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Australia risks missing out on lithium battery boom

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Australia must act quickly and decisively to take advantage of its leading position in the global lithium resources market, or risk missing out on what could be a $2 trillion value supply chain, a new report has warned.

The report, commissioned by the Association of Mining and Exploration Companies, says that Australia is in a strong position to gain significantly from its abundant lithium resource, as the global battery market – a key ingredient in both the booming renewable energy and electric vehicle markets – gears up for exponential growth.

Lithium based batteries – which have been powering our mobile phones and laptops for years now – are rapidly emerging as the favourites in both stationary and mobile battery storage, with variations on the theme used by a number of global battery and EV giants including Tesla, BYD and Sonnen.

But while Australia is currently responsible for mining the majority of the world’s lithium, and also mines all of the minerals needed to make batteries on its home soil, the report warns that a failure to look beyond this natural advantage, to opportunities that lie further down the supply chain, could cost the nation dearly.

“It is crucial that action is taken quickly so Australia takes a share of the thousands of new jobs (skilled and semi-skilled) in this two trillion-dollar value chain,” the report says.

The report, published by Future Smart Strategies on Tuesday, says that under a “business as usual” scenario, Australia would will continue to “gain significantly” from lithium mining, but risked losing out on its share of the total market value, downstream.

It also risked locking in a “negative balance of trade impact,” the report said, caused by a need to reimport value-added products from further down the supply chain, such as the batteries themselves, at high prices.

Further opportunities in research and development, manufacturing, and “cross-sector synergies” also risked being missed, the report said, under a business-as-usual approach to the lithium mining sector.

“There is a limited window with many other countries already aggressively moving to take capitalise on these opportunities,” the reports authors, Ray Wills, Howard Buckley and Neil Prentice warn.

The authors point to examples from a number of countries around the world, including some of Australia’s near neighbours, where governments have introduced policies and programs to support downstream lithium processing opportunities.

“China has a range of government policy settings and industry support programs to drive growth of the lithium value chain from production to final consumption,” the report notes.

This includes both the adoption of electric vehicles and stationary storage, including the most recent announcement to phase out petrol- and diesel-fueled vehicles.”

The bottom line, says the report, is to use policy and other levers and mechanisms to drive consumer demand and affordability for stationary and mobile battery storage at the end of the lithium value chain.

“As Australia debates energy policy for the nation for the next decades, few federal regulatory measures or other incentives support the value adding or consumer demand aspects of the Lithium Value chain,” it says.

“Government, industry and industry associations must collaborate to capture this opportunity.”  

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  • George Darroch

    If only our overlords were supporting this massive potential industry – for which Australia has the potential to be the market leader, rather than weapons – where Australia comes up against very well established market participants. (And you know, weapons kill people. Lithium doesn’t, if you’re using it correctly.)

  • Joe

    Why isn’t Two Tongues Turnbull getting Australia tooled up to make batteries? But no it is all about war and making bombs and stuff that we can sell to god knows who. As if there isn’t enough weapons of destruction already existing in the world today.Talk about dumbass priorities from our ‘Innovative and Agile’ PM..

  • A lithium industry in Australia – our Future Smart value chain analysis for downstreaming Australia’s #lithium resources

    Commissioned by AMEC

    More via https://twitter.com/FSS_Au/status/958206129829367808

    • Jeff

      Professor. I have yet to read your report and having worked in the critical materials sector globally for many years, I support your sentiment and always look to where we as a country can move up the value chain.

      We will see how realistic your view is based on the success or otherwise of the Boston Energy / Bill Moss $1.6bn battery manufacturing facility proposal for Townsville. (If it is still alive).

      Having conducted the opportunity & feasibility analysis / business planning for a lead acid battery plant in NSW in the mid 90’s – and concluded it wasnt feasible, albeit we hade the resources and the skills, I question whether Australia’s position has improved since then?

      Whilst the discussion is hot around lithium, and cobalt is gaining momentum, the battery market will be a slave to the Rare Earths necessary to build the motors that the batteries need to drive. The other questions are do we have the skills, and the risk capital to reinvest in a few years time!?

  • Robert Westinghouse

    Instead of developing manufacturing of what we have – lithium (batteries) iron ore (steel) bauxite (aluminium), the children in Canberra are now focused on selling and developing weapons….all I can say is IDIOTS….how many boats do we have to miss to realise they are just plain corrupt idiots…..

    • ozmq

      Sadly, I have to agree. We are probably just too stupid. Our elected representatives are certainly too stupid.

