PERTH (miningweekly.com) – A new report on the future of the Western Australian lithium industry has noted that while future outlook for the commodity remained bright, it warned that government support was vital for the sector to remain sustainable.

The report was commissioned by the Chamber of Minerals and Energy of Western Australian (CME) and The Association of Mining and Exploration Company (Amec) to investigate what was needed to ensure the immediate viability, growth and longer-term sustainability of Western Australia’s lithium industry.

The study, authored by Australian Venture Consultants, found the application of lithium-ion batteries in portable devices, energy storage and particularly EVs will grow from the current 50% to more than 80% market share in the next several years.

Importantly for Western Australia, EVs will be the largest driver of battery derived demand for lithium, growing from the current 60% to just under 90% of market share in the next few years.

CME CEO Paul Everingham said Western Australia had a real opportunity to leverage the emerging lithium sector and become a key strategic player in the rapidly expanding lithium-ion battery supply chain. 

“Western Australia is already a significant producer of lithium, representing 50% of global supply of lithium on a lithium carbonate equivalent (LCE) basis. This is underpinned by significant production capacity from nine projects, both established and prospective,” he said.

“Our comparative advantage in the production of spodumene concentrate and the opportunities to convert this advantage into the manufacture of immediate downstream lithium chemicals presents a significant opportunity for the state’s ongoing economic growth and diversification.

“However, global market and other factors are impacting the competitiveness of Western Australia’s upstream lithium sector, and by extension, the viability of downstream opportunities in lithium chemical manufacturing.” 

Everingham pointed out that lithium projects are resource intensive and require a relatively large work force. 

In 2019, Western Australian lithium companies provided around 4 000 fulltime jobs. While lithium exports make up 1% of total resources exports, the sector employs 4% of the total mining workforce.

Amec CEO Warren Pearce said government policy settings to support the competitiveness of current and potential Western Australian lithium projects will be critical in the short to medium term to secure the viability of our upstream mining industry.

Pearce said policy options recommended by the report included royalty relief, infrastructure support, port access, approval timeframe improvements and better supply chain connectivity.

“Despite well-placed optimism for the lithium industry into the future, it is difficult to see market conditions in the short-term supporting further significant investment in lithium chemical manufacturing in Western Australia,” he said.

“Put simply, without a sustainable up-stream sector Western Australian simply won’t be in a position to capitalise on future downstream opportunities.”