Australia's fast growing lithium sector has received a major endorsement, with one of the world's biggest producers vowing to accelerate its Australian projects at the expense of its Chilean expansion options.
Albemarle Corporation said its plan to build a $400 million processing plant near the Western Australian city of Bunbury would be accelerated by 50 per cent, with the first stage of the plant set to produce "at least" 60,000 tonnes of lithium hydroxide per year, rather than the 40,000 tonnes initially planned.
The change is effectively an acceleration of the Kemerton project, which has sought regulatory approval to eventually expand to 100,000 tonnes per year.
Albemarle said the acceleration of the project would not create any "meaningful change" in total capital expenditure at Kemerton, although the company appears certain to be spending more money sooner than previously planned, and will begin earthworks in December.
Albemarle chief executive Luke Kissam told US investors the acceleration of the Kemerton project would coincide with a slowing of work on the company's lithium expansion projects in Chile.
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The contrasting approach to the company's Australian and Chilean projects is driven by battery manufacturers' rising demand for lithium hydroxide rather than the traditional industry benchmark product, lithium carbonate.
Australian producers, who extract lithium from hard rock, are increasingly viewed as the cheapest producers of lithium hydroxide, reversing the traditional industry dynamic which has ensured the lowest cost producers are those in Chile and Argentina who turn briny water into lithium carbonate.
The trend toward lithium hydroxide has forced the South American producers to add an extra processing stage to turn their carbonate into hydroxide, and that extra stage has in most cases erased the South Americans' advantage on production costs.
"We have stopped all engineering work on any further carbonate expansions in Chile at this time," said Mr Kissam on Friday morning Australian time.
"We are going to put it on the shelf and continue to monitor our customers' needs and the needs for the market.
"What is changing is we're seeing a significant acceleration in demand of lithium hydroxide ... it is clear we need to focus on lithium hydroxide."
The comments echo the sentiments expressed earlier this week by the world's newest lithium player, US company Livent, which was recently spun out of Philadelphia-based FMC Corporation.
Albemarle's partner in the Greenbushes mine, Tianqi, is the most advanced on construction of an Australian lithium hydroxide plant, with the first stage of its project at Kwinana, south of Perth, scheduled for completion before Christmas.
Altura Mining shipped its first spodumene concentrate about one week after Pilbara Minerals' maiden cargo set sail.
The extra supply from those new mines, combined with sliding demand for lithium carbonate and changes to electric vehicle subsidies in China have seen prices for lithium carbonate in China slump sharply this year, and that slump has taken a toll on the share prices of many ASX-listed lithium producers.
Altura has been no exception, with its shares falling 64 per cent between January and this week.
But the stock rose by more than 30 per cent on Friday on the back of a binding offtake agreement, which will see Ganfeng buy about 31 per cent (70,000 tonnes) of Altura's annual production of spodumene concentrate between 2019 and 2021 with two potential five-year extension periods.
The price paid by Ganfeng will be calculated in reference to market prices, but the contract guarantees the price will be between $US550 per tonne and $US950 per tonne.
PLS Price at posting:
83.5¢ Sentiment: Buy Disclosure: Held
(20min delay)