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Lithium boss saysChina ties too valuable to break

Pilbara Minerals boss Dale Hendersonsays China would suffer “massively” from any attempt to distance itself fromAustralia in lithium and other commodities in response to US moves to enlistallies to build critical minerals supply chains.

Mr Henderson said Pilbara Minerals, one of the world’s biggestlithium miners, was highly aware of the impact of the US-China rivalry on critical minerals supply chains

Commenting as one of the leading voices in a KPMG report on theglobal mining outlook, Mr Henderson said: “I don’t foresee China making anydetrimental move to increase distance between Australia and China in respect ofraw materials, particularly within the lithium supply chain because it wouldhurt them massively.

“Their industries are very dependent on Australia, and we have avery co-dependent relationship.”

The release of the KPMG report on Tuesday comes soon after talksbetween Prime Minister Anthony Albanese and US President Joe Biden on thesidelines of the G7 summit in Japan.

The talks included giving Australiaminers and green energy producers greater access to US subsidies aimed atbolstering its defence manufacturing and related critical minerals supplychains.

The KPMG report, based on a survey ofmore than 430 executives in the global mining and metals sector, found manywere confident they could grow as part of the energy transition and deliver ontheir emissions reduction targets in operations.

On the other hand, almost 50 per centsaw increased government regulation, environmental, social and governance (ESG)considerations and emissions reduction targets as the biggest threat to theiroperations over the next five years.

Growth opportunity

Trevor Hart, KPMG's global head ofmining, said mining executives regarded decarbonisation as a growth opportunityand not just a cost of doing business.

“The global mining sector knows thereis a great deal of heavy lifting ahead to achieve net zero targets, and thattime is of the essence,” he said.

The survey found almost 80 per cent ofexecutives were either confident or very confident the sector could meet demandfor clean energy minerals. A similar percentage said the growth in productionand new mines required would not prevent them hitting ESG and net zero targets.

Mr Henderson said a big increase inproduction at Pilbara Minerals would help it move further down the supplychain. The company has been in talks about a partnership deal to convertspodumene from an expansion of its Pilgangooramine about 120 kilometres south of Port Hedland into high-value lithium chemicals.

Pilbara Minerals already has an 18 percent stake in a 43,000-tonne-a-year lithium hydroxide plant being built byPOSCO in Korea with an option to own up to 30 per cent.

“We’re balancing the fact that thewhole lithium industry pretty much looks to China for the processing of rawmaterials, so we can’t sever that tie, nor do we want to,” Mr Henderson said inthe report.

“We continue to diversify into othermarkets, although we can’t pivot elsewhere too quickly.”