Australia’s ambitions to develop a robust downstream lithium sector face mounting challenges, as recent setbacks highlight the industry’s struggles to achieve long-term viability. The latest blow came when Albemarle Corporation (NYSE: ALB) announced it was suspending parts of its Kemerton hydroxide plant, located south of Perth, due to weak lithium prices and other operational difficulties.
Struggles Across the Industry
The Kemerton facility was designed to include four production trains, each capable of producing 25,000 tonnes per annum. However, after delays, cost overruns, and a comprehensive review, Albemarle has decided to suspend the construction of Train 3, a project worth A$900 million, and idle Train 2. The company is now focusing its efforts on ramping up production from Train 1.
This decision underscores the broader challenges facing Australia’s downstream battery sector. Other players, such as Tianqi Lithium and IGO Ltd. (ASX: IGO), have also encountered difficulties in scaling up operations at their Kwinana hydroxide plant, situated in an industrial area outside Perth. IGO CEO Ivan Vella acknowledged the plant’s improved performance but admitted it remains a challenging operation with low margins and significant stress on the industry.
The Role of Partnerships and Infrastructure
Liontown Resources (ASX: LTR), which recently began producing spodumene at its Kathleen Valley mine in Western Australia, remains committed to its downstream strategy. The company is collaborating with LG Energy Solution and Sumitomo to build a downstream facility, with Liontown’s managing director, Tony Ottaviano, emphasizing the importance of strong partnerships, strategic plant locations, and compliance with international regulations.
Meanwhile, industry leaders like Vella and other stakeholders are calling for government support to bolster the sector. They emphasize the need for reliable and affordable green power, improved infrastructure, and a productive workforce to ensure the industry’s competitiveness. However, experts like Canaccord Genuity analyst Tim Hoff caution that Australia’s existing cost structures and industry frameworks may not be conducive to long-term success without significant reforms.
The Path Forward: Innovation and Government Support
While the challenges are significant, industry leaders believe innovation and strategic government intervention can help Australia build a sustainable battery sector. Pilbara Minerals managing director Dale Henderson described Albemarle’s decision as a setback but expressed optimism that the industry still has room for growth and development. Pilbara Minerals is exploring mid-stream processing options, such as producing lithium salt at mine sites, to add value onshore while avoiding the complexities of full chemical processing.
In parallel, companies like Lynas Rare Earths (ASX: LYC) are focusing on expanding critical minerals production, with CEO Amanda Lacaze identifying uninterruptible power and improved logistics as key areas where government action could enhance Australia’s competitiveness in the global market.
Ultimately, industry players agree that while subsidies may not be the solution, targeted government support in infrastructure, energy, education, and tax reform could provide the necessary foundation for the sector’s growth. As Australia navigates these crossroads, the decisions made in the coming years will determine whether the country can secure a leading position in the global battery supply chain.
Source: Mining.com
