stranded Kemerton.

Unlike Kwinana, Kemerton still has plenty of land to spare. Butit already has inadequate power supply for industry expansion, includinglithium hydroxide processing.

That leaves Albemarle helping fund a new power line into thepark. Albemarle must pay millions for biodiversity offsets for land requiredfor the 9km transmission line as well as for the plant area itself. That islikely to become more expensive with risks of longer delay once Canberra’s“nature positive” reforms aimed at increasing rather than replacing nativevegetation take effect next year.

Note to governments. Downstream processing of critical mineralsrequires hard business decisions more than soft political soundbite