Chris Ellison is the low-key leader of Australian lithium.
In contrast to the pomp and posturing that has been associated with the swarm of Australian lithium hopefuls racing to secure a slice of the booming battery market, Ellison's Mineral Resources has quietly become the world's largest miner of lithium.
For Ellison, gaining exposure to lithium was not about attaching the company's name to the hottest new commodity – it was a clear opportunity to put its unique business model to work.
MinRes' business is built on its mining services arms – processing, site operations and, increasingly, logistics. But it also partners with mining companies to develop new assets, with a view to securing more services work and an equity stake in the new project which it would then sell once the operation is up and running.
In the lithium space, MinRes owns the Wodgina mine in the state's Pilbara region and a 43.1 per cent stake in the Mount Marion lithium mine in the state's south.
It is difficult to compare MinRes' production volume to its global rivals because, like other West Australian miners, its operations produce spodumene, a lithium ore that can be converted into the end-use battery chemicals lithium hydroxide and lithium carbonate.
But analysts who have crunched the numbers estimate that with an expected share of about 75,000 tonnes of production on a lithium carbonate equivalent basis this financial year, MinRes leads the pack.
"I don't pretend to know everything there is to know about the lithium market but it is an industry we can be strong in and we have taken the opportunity to secure some good assets," Ellison tells AFR Weekend.
"We will sell down our equity in it because it is what we do ... get a site up and running, net a capital gain out of the sell-down, keep our life-of-mine operations contract and then move onto the next one and do it again."
MinRes hasn't set a timeline to sell down and for now, is focused on running the operation smoothly. Increasing exposure
Mount Marion, which shipped its first ore in February, has achieved its target rate of 400,000 tonnes a year. Despite MinRes' processing expertise, getting the plant running as planned was "a difficult process", but the project partners are now content with its performance and already planning upgrades, Ellison says.
At Wodgina, ore is initially being mined and shipped directly to China but within months the MinRes board will make a decision on whether to build a second spodumene plant there. Ellison wants this one up and running quickly – by July 2018.
Mineral Resources intends to reduce its stake in Wodgina to about 50 per cent. Ellison says he will sell only to parties that understand his vision to use the well-located operation as a "hub" for other parts of the business and can "take that product all the way through to, not just chemicals, but to batteries".
And there are plenty of groups looking to do just that, he says. "The downstream industry – both the carbonate guys and the battery makers – are trying to secure supply going forward and quite honestly I don't think there is as much supply out there as everyone says there is," Ellison says.
"There are only four mines I know of that have got long-term legs in WA and WA is the heart of hard rock [lithium]," he explains, pointing to Wodgina, Mount Marion, the state's biggest operation Greenbushes, and the Pilgangoora mine being developed by Pilbara Minerals.
"And on the demand side, I think it is going to be power storage that turns the dial.
"We have had three battery manufacturers from China out and two of them are making big, power storage batteries. My impression was the perception of them in the market is they are car battery manufacturers but in fact they are seeing that battery storage is going to be a much bigger part of their business from this year onwards. "That is where the market is going."
Shares in Mineral Resources are up about 15 per cent so far this year, buoyed by a resurgence in its contracting business and its exposure to that positive picture for lithium.
While its 2017 full-year results this week proved its bread and butter is still mining services, analysts at Macquarie said lithium, which accounted for less than 10 per cent of its EBITDA in 2017, would account for about 55 per cent this financial year and nearly 70 per cent in 2019.
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