Western Australia is host to one of the most valuable hard rock spodumene resources across the planet. The Greenbushes Lithium mine, located in the South West region of Western Australia is currently operated by Chinese owned Talison Lithium and American based Albermarle.

Although the mine has operated for over 30 years, there has recently been an enormous wave of investment interest into the regions hard rock ore. Most attention has resulted from the newly competitive nature of the lithium market, driven by the electric vehicle and smart phone industries.

But why is WA lithium more important than others?

Lithium carbonate is currently produced from one of two sources, hard rock spodumene or Salt Lake brine.   

Hard rock mining (spodumene) has fewer environmental risks than Salt Lake brines, which has a positive effect on project schedule due to permitting requirements. This makes WA deposits very attractive to investors as compared to the increased environmental risks of brine extraction.

The mining process to retrieve hard rock spodumene relies on well-known and tested methods of drilling and processing. The reliable method of mining gives regions like Greenbushes a competitive edge over lithium brine producers as mining companies are able to target resource deposits close to major markets, reducing transportation costs and delays.

The process to extract lithium from brine waters is a complex and delicate process involving evaporation in large ponds and difficult locations. The process can often take more than a year and is subject to climate impacts outside of the company’s control. In contrast, hard rock spodumene is easier to locate for geologists, cheaper to mine as well as a process using common process unit operations. WA has an additional benefit of limited annual rainfall, with an average of 83 days of rain per year.

The Lithium carbonate produced from brines has also shown lower grades, more variability in composition and uncertain recovery rates. This increases the cost of production as further refinement is required before it is battery grade.  

In contract, Lithium from hard rock minerals has shown good lithium grades, higher recovery rates, and reduced processing duration.

Due to these economic reasons, WA’s lithium industry is set to be a sustainable and major player in the upcoming electric vehicle movement and will continue to attract both local and foreign investment. 

The increase in lithium demand saw four new spodumene operations enter the market in 2018, which has impacted the hard rock ore’s trading price and reduced realized profits for West Australian producers. The Mt Marion lithium mine in WA has described a price fall of almost 15% over the last 3 months, with spodumene lithium oxide prices falling from $930/dmt last quarter to $791/dmt in the first quarter of 2019.

The Mt Marion operation is currently owned by Gangfeng and Mineral Resources after Neometals recently agreed to sell its 13.8% stake in the venture to Mineral Resources for $104 million.

While the cost of spodumene concentrate is higher than that of the typical South American brine operation, spodumene concentrate is typically the preferred form as its conversion to battery grade lithium hydroxide still trades at around US$20 000 per ton.

Industry tracker Benchmark Minerals said that spodumene producers “experienced more pressure as 2018 contracts expired, ushering in a difficult period of negotiation for suppliers, as Chinese converters sought to receive significant discounts due to increased supply”

Despite this recent fall in prices, experts believe that demand for battery-grade lithium hydroxide will continue to exceed supply in the medium to long term, driving prices up and encouraging further investment into the market.