Australia is already the world's largest lithium producer and now wants to significantly increase its mining operations.
Written by Heiko Stumpf.
Resource companies in Australia are preparing for a surge in demand for battery raw materials. Things are looking up in the lithium mining sector in particular. The sector recently suffered from a global oversupply and falling prices, which prompted the mine operators to cut back their production. Two Australian mines, Wodgina and Bald Hill, even stopped their operations temporarily. Copper and nickel are also in demand.
To overcome the economic slump due to the coronavirus, many governments around the world are now relying on stimulus packages with a green focus that also provide incentives for electromobility. The Department of Industry, Science, Energy and Resources (DISER) expects global lithium demand to increase by 37 and 21 per cent in 2021 and 2022, respectively.
New lithium projects get underway
In early 2021, Covalent Lithium announced the final investment decision for the construction of the Mount Holland Mine in Western Australia. The capital requirement for the major project is approximately USD 1.3 billion (AUD 1.9 billion, USD 1 = AUD 0.6906) with mining scheduled to begin in 2024.
In Australia, lithium is extracted from spodumene ore, which can be directly processed into lithium hydroxide. The latter is needed for the production of high-performance battery cathodes with a high nickel content. This gives Australia an advantage over producers in South America who extract lithium from brine in salt lakes. The lithium carbonate produced there must be further processed to achieve high-quality lithium suitable for batteries.
The Mount Holland mine is expected to produce over 340,000 tonnes of spodumene concentrate per year. The operators are also building a lithium refinery in the Kwinana Industrial Area near Perth, which will produce around 50,000 tonnes of lithium hydroxide per year. Core Lithium is developing another new project in the Northern Territory. The proposed Finniss mine is expected to reach a production capacity of around 175,000 tonnes of spodumene concentrate per year.
There is also major potential for expansion at the existing Greenbushes mine operated by Talison Lithium. The Greenbushes mine is the largest lithium mine in the world. In the longer term, the plan is for production capacity to be increased from 1.3 million tonnes to up to 2.4 million tonnes of ore.
Pilbara Minerals is planning on being another major producer in the medium term. The company operates the Pilgangoora Mine and acquired the adjacent Altura Lithium Project in 2020. Feasibility studies are currently underway to investigate further production increases.
Progress is also expected in the construction of two stalled lithium refineries. The Kemerton Lithium Refinery (Albermale/Mineral Resources), is scheduled to come on stream before the end of 2021 and will initially produce 50,000 tonnes of lithium hydroxide per year. Further expansion of the refinery could see production expanded to as much as 100,000 tonnes. Tianqi (China) plans to bring a lithium refinery in Kwinana on stream in 2021. Capacity could be doubled from an initial 24,000 tonnes/year by 2024.
Copper mines invest in capacity expansion
The rise in interest of electromobility is also likely to stimulate demand for copper. Australia's copper exports are expected to increase from 925,000 tonnes in fiscal year 2019/20 to 941,000 tonnes in fiscal year 2021/22. Across the country, 15 projects are planned with a total value of at least USD 4.5 billion (AUD 6.5 billion).
Oz Minerals plans to expand its copper production at the Carrapateena Mine in South Australia to 120,000 tonnes per year by 2026. The investment costs are expected to be around USD 860 million (AUD 1245 million). In addition, the investment decision for the expansion of the Prominent Hill mine is to be made before the end of 2021. Construction of a new vertical mine shaft is planned for the site by 2025 at a cost of around USD 300 million (AUD 435 million).
Many eyes in the industry have been on the exploration drilling by mining giant Rio Tinto in the Paterson region of Western Australia. Although, with the Winu project, only a small open pit mine with an annual production of around 50,000 tonnes is initially being built there. However, Rio Tinto spokespeople point out that the group's massive iron ore complexes in the neighbouring Pilbara region also began as small operations. In the long term, Rio Tinto hopes to build an entire network of copper and gold mines in the Paterson Ranges.
Competitor BHP, on the other hand, suffered a setback when it had to finally bury its plans for a massive USD 2.4 billion expansion of the Olympic Dam Mine in South Australia. During test drilling, the company encountered geological difficulties. In the longer term, however, production at the mine could be increased from 200,000 to 300,000 tonnes of copper per year, for which development of the Oak Dam deposit is being investigated.
Focus also moving to nickel and graphite
In contrast, BHP is making major investments in its Nickel West complex in Western Australia. A nickel sulfate plant will be built at the Kwinana refinery by mid-2021 with an initial capacity of 100,000 tonnes per year, which can later be doubled. To ensure supply, BHP plans to develop the Honeymoon Well Mine. The deposit contains 1.2 million tonnes of nickel.
With the West Musgrave Mine, Oz Minerals is also looking to invest heavily. The investment decision for the approximately USD 700 million project is expected to be made in 2022. Annual production of 21,000 tonnes of nickel and 28,000 tonnes of copper is planned. Several decommissioned mines are also being brought back into operation. For example, Mincor Resources intends to revive its Kambalda complex in Western Australia, which consists of three underground mines.
In the future, Australia also wants to produce the graphite needed for battery production. There are several exploration projects across the country; Ecograf, for example, is building a processing plant for 20,000 tonnes per year in Kwinana.