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Australian spodumene conversion facility to add much needed capacity to the market – WoodMac

5th March 2018

By: Schalk Burger

Creamer Media Senior Deputy Editor

     

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JOHANNESBURG (miningweekly.com) – Shenzen-based Tianqi Lithium’s construction of the 48 000 t/y Kwinana spodumene converter, in Australia, will add much needed spodumene conversion capacity to an expanding market, says Wood MacKenzie (WoodMac) managing consultant James Whiteside.

The Kwinana converter will be the largest lithium hydroxide producing operation and the biggest converter in the world. First production is expected in mid-2019 and the first product sales by the end of 2019, he adds.

All spodumene conversion currently happens in China, where total conversion costs are over $6 000/t for lithium hydroxide. Alongside Kwinana, Nemaska's Whabouchi is bringing new production on line outside China and both companies expect to consume less reagents and energy than the typical Chinese converter, explains Whiteside.

In the Nemaska process, conversion produces lithium hydroxide first, with the remaining solution further treated to produce carbonate – the proprietary process produces carbonate using carbon dioxide rather than soda ash, as is typical.

Integrated, local spodumene supply will also reduce input costs at both operations. If these cost forecasts are proven correct, lower conversion costs at integrated producers could change the cost structure of the entire lithium mining industry, he added.

“Up until 2016, most hard-rock supply came from a single operation: Greenbushes, in South-western Australia. Tianqi acquired Greenbushes in 2013 and entered into a joint venture with Albemarle (formerly Rockwood) in 2014 to operate the mine.”

Current capacity at Greenbushes is 32 000 t/y, with plans to expand to 100 000 t/y by 2020. Greenbushes produces a final concentrate product of 6% Lithium, which is then converted to lithium sulphate.

Tianqi intends to transport most of its concentrate to Kwinana for conversion to lithium hydroxide. 

Hard-rock operations have gained market share over the last two years and today make up over half of total primary supply. In 2018, production is starting-up at several new lithium projects in Western Australia's Pilbara region – adding more supply alongside the expansion at Greenbushes.

“Higher lithium prices, the simplicity of upstream mineral processing operations, plus well-understood geology has enabled fast supply response from these operations. New conversion capacity, however, is not keeping pace with mine projects and WoodMac forecasts spodumene conversion capacity will be insufficient this year.

“Kwinana's capacity is, therefore, much needed.”

“We expect that the spodumene concentrate market will move into surplus this year. However, exacerbated by the bottleneck at the conversion stage, the battery-grade carbonate market will remain undersupplied in 2019,” said Whiteside.

The premium for hydroxide has existed because of its higher production cost from brines, but more spodumene conversion facilities are adopting a preference for hydroxide since prices are higher and costs are cheaper than for carbonate.

Most new plants are being built with the objective of flexibility to produce either carbonate or hydroxide based on market preferences. In addition, cathode manufacturing processes are constantly evolving and, with this, lithium compound preferences can change rapidly.

“As the fastest growing section of the market, we expect that the hydroxide supply deficit will rapidly disappear and lower production costs will result in a lower hydroxide price premium in the medium term,” notes Whiteside.

The principal application for hydroxide is in the manufacture of greases. Hydroxide's second largest consumption sector – battery manufacturing – is growing rapidly. Production of certain types of lithium-ion batteries use hydroxide in production because it is less energy intensive than carbonate and producers indicate that batteries have better performance characteristics when using a hydroxide feedstock.

“Once Kwinana is in production, Australia will have all the precursor materials required to manufacture a high-performance cathode for a lithium-ion battery – lithium hydroxide, cobalt hydroxide and nickel sulphate,” emphasises Whiteside.

Over 95% of cathode material production manufacturing capacity is currently located in Asia. Indications are that battery manufacturers may also be coming to Australia.

Joint venture lithium-ion battery company Energy Renaissance is planning a 1 GWh capacity battery manufacturing plant in Darwin and battery minerals company Magnis Resources is investigating the potential for a 15 GWh plant in Townsville, he concluded.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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