Western Australia (WA) should not take for granted its position as a competitive producer of minerals critical for lithium-ion batteries.
A report by the Chamber of Commerce and Industry of WA (CCIWA) said the region had reasons to be positive about the growing demand for minerals fueled by increasing production of electric vehicles, including lithium, nickel and cobalt.
Australia is the biggest producer of lithium in the world and separate reports have suggested it could capitalise on a potential $2tn global lithium value chain by investing in a downstream sector.
But while WA had ample capacity, CCIWA said it was not the lowest cost producer of these minerals and that other regions were investing heavily in developing their own supply.
“Given the investment in developing these mineral resources across the globe, and Western Australia’s typically mid-range cost profile, we should not take this competitive advantage for granted,” CCIWA said in its report.
The report also said although there was “a lot of enthusiasm” for developing the region’s role in battery manufacturing beyond raw materials, WA should “be very cautious” about trying to expand downstream capacity, especially as it has had mixed success before in adding value to the raw chemicals it produces.
It said competing internationally in the downstream supply chain – including manufacturing cathodes and anodes, electrolytes, battery cells and battery packs – would be a “much more significant challenge”.
As well as being a small domestic market for lithium-ion batteries – most growth was expected to come from exports – the report said WA was poorly placed to compete compared to other East Asian countries.
Japan, South Korea and China in particular already had well developed industries and benefited from a large regional market, low barriers to entry and beneficial policies for the part of the supply chain beyond extraction, and the region was likely retain its dominance.
“The dominance of East Asia and its inherent competitive advantage in the mid-stream lithium-ion battery supply chain is a reason to be very cautious,” the report said.
“However, the fact that expanding Western Australian upstream production is an integral part of the dominant East Asian lithium-ion battery supply chain is a reason to be excited,” it added.
The report said WA had the potential to increase its production of lithium concentrate by 4.1m tonnes per year when projects currently in the pipeline come online.
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