WA Government’s Lithium Processing Ambitions Challenged by Refinery Closure
The Western Australian government’s ambitions for lithium processing face significant challenges, especially following the recent closure of a major refinery. In a reversal of fortune, US company Albemarle has ceased operations at its facility located 150 kilometers south of Perth, impacting hundreds of jobs in the process. The refinery, initially hailed as the potential largest lithium processing plant globally, began operations just four years ago but has now shuttered due to high operating costs and persistent price volatility.
Significance of Lithium Processing in WA
Western Australia has aimed to capitalize on the growing demand for lithium, driven largely by an increasing global reliance on batteries. The government’s optimism was reflected when former Premier Mark McGowan participated in the ribbon-cutting ceremony at the Albemarle site in 2019. Nonetheless, the recent closure casts doubt on the viability of the domestic lithium processing sector.
Industry Reactions to the Closure
- Aaron Morey, Chief of WA’s Chamber of Minerals and Energy, noted the closure highlights the challenges of high operational costs.
- He stated that developing a sustainable minerals processing sector in Australia is proving exceedingly difficult.
- Morey emphasized the need for government policies that support fast approvals and reliable energy access.
Industry leaders like David Miles from Simcoa, a major silicon smelter, echoed similar sentiments. He pointed out that increasing labor, energy, and compliance costs are making it harder for local processors to compete, especially against China, which currently processes approximately 59 percent of the world’s lithium.
Economic Context and Government Response
The tightening economic circumstances come at a time when the WA government plans to transition away from coal-fired power generation by 2027 to 2029. This self-imposed deadline coincides with rising energy costs and a reliance on aging coal assets that are costly to operate.
Calls for Government Support
- The Australian Manufacturing Workers Union has urged the federal government to accelerate tax incentives aimed at critical minerals processing.
- WA’s Premier Roger Cook expressed disappointment over Albemarle’s decision but reaffirmed the government’s commitment to fostering local processing efforts.
- Cook also called for increased support from international trading partners for mineral processing capabilities in WA.
Australia’s Resources Minister Madeline King stressed that diversifying critical minerals supply chains is not only economically beneficial but essential for global economic security.
Looking Forward
The future of lithium processing in Western Australia remains uncertain. Industry stakeholders stress the need for conducive policies and investment to revive local operations. The ongoing dialogue among government officials, industry leaders, and labor representatives will be crucial in determining the viability of the sector.