      • Robert Westinghouse

        Every day I worry about my children…living in this stupid, corrupt country that has been sold out to BIG business. We need to stop allowing this….Nationalism for Australians…real people like you and I….

        • juxx0r

          Dont forget it’s also been sold out to nepotistic government jobs of uselessness. Govt is big business these days.

          • Robert Westinghouse

            I wish you were not so correct….make be more depressed.

    • Patrick Parnis

      Wholeheartedly agree as I made a comment previously. Government is now tied in with minority parties such as the greens or independents for their own personal gain and power, they dare not doing anything that is productive for the country or the economy. Also they are pending to the greens and their attention is turned to BS such as the Australia day debate and before that the SSM debacle. I’m glad I’m the age I am today the future is bleak economically and in our lifestyle being dominate and dictated by minorities

      • Robert Westinghouse

        Agreed…they continue to throw up relevant issues (Aus. Day, etc….) without focusing on IMPORTANT issues, jobs, exports, electricity,
        HEALTH and Education. I am so tired of spin and BS issues, they need to stop Donald Ducking the country. I am depressed for my daughters…. they are totally Donald Ducked, at least I will be dead.

  • Diego Fuentes

    How does making batteries help the coal lobby?

    • Chris Fraser

      They can re-engineer to mine Lithium. They already have all the skilled workers.

  • B&J Lakey

    Collective nouns anyone! We have murder of crows but also most appropriate a Coalition of Cheetahs.
    And this is exactly what is in Canberra now. They are cheating on us and on our grandchildren, cheating on the environment for a few dollars in donations and using all of the sleeze and dishonest wording possible to clutch to power.

  • Andy Saunders

    A somewhat contrary view.

    Lithium mining is a currently very lucrative business, and like all mining is value-accretive if the grades are good enough, the deposit is large enough and the processing is cheap enough. The output (usually lithium carbonate or hydroxide monohydrate) is an intermediate product available on the spot market. Admittedly it is increasingly being tied up in take or pay contracts, but it is a commodity nevertheless (http://www.asianmetal.com/LithiumPrice/Lithium.html).

    Battery manufacturing is an industrial process, with considerable chemical IP. Battery manufacturers buy lithium (and cobalt, and graphite) commodities and turn them into finished cells, modules and beyond. There’s a lot of IP in battery chemistries, assembly techniques and design now, but Australia doesn’t magically gain IP just by setting up a battery facility.

    It’s not obvious to me why a battery manufacturer with access to commodity lithium needs to also own a lithium mine. Or vice versa.

    • Simon

      The reason being that supply is extremely tight and additional supply is not available “at the turn of a tap”. What we are seeing is a market being driven by accelerating demand. This provides a limited window of opportunity to engage battery manufacturers – who are reliant on WA lithium for the foreseeable future – in negotiations to bring their IP and investment dollars to WA and try and create a legacy that outlasts this temporary period in time where lithium mining is quite profitable.

      • Andy Saunders

        Those would be foreign battery manufacturers, I assume. The manufacturing jobs would be low-ish skilled, and uncompetitive once the lithium supply-demand rebalances, so the manufacturers would then either leave or demand assistance to stay in business.

        Sorry to be cynical, but we’ve seen this before in car manufacturing.

        • Simon

          I dont agree. Battery manufacturing is becoming an advanced manufacturing activity and suits Australia’s needs. This is a once in a generation opportunity.

          The alternative is to remain as a society that is only good at making big rocks into little rocks.

          • Andy Saunders

            Yes, there are opportunities in battery manufacturing. Just not sure Australia is able to grasp them.

            I suspect battery manufacturing is also destined to be something of a dirty industry

          • eveee

            Australia also has Cobalt and other necessary materials in abundance. This would be an ideal location for a battery manufacturing plant combined with auto assembly like Tesla.

          • Coley

            But, and there’s always a but, mebbes the potential investors in LI technology have read the daily announcements on here and (related sites) regarding the imminent ‘ breakthrough’ of a competing battery technology and have decided to ‘hedge their bets?)

          • Andy Saunders

            As an example, take a look at https://www.youtube.com/watch?time_continue=24&v=IInaQc2Wv-8.

            This is a Ford product development executive explaining why they decided not to invest in battery manufacturing (around 5 mins in and onwards), because it’s capital intensive, very large scale, and likely change of technology (6:10 mins).

            That makes it all very risky, as it is likely that very large investments in battery manufacturing will be obsoleted relatively quickly. I doubt Australia has any particular skill in predicting what technologies will succeed.

