a round metal ball with the periodic table information for lithium sitting atop a periodic table of elements

As the top lithium producer globally, Australia is home to a slew of mines focused on the commodity. Learn where they are and which companies are running them.

Australia is currently the world’s largest lithium producer and exporter, and the country is primed to take full advantage of growing demand for this important battery metal.

In 2020, an impressive 49 percent of the world’s lithium came from Australia. And from 2022 to 2023, exports of the commodity are expected to contribute AU$4.2 billion to the nation's economy. While it might not have historically been a top investment pick, lithium is now gaining momentum and seems bound to pick up speed.

This soft, reactive, silver-coloured metal is somewhat difficult to get ahold of, which further ups its value. Lithium is most often found in the mineral spodumene, from which it must be extracted, processed and refined. It is often used in aluminium or magnesium alloys for industrial uses such as building aircraft or trains, serving as a strengthening and lightening agent. But a key use of lithium is in rechargeable batteries for electronic devices such as cell phones, cameras, laptops and of course electric vehicles (EVs).

It is the last of these uses that has investors most excited. Lithium is critical to EV production, as its unique properties help create the lightweight batteries they need to function.

Demand for EVs is on the rise as automakers pledge to up their electric lines; for example, Volkswagen (OTC Pink:VLKAF,ETR:VOW) recently committed to producing 50 percent all-electric vehicles by 2030. Through 2030, EV sales are predicted to spike from 3 million to 30 million.

Currently, 46 percent of lithium consumption worldwide is attributed to rechargeable battery manufacturing, representing an excellent opportunity for Australia, the world’s top lithium producer.

The nation is ready to capitalise on the growing lithium market, and has had some recent success due to the EV boom. For example, until 2021, Australian lithium-mining company Pilbara Minerals (ASX:PLS,OTC Pink:PILBF) was operating at only 30 percent capacity due to lithium’s price drop from 2018 to 2020. However, prices boomed in 2021 and the mine was back at full capacity with plans to expand production by the middle of the year.

In short, many analysts are bullish on lithium, and believe demand will continue to increase over the next decade. With all of these factors in mind, investors would be wise to look toward Australia, a country brimming with abundant lithium reserves, for possible investment opportunities moving forward.

Where are the lithium mines in Australia? 

Most of the lithium resources in Australia are located in Western Australia, where there are several robust deposits. A typical lithium deposit in Australia has a grade of between 1 and 3 percent lithium oxide.

Lithium mined in Australia comes mainly from spodumene, though it can be found in other minerals as well, such as lepidolite. In 2020, Australia reported total output of 40,000 tonnes of lithium, slightly below its 2019 total of 45,000 tonnes. The country’s lithium production numbers first began spiking around 2018 due to accelerating output from two spodumene projects launched in 2017.

Australia has several lithium mines that are currently in production, including the Greenbushes mine, which is the largest operational lithium mine globally. After ongoing expansions at the mine are completed, Greenbushes is expected to produce more than 160,000 tonnes annually.

Greenbushes was launched in 1983 and has been processing lithium since 1985. Since then, the project has expanded greatly, even gaining a second lithium processing plant in 2019. Greenbushes is recognised as the “longest continuously operated mining area in Australia,” and is owned by joint venture partners Tianqi Lithium (SZSE:002466), IGO (ASX:IGO,OTC Pink:IPGDF) and Albemarle (NYSE:ALB).

Construction of an additional lithium processing plant, the project’s third, is currently happening at Greenbushes. This will allow the mine to grow its lithium output, while also ensuring that it keeps the processing of lithium local, rather than outsourcing the task to other countries.

Another key lithium mine in Australia is the Mount Marion lithium project, which is operated by Mineral Resources (ASX:MIN,OTC Pink:MALRF) and located in the Yilgarn Craton, a bit southwest of Kalgoorlie. It currently produces around 450,000 tonnes per year due to an upgrade made to the mine from 2018 to 2019. This upgrade increased the asset's available spodumene concentrate content to 6 percent lithium up from 4 percent.

Mineral Resources also has interests in the Wodgina lithium mine, which launched operations in Kemerton, Western Australia, in April 2017. This asset has two production sites, each of which has annual output of around 25,000 tonnes of lithium hydroxide. While Mineral Resources owns a 40 percent stake in the project, Albemarle is the majority owner with a 60 percent interest.

The Pilgangoora project, which is fully owned by Pilbara Minerals, is located in Western Australia’s Pilbara region, close to Port Hedland. The mine’s location is auspicious, considering that the Pilgangoora orebody is one of the largest lithium deposits globally. Pilgangoora's two operational processing plants allow for increased production capacity, enabling the mine to better meet the market’s current demands. The project is undergoing further expansion initiatives as it aims to tap into the full potential of its lithium reserves.

Currently, Pilgangoora produces around 330,000 tonnes of spodumene concentrate annually at 6 percent lithium, as well as another 321,000 pounds of tantalite concentrate at 5 percent lithium.

The Mount Holland lithium project, otherwise known as the Earl Grey lithium project, is another Western Australia-based mine. According to a prefeasibility study performed by Covalent Lithium, this mine is projected to produce around 50,000 tonnes of lithium hydroxide annually across its expected 47 year lifespan. This mine remains largely undeveloped, so only time will tell how much lithium it is able to put out to the market.

Future lithium mines in Australia

The Mount Holland lithium project isn’t the only lithium operation under development right now. In fact, Australia is seeing the expansion of many of its key lithium projects, from Greenbushes to Mount Marion, as well as the development of new deposits in order to keep up with growing demand from consumers.

Greenbushes, for example, has commissioned a new chemical-grade plant, while there are plans for the Pilbara-based Wodgina mine to resume production at one of its three spodumene operations. This recommencement is projected to produce 250,000 tonnes of spodumene concentrate annually.

Another up-and-coming lithium deposit is Western Australia's Kathleen Valley deposit, owned by Liontown Resources (ASX:LTR) and located near Kalgoorlie. A feasibility study was completed in winter 2021, with projections for annual production of 50,000 tonnes beginning in 2024. Additionally, the Northern Territory-based Finniss lithium project owned by Core Lithium (ASX:CXO,OTC Pink:CXOXF) is expected to begin production in late 2022.

Pilbara Minerals saw a 49 percent production increase in the second half of 2021 compared to H2 2020, with output hiking up to 85,800 tonnes. The company has recommenced production at its Ngungaji plant and is considering building a Phase 1 expansion of its Pilgan plant; this would add another 100,00 tonnes of spodumene concentrate per year. The decision is scheduled for June 2022. A Phase 2 expansion of the plant would likely bolster production by an extra 320,000 tonnes annually. Overall, the company has seen a 54 percent increase in ore reserves at its Pilgangoora project, largely consisting of new pegmatite discoveries.

While new mines are one way that Australia stands out in the lithium sector, another is sustainability. This will prove key to the metal’s future, as producing just 1 tonne of lithium consumes over 500,000 gallons of water. Currently lithium extraction poses a threat to local water supply in terms of both pollution and shortages, harms which disproportionately affect Indigenous communities.

Going forward, ensuring a sustainable and ethical supply of lithium will represent a significant challenge — as well as a promising opportunity — for Australia.

Don’t forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Isabel Armiento, currently hold no direct investment interest in any company mentioned in this article.

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