How much of the battery supply chain Australia can wrest from the clutches of Asia, the EU, the US and the UK is unclear, however some companies are promising to carry out different parts of the production in Australia.
“These nations are executing comprehensive, well-funded strategies to build their strategic positions,” O’Rourke said. “Their strategies seek to buy direct from the mine, or buy the mine, resulting in a missed opportunity for Australia.”
High lithium price cycles have given confidence to three projects near Perth, including a partnership between Australian miner IGO and Chinese miner Tianqi Lithium, promising to refine lithium concentrate into battery lithium hydroxide. About 200 people work at the Tianqi factory to refine the product, which is lighter to ship and is sold at a higher price to downstream manufacturers.
“Recently, we have seen strong support from the government [for] modern manufacturing and downstream production,” said IGO head Peter Bradford. “We will need commitment at the state and federal level to continue through the cycle.”
Australian companies along the supply chain exploring more advanced processing and even manufacturing cells for large-scale batteries describe an uphill battle for private and government funding.
Subsidiary Lithium Australia VSPC is currently working on a Queensland site to market cathode active materials – a component of the battery part with a positive symbol and between the final stages of manufacturing before lithium enters a battery.
“We recently applied for funding to support the development of a small-scale commercial facility for our process here in Australia, and we were unsuccessful,” said CEO Andrew Skalski.
“The federal government is not giving anything to talk about at the moment.”
Skalski said that unless the operation becomes commercially viable in Australia, the company will look to move production to the US. “The window of opportunity is small,” he said.
Also uncertain is whether a handful of companies can bring large-scale battery cell manufacturing overseas without a local automotive manufacturing sector to provide. McKinsey and Company says that, based on past developments in other industries, global competition among battery cell manufacturers will eventually boil down to 10 to 15 entrants. Meanwhile, the CSIRO says cell manufacturing in Australia will not be competitive with China, although opportunities exist for local and niche manufacturing.
ASX-listed Energy Renaissance will in the coming months move to a purpose-built plant in Tomago, NSW, where it plans to be the first large-scale battery manufacturer in Australia in 2023 and then expand to other states.
“The easiest and least-resistance path here would be to sell wool and buy sweaters back, and we shouldn’t repeat that mistake of the past,” said company founder Brian Craighead.
He has ruled out competing globally to make batteries for electric vehicles, but is promising large-scale batteries for the electrical grid and for industries such as defence, public transport and agriculture. The company is working on warehousing two off-grid dairy farms in Victoria and sees Southeast Asia as its biggest market.
“We will quickly become the smallest customer, but we will be important because we are local and they can trust us,” Craighead said. “We give [mineral processors] three, four or five years for sure on orders. And that’s enough for them to get their financial case up and running.”
While the company received about $2.5 million in government funding for manufacturing, Craighead said raising capital was the biggest hurdle.
“We’re basically entirely funded by people who believe,” he said. “We could be up and running two or three years earlier if we had more support.”
Magnis Energy Technologies, another ASX-listed company, has a majority-owned grant at a lithium-ion battery cell manufacturing site in New York State and is considering replicating the plant in Townsville, Queensland.
The company received $3.1 million from the Queensland government for a feasibility study in 2018, but Magnis chairman Frank Poullas says plans for the $3 billion site now depend on more private and government investment. .
“We have all the raw materials in the country, it makes sense that you can have this circular economy with lithium-ion batteries locally. But we are not getting the support,” Poullas said. “I believe that a battery factory can become an enabler for other manufactures, such as vehicle production in Australia.”
Manufacturing, now less than 10% of the Australian economy, has been in decline since its peak in the 1960s. Ai Group’s head of industry development and policy, Louise McGrath, said a small domestic market and not being on a major trade limits the sector.
“Manufacturing has become more complex and niche, and it’s less volume-based,” McGrath said. “Most products that require scale will not be made in Australia.”
However, she said Australia can compete by demonstrating the integrity of its supply chain. “Where the government could help is in certifying this supply chain.”
Whittingham, who advises the US government on lithium-ion batteries, said governments need to look beyond their borders to diversify mineral sources and ensure reliable suppliers.
“There’s a lot of talk right now in the US about getting lithium from Australia,” he said. “No country has everything.”
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