            Note also that Panasonic (which does the battery manufacturing for Tesla) refused to actually pay for the plant unless Tesla contracted multi-decade take or pay contracts for the facility – in other words a very major battery manufacturer refused to take the risk. Speaks volumes.

    • My_Oath

      “It’s not obvious to me why a battery manufacturer with access to commodity lithium needs to also own a lithium mine.”

      Because they need to secure supply,

      The lithium market was incredibly small. Ceramics. Grease. Medical use. And a few grams into each mobile phone. Very quickly customers suddenly need many tonnes of the stuff.

      A sudden massive increase in the market means a lot of capital investment on production needs to be spend – and I am talking $US6-10 billion by 2022. And that range is the low end of the estimates. If customers want feedstock, they gotta be prepared to supply capital assistance to get it.

  • MrMauricio

    Australia is in a similar position with cobalt-opportunity is there-but the will is elsewhere,following corporate donors’ wishes!!!

  • Ian

    Finally, people of influence recognising a potential industry for Australia. The need for lithium batteries is huge and every country should do their share. Even China would be hard pressed to meet the world’s battery requirements. This sort of industry is highly mechanised and the companies producing lithium batteries like Panasonic are well acquainted with our market. Like Musk we can give’m a shed and some workers and they can bring their tools and start making batteries like “bullets out of a machine gun”

  • Patrick Parnis

    We are no longer the clever country. Sure we will mine lithium and that’s it. With excessive costs and artificially high electricity rates (why it’s high is beyond me) a other opportunity will pass us by. Its the same with EV cars, we have the resources and skill to make them yet we let Elon Musk and Chinese grab the market share.

  • eric

    Nice idea but it is not going to happen simply because we have nowhere near the economies of scale to compete.
    Massive global conglomerates based in China,Japan and Korea have been developing and making batteries on a massive scale for decades.
    There is just no way in a million years we will ever develop a battery industry here that could compete with that.
    However, we may develop downstream processing technologies that value add to the graphite etc before we export the product. Or improve the way the material is mined. Australian mining companies are working flat out world wide securing and developing mineral resources to supply this growing market. We are already the largest exporter of Lithium even though we have a relatively small share of the global lithium resource. And many of those companies are already forming partnerships worldwide to value add within the battery supply chain.

    We have to get past this idea that just becasue we dig stuff up we are dumb and we are missing out. The fact is, mining these days is an incredibly high tech business
    requiring massive expertise in a whole range of areas to be good at it. And Australia is known world wide as the best at mining. Australia is spinning off companies left right and center around the mining industry that are world leaders in all sorts of high tech areas. For instance Hazer, Lepidico, Lithium Australia.

    Australia should certainly be encouraging the uptake of electric cars and transforming the economy to renewable energy, agreed. But as for making the cars or the batteries, hmmm, I’m not convinced it will fly!

    • Mike Shackleton

      I disagree, we are in a unique position with the latest manufacturing technologies and automation now a genuine possibility. We have abundant renewable capacity, so a manufacturer can have ownership or at least close control of all aspects of the supply chain – mining, energy production, mineral processing and manufacturing. It’s why Gupta is setting up in South Australia with a massive investment in renewables to run his steel business. Now he’s looking at acquiring parts of the Holden Elizabeth factory. It doesn’t take a genius to see the direction he wants to head in.

      • eric

        Good on Gupta. I have been following him too, let’s see where it ends up.
        Gupta shows that the innovation and entrepreneurship is moving in because we do have natural advantages.
        However, if you look at China and the big manufacturers overseas they have already tied up the cheapest Lithium sources in Australia via partnerships with local miners and binding offtake agreements, same goes for other critical minerals. And they are buying these minerals in massive quantities. That gives them a huge advantage in the market straight off the bat, without even considering their manufacturing advantages. Securing and controlling the supply chain is already largely complete for these guys. So I don’t see an advantage for an Australian company here.

        Maybe, with the world turning to full automation of manufacturing, plants may be able to be set up anywhere at low cost, particularly with a much simpler assembly of EV vehicles.

        Interesting times.

        • solarguy

          So these mining companies could sell their Lithium to Australian manufactures for a similar price. After all if China were to require higher quantities the price may not change, Re: Binding agreement.

          • eric

            Well it is true that with so many mines coming on stream in Australia and globally there will be plenty of opportunities to buy Lithium.

    • solarguy

      What a bloody defeatist attitude you have, we could do it if some one with money and brains in this country seizes the opportunity. If Musk can make it happen in the US, we can do it. And they import most of their Lithium!

