Royalty arrangement to drive lithium manufacturing

A new royalty arrangement could see the flourishing of a new field of manufacturing in Western Australia.

The Western Australian government will use royalties to spur the growth of the downstream processing and manufacturing of lithium in the state.

“Updating the royalty arrangements provides a fairer system for all lithium producers and will enable Western Australia to move up the battery value chain beyond mining and processing,” said WA Mines and Petroleum Minister, Bill Johnston.

The government will introduce, as soon as possible, a five per cent feedstock royalty rate for lithium hydroxide and lithium carbonate, when those are the first products sold and the feedstock is spodumene concentrate.

The change to lithium royalty rules comes as part of the WA government’s “Future Battery Industry Strategy”, that has been developed in consultation with industry.

“This will create more jobs and encourage innovation in meeting the needs of the growing demand for electric vehicles and battery storage systems,” said Johnston.

In 2017 global total worth of lithium sales stood at $35 billion, and lithium is used for batteries for everything from home appliances, to vehicles and more recently, utility energy storage. However, with a rising glut of raw lithium supply, the value of lithium in its initial form may fall from current 20 per cent annual growth.

In WA, lithium hydroxide refineries are operated by Chinese company Tianqi Lithium and US-company Albermale.

“Western Australia is increasingly becoming an internationally attractive destination for downstream processing and manufacturing of lithium and other battery minerals,” said Johnston.

Taking the next step from lithium hydroxide to a useable battery has the potential to grow the value of the raw product ten times and contribute to a wider manufacturing resurgence.