Lithium spotlight: Australia sizing up project pipeline 

Lithium is an integral part of the global transition towards net zero emissions and global decarbonisation.

While the lithium spot price is enduring a somewhat protracted lull, the silvery-white alkali metal is essential to producing virtually all batteries currently used in electric vehicles (EVs), as well as consumer electronics such as smartphones. 

The federal government’s latest 2024 ‘Australian Critical Minerals Prospectus’ puts a spotlight on lithium and details how lithium-ion batteries are widely used in many applications, from energy storage to air mobility.

Over the past decade, demand for lithium has continued to grow in parallel with the rise of EVs. The latest prospectus notes that overall, the global passenger EV market – which relies on lithium-based batteries – is projected to grow annually by 26% to 2030. 

Globally, governments are trending towards green policies, which continue to drive the uptake of EVs and lithium-ion batteries. As per the prospectus, Australia is also a world leader in this respect.

According to a report by the World Economic Forum’s Global Battery Alliance, these initiatives and others from the private sector are expected to further increase global demand for batteries by some 14x the 2018 levels of 184 gigawatt hours (GWh), to more than 2,600GWh in 2030. 

The challenge remains for industry to find a secure, safe, consistent, and reliable source of lithium to facilitate the change in the automobile and battery sectors.

Yet, a current challenge for explorers and miners is the subdued lithium price.

At its peak, the lightest (or least dense) known metal reached an all-time high of about US$80,000 per tonne at the back end of 2022. However, since then it has plummeted to 3-year lows, sitting about US$14,099 per tonne as of 1 March 2024, according to Trading Economics. Year-on-year the price has fallen 72%. 

Downward pressure caused by oversupplied markets in Asia, primarily fuelled by the global adoption rate of electric vehicles (EVs) slowing amid high interest rates has been the catalyst for the price fall, as reported by this news service.

Australia’s place in lithium space

The Australian Critical Minerals Prospectus puts the spotlight on Australia remaining a top contender to satiate the global demand for the vital battery metal. 

Nearly all of Australia lithium is hardrock and derived from spodumene deposits. What’s more, since the 1990s the country – with now the world’s second largest spodumene reserves – has been producing lithium as a mineral concentrate rather than a refined product.

According to the United States Geological Survey (USGS), Australia had 5.7 million lithium ore reserves in its inventory as of 2022, behind Chile’s 9.2 million. 

Australia accounted for 50% of global lithium extraction in 2022, the majority of which was processed overseas. However, the prospectus notes the tide could be turning, as 6% of refining could be in Australia by 2025 — ranking 4th in the world. 

At the same time, Australia also saw record lithium exports of $20 billion in 2022 to 2023, a 4x increase from the $5 billion observed in 2021 to 2022. 

These achievements have been recorded following a ‘transformative’ journey over the past 5 years, which has seen new mines begin production and the midstream capacity grow. 

Despite this growth in demand, as previously mentioned, junior explorers in particular are facing challenges to advance early stage projects towards development and production.

Factors like the increasing adoption of electric vehicles, advancements in energy storage technologies, and government initiatives promoting clean energy are expected to continue driving the demand for lithium

Solis Minerals (ASX:SLM) Executive Director Matthew Boyes tells Mining.com.au that trying to raise capital on a lithium asset at the moment is a tough task.

“With regards to investment in the [lithium] space, obviously it’s gone very quiet. If we were today trying to list a lithium company, you would be struggling just because of the sheer number that are already out there and also the lack of cash available.”

Industry executives polled by Mining.com.au agree, however, that despite the current woes lithium is likely to see a resurgence in the next few years.

Torque Metals (ASX:TOR) Managing Director Cristian Moreno tells this news service that the overall trajectory for lithium is upward. 

Predicting market trends, especially for commodities, is very difficult as one should consider supply and demand dynamics, macroeconomic conditions and international regulations. As mentioned in the past, despite short-term down cycles, the overall trajectory for lithium demand is upward. 

Factors like the increasing adoption of electric vehicles, advancements in energy storage technologies, and government initiatives promoting clean energy are expected to continue driving the demand for lithium.”  

Pipeline of projects

As per the prospectus, Australia is well-placed to meet global demand, as it is well-endowed with many hardrock and pegmatite-hosted lithium resources (largely in Western Australia), including a suite of producing and development deposits.  

