Western Australia eyes CAM production; state broadens critical minerals strategy | Hotter Commodities

Western Australia (WA), Australia’s largest state, will evaluate the possibility of developing cathode active materials (CAM) production once precursor CAM (pCAM) output is up and running, Bill Johnston, the state’s Minister of Mines and Petroleum, told Fastmarkets

The move is part of Western Australia’s (WA) plan to develop downstream stages of the lithium-ion battery supply chain and further support value-add opportunities for battery and critical minerals, Johnston said.

In a recent exclusive interview, Johnston said that since WA launched its battery strategy in 2019, it has moved from a focus on mining the minerals critical to batteries, like lithium and nickel, to adding value to the supply chain through the addition of lithium hydroxide production.

WA now has two operating lithium hydroxide plants and a third one under construction, Johnston noted, while miner BHP has added a nickel sulfate plant to its existing refinery; various companies also have midstream projects underway for nickel, cobalt, graphite and high purity alumina.

“Now we are working with a number of proponents at the pCAM stage, and once the pCAM is in place then you can then start discussing whether there is an opportunity for a CAM plant. We are just trying to follow things through logically,” Johnston added.

CAM is a key battery material, representing about 40% of the cost of a battery cell. Currently, CAM and pCAM processing is highly concentrated in Asia, but companies are working to establish capacity elsewhere.

Earlier this year, IGO Limited, Wyloo Metals and a planned battery chemical partner received approval for land for an integrated battery material facility that will produce high-value nickel-dominant pCAM in WA’s Kwinana-Rockingham Strategic Industrial Area. A feasibility study is due in the second half of 2024.

Pure Battery Technologies is meanwhile in feasibility for the construction of a pCAM plant in the Kalgoorlie-Coolgardie region of WA.

While battery gigafactories may not be in the immediate future for the state, given the current lack of car manufacturing plants in the country as a whole, they could become more realistic the further downstream in the supply chain WA goes, Johnston said.

“If somebody wanted to establish a battery factory in WA, we would welcome that, but of course, the challenge with battery factories is you have to get your chemicals from somewhere and, at the moment, really the only choice is China,” he told Fastmarkets.

“So, we’re very much focused on the early stage and midstream part of the supply chain. That may in the future stretch further, but without the midstream, we don’t think WA be a logical place [for battery gigafactories],” he said.

Country-agnostic strategy for critical minerals

The Australian government has an on-shoring strategy for critical minerals, driven in part by a desire to reduce reliance on China, whose leading position in the energy transition has been in progress since the turn of the millennium.

China decided long before many other economies to set its sights on the production of electric vehicles (EV) and the associated supply chain, and its strategy has been a resounding success.

Chinese companies are active throughout the entire lithium battery production line, from resource development, refining and processing to battery manufacturing and recycling. The country accounts for the majority of the world’s lithium chemicals production, cell capacity and battery component manufacturing, and has supply deals with automotive companies across the globe.

“There’s a logical way to de-risk your logistics chain, to have more than one location doing that chemical processing step,” Johnston acknowledged.

He also noted that reducing the movement of materials around the world is better for environmental reasons, while WA’s experience disposing of the residues from manufacturing processes provides another incentive to keep production closer to home.

But while strongly supporting the development of critical minerals supply chains in WA, Johnston remained agnostic over investors’ countries of origin.

He pointed to Tianqi Lithium Energy Australia (TLEA), a joint venture between China’s Tianqi Lithium and Perth-based IGO Limited. The company has a 51% stake in the Greenbushes lithium mine and operates a lithium hydroxide processing plant in Kwinana.

“The Foreign Investment Review Board is run by the Commonwealth government and they could make any decision they want, but the point we make is that we would love investors to build plants here,” Johnston said.

“I prefer that a Chinese investor that wanted to build a hydroxide plant do it in Western Australia rather than in China, given that there is already a very strong chemical processing industry in China. We’d welcome [a Chinese investor] looking to a WA site for alternative processing facilities,” he added.

Johnston noted the strong presence in WA of other international firms, including US producer Albemarle and Chile’s SQM.

Relations between China and Australia have been at a historic low until recently, with both sides slapping import tariffs on key products. However, a recent thaw has led the two countries to agree to normalize diplomatic ties and work toward expanding bilateral trade.

Rare earths production

Moves to expand WA’s production of critical minerals have extended to rare earths.

Rare-earth magnets are employed in the motors of EVs and in wind turbine systems. While China is the largest producer and processor of these critical materials, western economies have been seeking to reduce their dependence on the East Asian nation by developing alternative operations.

Already a miner of rare earths, WA currently has two processing plants for the minerals planned: Iluka Resources’ Eneabba refinery and Lynas Rare Earths’ processing facility in Kalgoorlie.

The Australian government recently recognized the importance of developing rare earths supply chains following a meeting between Prime Minister Anthony Albanese and US President Joe Biden.

“The good news is that these two rare earths plants provide opportunities for midstream processing and give great comfort to Australia and its allies globally. It also shows there’s an opportunity to grow an industry over time,” Johnston said.

“At the moment, all the rare earths from the US are exported as a concentrate to China for processing and then returning to the US. Once Iluka’s Eneabba plant and the Lynas plant in Kalgoorlie are finished, then the concentrate could actually be sent here for processing and then be returned to the US,” he added.

Lynas Rare Earths is also building a rare earths processing facility in Seadrift, Texas, to develop a domestic supply of rare earths for US commercial and defense manufacturers.

“In theory, you could crack and leach in Kalgoorlie then separate and finish in Texas — that would be a logical development. You could use Australian raw materials, but you could also use United States raw material in the same process,” Johnston added.

According to Johnston, Lynas’ facility in WA is engineering complete and ready to begin commissioning, while Iluka’s plant is well into the construction phase.

While rare earths are included on the Australian government’s critical minerals list, nickel is conspicuously absent.

“WA strongly believes nickel should be on the critical minerals list — it’s an essential element in a lithium-ion battery and, in fact, there’s more nickel in a lithium-ion battery than there is lithium,” Johnston told Fastmarkets.

“We note all the work that’s been done in Indonesia [to increase production] but we think there’s a strong case for additional activity here in WA,” he added.

Recently, Fastmarkets launched a suite of prices and coverage for rare earth elements.

In Hotter Commodities, special correspondent Andrea Hotter covers some of the biggest stories impacting the natural resources sector. Sign up today to receive Andrea’s content as it is published.

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