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Felicity Bradstock

Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

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The Battle for Australia’s Lithium Reserves 

  • Australia possesses substantial lithium reserves, an increasingly valuable resource amid the global energy transition.
  • The "lithium corridor of power" near Kalgoorlie is attracting billionaires and multinational corporations in fierce takeover battles.
  • U.S. restrictions on China-linked mining activities may jeopardize subsidies crucial for Australia's lithium industry expansion.
Lithium

Australia holds one of the biggest lithium reserves in the world and will be a key mining area for the green transition. The country is no stranger to mining, with major gold, nickel, and iron ore reserves already contributing to the green energy and clean technology industries. And there are several mining billionaires operating in Australia, that want to keep mining activities Australian-owned by deterring major multinationals from entering the market. However, this may not be the only concern for Australia, as new U.S. restrictions on metals and minerals mined or processed with China’s involvement could mean companies are ineligible for subsidies needed to expand operations. 

In 2017, Australia recorded proven and probable lithium reserves of 1,662 kilotonnes, an increase of 22 percent from the previous year’s figures and almost 100 percent more than in 2015. Its lithium industry has grown rapidly and powerfully. It is thought to hold the third most lithium in the world, after Chile and China. These three countries, along with Argentina, hold around 76 percent of the world’s lithium reserves. Australia also accounted for the highest production of lithium in 2022, at around 61,000 metric tonnes. 

Australia is the largest global producer of spodumene - the base material for lithium hydroxide and lithium carbonate. However, its ability to refine spodumene into the lithium hydroxide – needed for lithium-based batteries – continues to be limited. Thanks to the rapidly rising uptake of EVs worldwide, the lithium hydroxide market is expected to generate around $10 billion a year in revenue by 2030. 

Australia’s “lithium corridor of power”, as it has come to be known, is situated near the mining town of Kalgoorlie, in the desert in Western Australia. This area was already well-known for mining thanks to the earlier discovery of gold, nickel, and iron ore, but now there’s a new era of mining taking place that will support the acceleration of a global green transition. 

In recent months, Australian mining billionaires and major multinationals have been fighting for dominance over this white gold region, with several takeover attempts. The executive director of GreenTech Metals, Tom Reddicliffe, explained “These exciting periods don’t come around too often, these prolonged periods of demand for a commodity. It is driving a frenzy.” He added, “There’s only so many seats at the table. It’s like musical chairs — you don’t want to miss out.”

Several attempts at takeovers have been thwarted in recent months, as Australia’s biggest miners stake their claim on the land. In September, U.S.-based Albermarle, the world’s largest lithium producer, made a deal to purchase Liontown Resources – a project in the corridor that has made deals with Tesla and Ford - $4.3 billion. However, Gina Rinehart, Australia’s richest person, was secretly developing her involvement in the project, building a 19.9 percent stake in Liontown, which ultimately forced Albermarle to walk away. 

Rinehart made her wealth in iron ore and is looking to continue to dominate Australia’s mining business. Following the first attack, Rinehart thwarted efforts by Chile’s SQM to buy out early-stage lithium player Azure Minerals for $1 billion by buying an 18 percent stake in the Pilbara region. She has also purchased a major stake in junior lithium explorer Future Battery Minerals and is proposing to do the same with lithium explorer Vulcan Energy. Despite the obvious move to dominate Australia’s lithium industry, Rinehart has said little about her intentions in the sector. 

Although Australia’s powerful lithium corridor is growing rapidly, it may face challenges in exporting the green transition mineral due to new regulations put in place in the U.S. The U.S. Department of Energy recently introduced new draft regulations as part of President Biden Administration's Secure Supply Chain Initiative that limit foreign entities’ access to subsidies from the U.S., particularly if they have ties with China. If a foreign entity has over 15 percent ownership by Chinese, North Korean, Iranian, or Russian stakeholders it will not qualify for green innovation subsidies under the $553 billion Inflation Reduction Act and the $550 billion Infrastructure and Jobs Act.

Australia has high hopes for its mining sector and the potential contribution of the industry to the global green transition, but it relies heavily on external funding to develop the sector. As the U.S. and Europe look to decrease their reliance on China by establishing alternative production and manufacturing hubs and supply chains, Australia could provide a strategic alternative when it comes to metals and minerals, particularly as Australia has a free trade agreement with the U.S. But China’s presence in Australia’s lithium sector – as in many other lithium markets – could present a problem. However, it is still uncertain whether minerals processed outside of China will fall under this categorization and whether the regulations will extend to other critical minerals, which could affect the nickel and rare earths industries. 

Several multinationals are attempting to enter the Australian mining market as the potential value of its critical metals and minerals becomes clear. However, the Australian mining billionaires that currently dominate the sector are making it extremely difficult for foreign companies to enter the market, as they intend to develop the white gold industry on their home turf. Yet, recent U.S. restrictions on the global lithium market could make it increasingly difficult to access the green funding required to expand the country’s lithium market unless Australia loosens its ties with China.

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By Felicity Bradstock for Oilprice.com

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