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Lithium next boom resource from the mining powerhouse of Western Australia

Value-adding proposals present more opportunities for lithium explorers, developers and producers.

Photo of lithium-ion battery
WA is destined to become the world’s second major location for refining of lithium from mineral concentrate

The key new generation battery ingredient of lithium is set to become Western Australia’s next boom metal, following in the steps of gold, nickel and iron ore.

It’s not just mining that is painting a rosy picture for companies active in the lithium space, with increasing interest in value-adding opportunities.

In fact, many analysts believe WA, which relies heavily on the abundance of mineral resources, will become the world’s second major location for the refining of lithium from mineral concentrate after China.

Rapid pace of developments

Global metals and minerals research company Roskill concurs, citing a number of recent announcements outlining the rapid pace of developments within the lithium mineral sector in the state.

Roskill stated: “Given its more straightforward development and production process compared to the lithium brine sector, this sector has been able to react quicker to current, and significantly increased projections for future lithium demand.”

Lithium is a soft, silvery-white metal, which is highly reactive and a key component in lithium-ion batteries.

The chemical does not occur in nature in its elemental form, but compounds within hard rock deposits and salt brines.

READ: Kidman Resources selects site at Kwinana for proposed lithium refinery

A recent value-adding example is the lithium conversion facility proposed by 50:50 joint venture partners Kidman Resources Ltd (ASX:KDR) and Sociedad Quimica y Minera de Chile (SQM).

Last week the two parties announced that they had selected a site in the Kwinana Strategic Industrial Area, 30 kilometres from Perth and adjacent to port facilities.

The JV company plans to build a facility with initial annual production capacity of about 44,000 tonnes of lithium hydroxide, or 37,000 tonnes of LCE, from spodumene concentrate.

A definitive feasibility study for the plant is due to be released in late-2018.

The proposed refinery will be at the Port of Kwinana.

This is part of an integrated production strategy for Kidman, which entered an agreement with SQM in June 2017 for joint development of the Mt Holland Lithium Project, 360 kilometres east of Kwinana.

In a report, Roskill said the quicker reaction time of the lithium mineral sector was highlighted by the fact that Kidman had only announced a maiden resource for Mt Holland in December 2016.

“Aside from the plant, SQM and Kidman also have to prove the technical and economic viability of Mt Holland if this to be an integrated operation.”

Adding value to Greenbushes

Other Roskill examples include Tianqi Lithium Corp (SHE:002246) and Albemarle Corporation (NYSE:ALB).

Tianqi began constructing its lithium hydroxide plant in Kwinana in October 2016, which is expected to have annual capacity of 48,000 tonnes of lithium hydroxide when fully commissioned in late-2019.

Albemarle aims to develop a 20,000 tonnes per annum lithium hydroxide facility in Kemerton, with staged expansions to 100,000 tonnes by around 2025 proposed.

Both will be fed by concentrate from the Greenbushes mine, 250 kilometres south of Perth, which is the world’s largest and richest lithium producing operation.

Greenbushes is operated by Talison Lithium, in which China's Tianqi controls a 51% stake and US-based Albemarle holds the minority interest.

READ: Lithium Australia nears completion of design for cutting-edge SiLeach plant

The value-adding potential is also being examined by other companies, including Lithium Australia NL (ASX:LIT) and Neometals Ltd (ASX:NMT).

Lithium Australia is designing a cutting-edge large-scale pilot plant to demonstrate its SiLeach® hydrometallurgical process which extracts lithium and by-products at commercial scale from lithium micas.

Lithium Australia is aiming for a circular economy in lithium-ion battery supply.

The company also has an extensive suite of lithium prospects throughout Western Australia from which it is intending to feed the SiLeach plant.

READ: Neometals to begin FEED study for lithium hydroxide project

Neometals is assessing the development of a lithium processing facility near Kalgoorlie, close to the Mt Marion Lithium Project in which it has a 13.8% interest.

Lithium produced at Mt Marion is being shipped to China but Neometals has a binding offtake option right for a minimum of 12.37% of production from February 2020.

This would provide a secure supply of feedstock to support the prospective development of its own downstream processing plant.

Neometals’ staged approach to becoming an integrated lithium producer.

The company also recently completed the acquisition of Mt Edwards Lithium Pty Ltd, which holds 75% of the lithium rights in the Mt Edwards Lithium Project 40 kilometres south of Mt Marion.

A little further afield, Core Exploration Ltd (ASX:CXO) plans to develop a spodumene concentrate and direct shipping ore operation to China from its Finniss project in the Northern Territory, which is within trucking distance of Darwin Port.

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