      • eric

        Not defeatist, realist. And besides I’m not saying we shouldn’t go high tech. But making things in high volume like cars and batteries and exporting them is not going to happen imo. We are just too far away from the markets.
        But if someone wants to prove me wrong, I’ll be the first to applaud them.

        • solarguy

          Oh yes, the myth of being too far from the markets. Are we too far from China, USA, Germany, Korea, Taiwan etc, for them to sell their goods to us, clearly not!

          You say we can make EV’s here but not batteries, what bloody silly thinking is that. The domestic market has plenty of meat in it, not just the export market.

          I believe it’s a matter of won’t rather than can’t.

          • eric

            I think your thinking is pretty bloody silly. There are very good reasons why most advanced manufacturing goods flow in one direction in Australia. Why do you think EV’s and batteries would be any different. There is no reason other than pure economics!

          • solarguy

            If the yanks get Tesla batteries too us at a reasonable price we can do the same.

          • eric

            Tesla can support the biggest battery factory in the world because it has the biggest car market right on its doorstep, it can leverage that to export to the world at cheap prices. Remember Tesla energy is a fraction of Tesla automotive atm.
            There are factories being built in China right now that are going to be bigger than the GF1. There is no hope we can compete against that. The price of batteries is going to plummet over the next 20 years to virtually nothing as mega manufacturers slug it out on the global market.
            If Australian companies and brains want a slice of the action we will have to be more niche and targeted in what we do. For example, value adding to the minerals before export. We already have mining companies working with startup technology companies on better battery electrodes and battery electrolytes. Mining companies can see the benefit in forming these relationships at an early stage in this new technology cycle.
            The market is already working.

  • remoteone

    It looks to me that Australia has missed the lithium battery bus. It takes visionaries like Musk, willing to throw everything at a facility like the gigafactory without the certainty of return. Developing a battery industry here would be a game of catch we are unlikely to win and our billionaires always want a guaranteed return on their money. And that’s because most billionaires see their money as an opportunity for making more money.

  • Tim Buckley

    Consistent with most of the comments here, it is staggering to see our government just ignore all the new energy opportunities that Australia could be leveraging right now. Instead the Federal LNP want to promote HELE, clean coal, CCS and weapons! So inept, so counterproductive, such rearward vision.
    Meanwhile, China is fully focussed on leveraging and dominating all the opportunities in industries of the future, be it lithium, batteries, rare earths, renewables or grid development. In a gratuitous plug of IEEFA’s report on this, please refer http://reneweconomy.com.au/china-further-cementing-its-clean-energy-dominance-92661/

  • solarguy

    But this Australia………”value add and export to the world”…….nah, we don’t have the smarts for that capper!

    And the LNP agree!

  • ray johnson

    as i mentioned in a tweet to elon musk who is looking to create more gigafactories and the asian renewable energy hub creators. they should look at the port hedland region to create a new gigafactory to add battery storage alongside this project as the lithium mine of pilbara minerals is close and would reduce transport costs. also as solar is being added to the HVDC link to asia the batteries can be added cheaper as the distance from mine>giga>solar farm is short the costs can be reduce incl exporting offshore as ports are in the same area and 1 last thing to add is a tesla vehicle plant to create car, semi’s, pick ups = steel/lithium mine+ tesla+power= cheap vehicle/solar farm build costs.

  • Australia didn’t do very well with the computer industry, though CSIRO built one of the first stored-program computers in the world: “Back in 1949 two of our pioneering scientists, Trevor Pearcey and Maston Beard, created the first programmable digital computer in Australia at our radiophysics labs in Sydney.” https://blog.csiro.au/csirac-computing-australia-begins-csiro/

    And although Australia developed and operated one of the first space launch facilities, at Woomera, it closed down its fledgling space industry too. “During our recent Oz roadtrip in pursuit of the World Solar Challenge, El Reg’s Special Projects Bureau made a lightning visit to Woomera, where Britain’s space programme was played out and, ultimately, laid to rest. …Britain became the only nation ever to develop a successful home-grown satellite launching capability, and then abandon it completely.” http://www.theregister.co.uk/Print/2011/11/18/woomera/

  • DogzOwn

    Isn’t Free Trade policy our holy of holies? While China has Manufacturing policy, mandating adoption of RE and now EVs. Such manufacturing is highly automated, little labour cost, so why not do it here? With new laws coming to protect us from foreign interference, requiring even RC clergy to declare as agents of foreign power, The Vatican, how about our pollies also declare, since their interests obviously for others, not us?