AME forecasts the Australian lithium production to total 464kt LCE over 2022, up 62% from 2021. Australia remains the largest lithium mining country, accounting for roughly half of global mined lithium supply. Australia’s lithium reserves are the second largest in the world, after only Chile.

The lithium supply is expected to grow an additional 58% in 2023, reaching 734kt LCE. Miners are expanding production to maximise output as they capitalise on soaring lithium prices. Multiple new projects are due to begin production in 2023 and 2024. 

Australian exports of lithium concentrate totalled A$2.63bn (US$1.77bn) for the June quarter, up 737% from a year ago.

Mine Expansions 

Lithium majors, including Albemarle and Pilbara Minerals, are expanding their operations in Australia. Pilbara Minerals has made a Final Investment Decision in June to increase the nameplate production capacity of its Pilgan Plant at the Pilgangoora Operation. An integrated crushing and ore sorting facility will be constructed at the site located in Western Australia. The A$194.5m (US$130m) investment will enable the facility to process up to 5Mtpa of ore throughput. Pilbara is also constructing a A$103m (US$69m) primary rejection heavy media separation circuit to boost spodumene concentrate production capacity by 15ktpa LCE.

Pilbara Minerals produced 19kt LCE of spodumene concentrate in the June quarter, up 58% from the 12kt LCE production in the March quarter. Pilbara’s total spodumene concentrate production capacity will reach 100ktpa LCE once the expansions are complete by late 2023. Pilbara reported an average sales price for the June quarter of US$4,267/t, up 61% from the average price of US$2,650 achieved in the March quarter. 

Talison Lithium, which is owned by Albemarle (49%) and joint venture partners Tianqi Lithium and IGO (51%), is increasing capacity at its Greenbushes site in Western Australia. Greenbushes, which currently produces 188ktpa LCE of lithium concentrate, accounted for nearly 40% of global hard rock lithium output in 2021. Greenbushes will increase its production by 42kt LCE through its Tailings Retreatment Project (TRP). TRP is currently in a ramp-up phase as of the September quarter, with full production expected by the end of the year.

Talison Lithium approved construction of an additional expansion project, CGP3, with commissioning expected by 2025. CGP3 will increase lithium concentrate capacity by 77ktpa LCE. After the completion and rampup of the TRP and CGP3 expansions, Greenbushes will have a production capacity close to 300ktpa LCE. 

Mt Marion, a joint venture project between Mineral Resources and China’s Jiangxi Ganfeng Lithium, is also increasing its production capacity. The JV partners are investing AU$120m (US$75m) to expand Mt Marion’s capacity to 89ktpa LCE. The expansion will be done in two stages, with Stage 2 expected to be complete by December 2022. 

New Mining Projects

A number of new lithium mining projects are in the pipeline for Australia, with the expected new operations from junior lithium minors adding upwards of 100ktpa LCE once their production is ramped up by 2024. Core Lithium officially opened its Finniss lithium mine in October, with production still on track by the end of 2022. Located in the Northern Territory, Finniss is Australia’s only lithium mine outside of Western Australia. The Finniss project will have a spodumene concentrate production of 25ktpa LCE. In August, Core and Tesla extended their binding offtake term sheet, previously announced in March. Core will supply Tesla with up to 18kt LCE of spodumene concentrate over a 4- year period. In addition to the offtake commitment, Tesla will provide support to Core for the assessment and possible development of Stage 3 Expansion.

Core Lithium officially opened its Finniss lithium mine in October, with production still on track by the end of 2022. Located in the Northern Territory, Finniss is Australia’s only lithium mine outside of Western Australia. The Finniss project will have a spodumene concentrate production of 25ktpa LCE. In August, Core and Tesla extended their binding offtake term sheet, previously announced in March. Core will supply Tesla with up to 18kt LCE of spodumene concentrate over a 4- year period. In addition to the offtake commitment, Tesla will provide support to Core for the assessment and possible development of Stage 3 Expansion.

Liontown Resources is expected to start construction of its Kathleen Valley project in 2022 pending a final investment decision. Since the start of this year, Liontown has signed offtake term sheets with LG Energy Solution, Tesla, and Ford. Under the agreement, Liontown will supply 25ktpa LCE of spodumene concentrate to Tesla and Ford as from 2024. Liontown’s total offtake commitments now stand at up to 74ktpa LCE of spodumene concentrate, representing 90% of Kathleen Valley’s start-up production capacity. The company plans to eventually expand output to 115ktpa LCE. The project is expected to return free cash flow of A$12.2bn (US$8.8bn) over the life of the mine. 

Liontown plans to launch the mine with 60% renewable energy, including a 13MW plus solar array, wind farm and battery system. The company plans to be at net zero carbon emitter by 2034. Ford will provide a A$300m (US$207m) debt facility to Liontown, with the proceeds to be used towards partially funding the development costs of Kathleen Valley. This funding, together with the proceeds from Liontown’s A$463m (US$319m) capital raise in December 2021, paves the way for a FID for the project by the end of 2022. Liontown revealed the mine’s estimated cost had been revised up from A$473m (US$326m) to A$545m (US$375m).

Lithium Refineries 

We expect Australia to process up to 20% of the world’s lithium refining over the next five years as EV battery demand continues to surge. China currently controls over 80% of lithium hydroxide refining capacity. If construction and commissioning of lithium converter plants are completed without major delays, Australia will reach 10% of the world’s refining capacity by 2024, and 20% by 2027.

MARBL, a joint venture between Albemarle and Mineral Resources, operates the Kemerton conversion plant in Western Australia. Kemerton 1 started its first lithium hydroxide production in July. Kemerton 2 is still under construction, with completion expected by the end of 2022 and first production in early 2023. The conversion facility, with a capacity of 44ktpa LCE of lithium hydroxide, processes spodumene ore concentrate from the Greenbushes project.  

Tianqi Lithium Energy Australia, a joint venture between Tianqi Lithium and IGO, operates the Kwinana conversion plant in Western Australia. The facility started lithium hydroxide production in May and will have a nameplate capacity of 48ktpa LCE by 2024. The Kwinana plant receives its spodumene directly from the Greenbushes mine 250km away.

Liontown is assessing an integrated refinery at its Kathleen Valley site, with a PFS currently underway. The refinery is expected to come online six years after spodumene production at Kathleen Valley begins. At full capacity, the refinery is estimated to produce 75ktpa LCE of lithium hydroxide monohydrate. The refinery will be one of the largest lithium refineries outside China when fully commissioned.

Covalent Lithium, a joint venture between SQM and Wesfarmers, is developing the fully integrated Mount Holland project. Mount Holland is scheduled to be operational in 2024. The refinery is expected to have an 85% lithium recovery rate from spodumene concentrate and a lithium hydroxide production capacity of 40ktpa LCE.