Three sites across Western Australia have been short-listed for a proposed multi-million-dollar lithium refinery, predicted to provide significant jobs and investment over the next 50 years.

Amid a lithium boom driven by the commodity's use in new generation batteries and electric vehicles, Australian company Kidman Resources has struck a $146 million deal to develop the Mt Holland lithium mine in the Goldfields.

The joint venture with Chilean company, Sociedad Química y Minera de Chile (SQM), is subject to Foreign Investment Review Board approval, but gives Kidman the option to take a 50 per cent stake in a proposed refinery to mine the lithium.

The Mungari Industrial Estate, 20 kilometres west of Kalgoorlie-Boulder and the site for a proposed solar power plant, has been short-listed as a potential location for the refinery by State Government developer Landcorp.

Kwinana, where China's Tianqi Lithium is already building a $400 million plant, is also being considered, alongside Kemerton Industrial Park, south west of Bunbury.

"We've engaged with government already at this preliminary stage, but we'll have further talks," Kidman managing director Martin Donohue said.

"We're going to work very closely with government to get this into production as quickly as we can in a suitable location."

Lithium concentrate being loaded onto a ship at Esperance Port earlier this year. ( Supplied: Galaxy Resources )

Five-year plan to get mine, refinery up and running

Mr Donohue said an investment decision would be made next year, with the company aiming to have the mine operational by 2020 and the refinery by 2021.

He said the refinery would disrupt China's dominance of the lithium sector.

"We want to participate in downstream processing … to try and break the cycle of simply picking it up and shipping it out," Mr Donohue said.

"China's been dominating Australia's mining industry for decades and this will add to the make-up of Australia's mining economy.

"The margins are in the refining … we think it will work."

The Earl Grey deposit at Mt Holland, which has been the subject of a Supreme Court battle this year, is believed to have a mine life of at least 50 years to underpin a long-life lithium refinery.

WA Mines Minister Bill Johnston said the Mt Holland mine and the refinery could create about 400 jobs during construction and another 380 full-time roles once operational.

Mr Johnston said SQM's deal for a half-share of Mt Holland was the first time a Chilean company had invested in a WA mining project.

Kalgoorlie-Boulder Chamber of Commerce and Industry CEO Hugh Gallagher says the proposed refinery would have a major economic impact. ( ABC News: Phil Hemingway )

Goldfields businesses want local knowledge recognised

While Mt Holland is in its backyard, Kalgoorlie-Boulder Chamber of Commerce and Industry chief executive Hugh Gallagher said the mining centre would have to fight hard for the refinery.

"There's no doubt that there will be a lot of lobbying for this to be located in the metropolitan area because the world we're in at the moment it's about jobs, jobs, jobs, jobs," he said.

"The emphasis really is on jobs in the metropolitan area — not in the regions."

WA already has three operating lithium mines — Mt Marion, Greenbushes in the South West, and Mt Cattlin near Ravensthorpe — but it could be as many as six by this time next year.

ASX-listed Neometals, a part-owner in the Mt Marion lithium mine near Kalgoorlie-Boulder, has previously proposed the development of a $200-million-plus lithium refinery near the Goldfields capital.

But access to power has been a major stumbling block, with Mt Marion trucking in liquefied natural gas (LNG) because there was not enough capacity in Western Power's grid.

Mr Gallagher said if the proposed lithium refinery was built near the city, it would bring the same economic benefits as the Kalgoorlie Nickel Smelter.

The smelter was opened amid a nickel boom by prime minister Gough Whitlam in 1973 and is still running under current owners BHP.

"I think the fact it's [Mungari Industrial Estate] on the radar — that's a good start," Mr Gallagher said.

"There's a lot of knowledge here; it's a relevant consideration let's put it that way.

"Hopefully that's the sort of knowledge that will be very influential in getting it across the line in our part of the world."