Eye on Lithium: Australia interested in critical minerals investment from ‘allies’ – Stockhead

As Australia positions itself as the alternative supplier of choice for critical minerals such as lithium, Treasurer Jim Chalmers has found that there is much to be gained by encouraging investment from allies.

At a conference in Sydney, he said that “foreign investment is a good thing when it is in our national interest” but that Australia “needs to be more vigorous in encouraging investment that clearly aligns with our longer-term national interest”.

The federal government has allocated $1 billion to “add value” to resources as part of its National Recovery Fund, in addition to its $2 billion Critical Minerals Facility to support new projects.

He added that countries need to avoid the pitfalls of a concentrated global market, which is very much the case for the lithium sector, where the vast majority of processing capacity is located in China. China also produces three quarters of all lithium-ion batteries.

“To put it as simply as possible – our international friends need someone to rely on, so we let them rely on us,” Chalmers added.

Three of the world’s largest lithium producers outside of China continue to invest in Chinese manufacturing assets despite efforts to secure supply chains.

Albemarle, Livent and SQM have all announced new processing plants in China this year to produce lithium hydroxide and lithium carbonate, with production said to dwarf that of North America Benchmark Minerals.

China’s dominance in lithium processing not only makes investing in the country faster and cheaper than building in North America, but also makes it too big for major lithium producers to ignore benchmark analyst Daisy Jennings-Gray.

“They may not necessarily want decoupling because so much of their downstream demand is in China, where it’s expected to remain for at least the next decade,” she said.

“It’s easier and cheaper to launch operations in China, and it helps to have regional hubs to meet demand in different areas and meet the needs of different customers.”

While North America could quadruple chemical lithium production from current supplies to 70,000 tonnes of LCE (lithium carbonate equivalent) by 2025 if all capacity announcements go to market successfully, it still pales in comparison to China, which is projected to have production of 847,000 tonnes LCE by 2025 if plants from all producers are taken into account.

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Lightning Minerals (ASX:L1M)

Soil sampling has commenced at the FMG-backed company’s Dundas project in Norseman, WA to test a number of critical minerals and lithium.

In addition, it is conducting surface mapping and prospecting to identify outcropping structures and other areas of potential mineralization.

Lightning Minerals has also begun interpreting geophysical survey data to develop drill targets as part of its discovery strategy.

The company does so just days later Listing on the ASX.