These include Liontown Resources’ (ASX:LTR) Buldania Project about 200km southeast of the historical mining centre of Kalgoorlie and Global Lithium Resources’ (ASX:GL1) Manna and Marble Bar lithium projects sitting 160km southeast of Port Hedland and 100km east of Kalgoorlie, respectively. 

Another is Mineral Resources’ (ASX:MIN) Bald Hill Lithium Mine about 105km southeast of Kalgoorlie. However, Bald Hill was placed on care and maintenance in 2019 when Alita Resources went into administration during a previous downturn in lithium prices. 

It is these projects which will emerge as the country’s newest producers in the aftermath of the current backdrop to satiate a hungry market. Such assets will also fill the void left behind by the closure of Core Lithium’s (ASX:CXO) Finniss Lithium Operation in Darwin, Northern Territory, as reported by this news service. 

Core Lithium states Finniss was the Northern Territory’s first and only lithium mine, and Australia’s only lithium mine outside of Western Australia. 

According to the company’s latest annual report, the project produced 18,274 tonnes of concentrate, with 14,774 tonnes of direct shipping ore sold through digital exchange platform. 

The project also had a global mineral resource of 30.6 million tonnes at an average grade of 1.31% lithium oxide. The lithium producer as of 28 February 2024 announced it had terminated its mining services agreement with Lucas Total Contract Solutions regarding Finniss.

Torque’s Moreno says it is these closures, as well as reductions in production and delaying the construction of processing plants due to pessimistic forecasts, that will undoubtedly diminish supply and therefore influence prices.  

Take, for example, the situation unfolding in Wodgina, where companies like MinRes and Albemarle are scaling back production to influence prices. This strategy mirrors what occurs in the oil and gas industry with OPEC, where deliberate supply cuts are employed to maintain high prices. Similarly, the lithium market may exhibit analogous behaviour as producers adjust their output to manage market conditions and stabilise prices.”

Echoing these sentiments, Solis’s Boyes, just like Moreno, forecasts that while lithium may be in the middle of a standing 8 count, it is not out of the fight. Yet, its performance in the later rounds will be watched closely.

“I think lithium will come back,” Boyes says. 

“But I don’t think we’re going to see the dizzying heights before. I think we’re probably going to see a more sustained market. Hopefully we can get back into a holding pattern around about that $1,500 mark and see what happens there. It makes doing business a lot easier.”

Solis Minerals holds a portfolio of lithium projects in the emerging lithium frontier of Minas Gerais, Brazil. 

Another major lithium asset listed in the prospectus is Global Lithium Resources’ (ASX:GL1) Manna Lithium Project located 100km east of Kalgoorlie. An updated total MRE of 36Mt @ 1.13% Li2O and 54ppm Ta2O5 was defined in July 2023 within a series of outcropping pegmatites. 

A Scoping Study was completed in February 2023 based on an open-pit mine and concentrator producing an average of 2.2Mtpa spodumene concentrate (5.5% Li2O) over a minimum 10-year mine life. A 50,000m drilling program started in August targeting completion in December 2023 and a resource update in H1 CY24. 

DFS level metallurgical testwork has been completed demonstrating Li2O recoveries above 70%. The DFS is targeting completion in H1 CY24 with FID expected in CY24. The deposit remains open in all directions and has clear potential for increased growth.

As the federal government acknowledges the importance of lithium and these most notable projects scheduled to come online, it is further established that Australia has all systems and processes refined to advance in the lithium space once it recovers from the current downturn.   

As previously mentioned, over the past few years, Australia’s lithium mining industry has undergone a transformative journey, propelled forward by surging global demand for lithium-ion batteries. 

As per the prospectus: “This is reshaping the lithium industry, witnessed by more investors moving further towards the ‘drill bit’ to acquire stakes in projects without the large premiums that are attached to operating or near-operating projects. 

As the nation evolves into a key supplier, the industry’s rapid development underscores the urgency for investors to engage early in projects to capitalise on the growing demand for lithium and lithium products.”

Write to Adam Drought at Mining.com.au

Images: Australian government & Core Lithium
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Written By Adam Drought
Born and raised in the UK, Adam is a sports fanatic with an interest in Rugby League and UFC/MMA. When not training in Muay Thai and Brazilian Jiu Jitsu, Adam attends Griffith University where he is completing his final year of a Communication & Journalism degree.