PERTH (miningweekly.com) – The Western Australian government on Friday announced that it would introduce a new royalty arrangement for lithium producers, in the hopes of encouraging downstream processing and manufacturing in the state.

A 5% feedstock royalty rate for lithium hydroxide and lithium carbonate, where those are the first products sold and the feedstock is spodumene concentrate, will be introduced as soon as practicable.

The new royalty arrangement clears up any uncertainty regarding lithium royalties, compared to the previous regulations, said Mines and Petroleum Minister Bill Johnston.

“The government is committed to supporting Western Australia’s battery materials industry. Updating the royalty arrangement provides a fairer system for all lithium producers and will enable Western Australia to move up the battery value chain beyond mining and processing.

“This will create more jobs and encourage innovation in meeting the needs of the growing demand for electric vehicles and battery storage systems.”

The review into lithium royalties, which is part of the government's Future Battery Industry Strategy, involved extensive consultation with industry. 

The new lithium feedstock royalty rate, introduced via amendment to Mining Regulations 1981, will ensure all lithium producers are treated equally, helping to encourage further downstream processing of lithium in Western Australia.

“Western Australia is increasingly becoming an internationally attractive destination for downstream processing and manufacturing of lithium and other battery minerals,” Johnston said on Friday.

The Association of Mining and Exploration Companies has welcomed the introduction of the new royalty rate, with CEO Warren Pearce noting that the government had listened to calls from industry participants.

“The royalty rate announcement helps Western Australia compete internationally to lock its place in the global lithium value chain,” said Pearce.

“Defining the royalty provides certainty for companies investing in Western Australia and will support the financing of projects and further investment.

“Western Australia has a phenomenal geological opportunity, particularly in battery minerals, but needs to make sure the regulatory settings are right so companies will choose to invest here. Today’s announcement increases certainty and Western Australia’s investment attractiveness for lithium downstream processing,” said Pearce.