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Huge WA lithium mine set to go ahead, tapping battery storage market

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Australia’s key role in the global battery technology revolution, as one of the world’s top lithium producing countries, was highlighted this week, with one of China’s biggest lithium producers agreeing to buy 100 per cent of the lithium mined from the as-yet untapped resource at Mount Marion, in Western Australia.

ASX-listed mining group Neometals said in an announcement on Thursday that production at the Mt Marion mine – a project owned by Reed Industrial Minerals, which is a jointly-owned subsidiary of Neometals (70%) and Mineral Resources (30%) – should commence in 2016, after Jiangxi Ganfeng Lithium signed an MOU to buy a 25 per cent stake.

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The deal, if it reaches financial close, would leave Neometals with 45 per cent of RIM and net it $19.5 million, while MIN would retain its 30 per cent shareholding, as well as the contract to build, own and operate the Mt Marion project.

The deal also gives Ganfeng the option to increase its shareholding in RIM to 43.1 per cent by around Q4 of 2016, leaving Neometals with a 13.8 per cent share.

Most importantly, however, it includes a long-term off-take agreement from Ganfeng for 100 per cent of the spodumene – the mineral deposit from which lithium is most commonly extracted – produced by the project, at benchmarked market prices.

In 2014, Australia was ranked just ahead of Chile as the world’s number one source of lithium – the metal used in one of the most talked about energy storage technologies, lithium-ion batteries, in one of the most talked about markets.

Last year, Australia produced 13,000 tonnes of lithium, with Chile producing 12,900t. Most of Australia’s supply comes from Western Australia, including from the world’s largest known lithium reserve, the Greenbushes project, which has been operational for more than 25 years.

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The Greenbushes lithium mine in WA

According to Neometals, Mt Marion will add 5,500t to the global supply once it gets to full production – which is more than China produced (5,000t) for the whole of 2014.

Chris Reed, Neometals managing director said on Thursday that the MOU with Ganfeng was an “exciting milestone achievement” for the company, as the Mt Marion project headed to the next stage of development.

Simon Hicks, Neometals manager of stakeholder relations, said in an emailed statement that the deal also highlighted the for Australia to move beyond turning big rocks into little rocks and selling them, and to instead move further down the value add chain.

“Logically, the lithium value add should be able to be extended all the way through the entire battery chain, with some vision and capital,” he said. “If Tesla’s ideal situation is to have a factory with everything under one roof and raw materials close by – well, WA should be able to supply all of that.”

Last week, Neometals was named as one of 16 ASX-listed companies to make up the Australian Efficiency & Storage Index – a cleantech sub-index that was the sector’s star performer for the 2014-15FY, gaining 31 per cent.  

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  • David Rossiter

    The new economy – the smart use of resources – we could even use renewable energy to provide the mining and processing energy. But lets not upset our leaders who wish to continue with the iron and coal age – none of that new fangled wind and solar.

  • onesecond

    Omg, quick, new business in Australia, call Abott to shoot it down! Only coal is good, our beloved black angel dust! So lovely to see children die of it with sick lungs and our ecosystem collapsing! Coal above anything! Let it kill ever more people!

  • Jacob

    Great.

    AUS really needs to put an export tax on raw minerals to encourage the processing of said minerals in AUS.

    The mining super profits tax did not work because the firms simply claimed to make little profit.

    Indonesia and India are smart enough to slap an export tax on iron ore and coal.

  • Craig Allen

    I’m all for renewable energy, but let’s acknowledge that any mine is going to damage landscapes and ecosystems, and impact on flora and fauna. I hope that Neometals, Jiangxi Ganfeng etc. do their utmost to minimise the impact of this mine on the wilderness it will be located in, and perhaps even fund conservation work around it and elsewhere to compensate. Lake Mason is immediately downstream from the mine. It’s true that their’s is not the only mine in that landscape. They all have impacts and the scars and possibly toxic legacies they leave will remain long after the minerals have been mined out. In Western Australia mining takes precedence over any other values and concerns. I hope the proponents don’t take advantage of that by choosing to not to minimise their impact as they strive for profit.

    • Ronald Brakels

      The mine will disrupt the local environment and have wider reaching effects as well, and care should definitely be taken to limit negative effects, but I will mention that 5,500 tonnes a year is a drop in the bucket compared to the over 400 million tonnes of coal that are mined in Australia each year which not only results in local destruction but pollution from burning it increases cancer and lung disease rates and contributes to other health problems while greenhouse gases released result in death and destruction throughout the world.

      Just to be clear, I’m not saying that because A is worse than B we should not be concered about B, I’m just comparing the two to emphasize the difference in scale between them.

      • Andrew Woodroffe

        that and the simple fact that the coal is burnt while the Li is turned into rechargeable batteries, which themselves can be recycled after a few decades of service – and you ought question the quality of the wilderness around Kalgoorlie!

        • Ronald Brakels

          The Kalgoorlie region is comprised of land on which all goanna fattening trials have proved to be dismal failures. However, that does not mean it’s not important to the people who live there.

          • juxx0r

            I know a lot of fat bungarras, They’re our pets.

            He’s about 5 feet long. Maybe 6.

      • juxx0r

        Coal gave us modern medicine. Coal gave us a lot of lives and a lot of technology.

        Coal’s time has come…. so long and thanks for all the fishes

  • Vic

    Drill baby drill !
    Neometals should power their new mine on 100% renewables backed up by Tesla’s industrial sized Powerpak battery systems. There’s pent up demand out there for ethical investment opportunities and if they played their PR cards right they might be able to supercharge their share price by marketing themselves as a clean energy stock market darling, like Tesla did.

  • Tbob

    I do believe there are at least two huge reserves of lithium in WA. The other is along the Mt.Newman RR line from Port Hedland.