The federal government wants to seize a “once-in-a-generation opportunity” to position Australia as a world leader in the rapidly developing lithium-ion battery manufacturing sector.

Releasing a new strategy document from Austrade on Tuesday, the investment minister, Simon Birmingham, said the time was right to capitalise on growing global demand.

“Australia has a once-in-a-generation opportunity to transform into a major processing, manufacturing and trading hub for lithium-ion batteries,” Birmingham said in a statement.

Until now the federal government has been criticised for its lack of engagement with the lithium sector, notably by the governor of Western Australia, Kim Beazley, and the WA chief scientist, Peter Klinken.

Western Australia is the world’s largest producer of lithium, much sought after for its very high electrode potential and used in batteries for smartphones and other portable electronic devices. The electric car industry is expected to become its biggest driver.



The September Resources and Energy Quarterly by the chief economist, Mark Cully, says global lithium use is expected to grow from about 211,000 tonnes in 2017, with just under half accounted for by electric cars, to 1,265,000 tonnes by 2027, with almost 90% for electric cars.

Australian exports of spodumene ore (the raw material for lithium) rose from $117m in 2012 to $780m in 2017. Australia also produces most of the other mineral elements involved in lithium-ion battery manufacture – including copper, nickel, cobalt, manganese, iron, phosphate, titanium and aluminium – and has access to commercial reserves of the remaining element, graphite, as well as all the chemicals required.

But a recent report by Future Smart Strategies for Perth’s Regional Development Australia pointed out that Australia currently captures just 0.5% of lithium’s ultimate value as simply processed export ores, while 99.5% is paid to Australia’s trading partners for value adding through electrochemical processing, battery cell production and product assembly.

The report called for a concentrated lithium processing and manufacturing hub or “Lithium Valley” at Kwinana, south of Perth..

The Austrade report suggested a number of possible sites for lithium-ion battery cell manufacturing, including Kwinana, Kalgoorlie and Bunbury in WA, as well as Adelaide, Townsville, Newcastle and Geelong.

We have a huge opportunity here to be a market leader of lithium that’s produced and processed using renewable energy Piers Verstegen, WA Conservation Council

The resources minister, Matt Canavan, said in a statement it was time for Australia to take advantage of the booming industry.

“With the right policies we can advance our industry further up the value chain to become the world’s leading supplier of high-grade lithium components, including ion batteries – creating new jobs and opportunities for Australians.”

Canavan previously highlighted Australia’s stringent environmental standards as an obstacle to the development of a fully fledged battery manufacturing industry.

“We’re not sure we can take it all the way through to batteries because regulations around chemical use mean we’re not going to be able to compete with Asian processing facilities,” Canavan told Guardian Australia.

“We are not going to weaken our environmental standards to attract manufacturing jobs. We’ve got a good environmental regulatory system, which we’re proud of and want to keep, but other countries don’t have our level of robustness and that does sometimes put them ahead in terms of investment traction with industry.”

Piers Verstegen, the director of the WA Conservation Council and a vice-president of the Australian Conservation Foundation, said he was optimistic about a low-impact battery manufacturing industry. “We have a huge opportunity here to be a market leader of lithium that’s produced and processed using renewable energy.”

He said environmental impacts such as land-clearing for mining, energy-intensive processing and waste products would need to be carefully managed.

The chief executive of the Association of Mining and Exploration Companies, Warren Pearce, agreed the industry was in a critical phase, but said the Lithium Valley concept was a stumbling block for state and federal governments, who were reluctant to subsidise key components such as a new port.

Western Australia has five second-stage processing sites planned or under construction, including Kidman SQM, which isexpected to start operations at Kwinana in 2021 and has been contracted to supply the electric car manufacturer Tesla.

“The market is still chaotic and that supply chain hasn’t set, so we’ve got to be able to secure our place in it in the next two-year window, so as not to be locked out, and that’s why partners in research and development are so important,” Pearce said.

He cited the Kidman SQM deal with Tesla as an example of manufacturers building their supply chains, and said others would follow.

Pearce has urged the federal government to offer incentives for international companies holding patents on lithium chemical processing techniques (producing the much more valuable lithium hydroxide) to partner with smaller Australian mining companies.

Amec is lobbying the federal government to exempt lithium mining from a proposed cap on research and development incentives, which will limit refunds available to loss-making businesses with turnover below $20m to $4m a year.

“It’s a bad decision that will have a detrimental impact on our ability to develop a significant battery minerals processing industry in Australia,” Pearce said.

Western Australia’s Labor government said it was also lobbying the federal government for the exemption.﻿ Canavan said he was aware of industry’s concerns. The state government has been moving ahead regardless. In May it announced a dedicated lithium taskforce and in October it pledged $6m to secure the Future Battery Industries cooperative research centre.