The comments effectively mean the nickel made by the refinery would undergo a further step to be mixed with cobalt and manganese.
Those three metals combine to make a precursor powder that can be activated at a later time by the addition of lithium to form the most common chemical mix that goes into the lithium-ion batteries that power most electric vehicles.
The plans to make the nickel, manganese and cobalt precursor material at Kwinana are not certain to go ahead and remain subject to a final investment decision by Wyloo and IGO.
That investment decision is unlikely to occur before the latter months of 2024 at the earliest.
But the plans announced on Friday fit neatly into one of the Albanese government’s top policy priorities; to see more value-added processing of critical minerals on Australian soil.
Wyloo and IGO’s announcement comes a day after Resources Minister Madeleine King said she ultimately wanted Australia to go beyond the creation of precursor materials and assemble batteries domestically.
“What we want to get to is creating the anodes and cathodes, all the precursors, and then some of those will be assembled in other places. But the aim is that we will end up assembling them here,”she told ABC Radio in Darwin on Thursday.
IGO’s acting chief executive, Matt Dusci, said on Friday he believed Australia’s greatest opportunity lay midway through the battery value chain.
The precursor plant flagged by Wyloo and IGO would be built next door to where IGO and a Chinese company, Tianqi, already makes lithium hydroxide.
“We need to continue to expand our participation throughout the battery supply chain, beyond just the mining of key raw minerals, in order to capture a greater share of the value. We believe the area where Australia can be most competitive is in mid-stream battery chemical processing,” he said.
The contrast between Mr Dusci’s comments and the Albanese government’s desire for full assembly and manufacturing of batteries in Australia is a familiar one; most in the industrybelieve Australia will struggle to compete internationally in the latter stagesof the manufacturing chain unless the government unleashes dramatic amounts of funding in next month’s budget to support onshore battery manufacturing.
The precursor plant flagged by Wyloo and IGO would be built next door to where IGO and a Chinese company, Tianqi, already makes lithium hydroxide.
That location means all the ingredients would be on hand at Kwinana to go a step beyond precursor materials and make activated materials for battery cathodes. But activated materials are harder to handle and ship long distances than precursor materials, and there was no sign on Friday that Wyloo and IGO were planning to mix the lithium hydroxide from Kwinana with the materials they plan to make next door.
“The project will source feed stock concentrates and other intermediates from IGO’s own assets and third-party suppliers, providing a direct linkage between Western Australian upstream battery mineral assets and downstream customers in the battery supply chain, and support the development of sovereign battery chemical processing capabilities in Western Australia,” said IGO in a statement.
“IGO and Wyloo are currently advancing discussions with a global battery chemical manufacturer who have indicated strong interest in partnering in the project. This is an important step in integrating the parties’ technologies with IGO’s critical minerals to capture value across the supply chain.”
Lithium-ion batteries with nickel, manganese and cobalt were fitted into about 60 per cent of the electric vehicles sold globally in 2022, according to consultancy Rho Motion. Batteries with NMC cathode materials tend to store more energy than rival cathode chemistries.
For motorists, that means batteries provide more power for acceleration and last longer, allowing drivers to recharge fewer times. That superior performance comes at a price; NMC batteries were typically about 25 per cent more expensive last year than the major alternative cathode chemistry for lithium-ion batteries; lithium ferro phosphate.
Cars fitted with LFP batteries tend to have less range than NMC batteries, but the lower cost means they are often selected for small cars aimed at pragmatic, inner-urban motorists who are not looking for a car with elite performance nor wanting to drive long distances.
Rho Motion estimated that LFP batteries share of electric vehicle sales rose from 22 per cent in 2021 to 35 per cent in 2022.
Fortescue Future Industries CEO Mark Hutchinson, TES CEO Marco Alvera and Fortescue executive chairman Andrew Forrest at the World Economic Forum meeting in Davos.
Wyloo and IGO’s plans to make NMC precursor material at Kwinana are only possible because the two companies have invested in more nickel resources in Western Australia over the past year.
IGOspent $1.26 billionacquiring WA nickel miner Western Areas last year, while Wyloo is currently trying to seal a$760 million takeover of WA nickel miner Mincor.
Wyloo owned 40.81 per cent of Mincor as of Thursday and appears likely to win control of the company soon given the Mincor board has encouraged shareholders to accept the deal.
Most of the nickel produced by the former Western Areas and Mincor mines is sold to BHP, which needs external supplies of nickel ore for its Kalgoorlie nickel smelter because the BHP nickel mines in WA cannot supply enough volume, nor enough of the particular ore chemistry needed for the smelter to run efficiently.
In that context, Wyloo and IGO’s plan to build their own nickel refinery and precursor material plant suggests they are unlikely to extend the contracts that sell nickel ore from the Mincor and Western Areas mines to BHP.
Wyloo and IGO would likely divert that nickel ore into their own downstream processing plants, putting the pressure on BHP to find alternative sources of supply for its Kalgoorlie smelter.
Wyloo chief executive Luca Giacovazzi said the Kwinana plans could spark a bigger battery metals industry in WA.
“We’re extremely excited to build upon the immense potential that exists here in WA with the development of Australia’s first commercial PCAM [precursor cathode active materials] facility in Kwinana. Areas like Kambalda and Leinster in Western Australia hold some of the world’s highest-grade nickel, with huge potential for more discoveries to be made,” he said.
“WA is already a leading supplier of critical minerals, and this is the spark it needs to become a global hub for battery metals.”
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