Diversified mining group Mineral Resources could double the capacity of its planned lithium hydroxide plant in Western Australia’s Pilbara, to cater for an expected uplift in global demand for battery-making materials.
Mineral Resources was initially planning to build a 56,800 tonne per annum processing facility to convert spodumene concentrate mined from its Wodgina operation, located in the north west of Western Australia, into lithium hydroxide, which would then be sold direct to lithium-ion battery manufacturers.
In its annual report released to the ASX today, Mineral Resources said it may double that capacity to 113,600 tonnes per annum, depending on the outcome of a sales process for a minority stake in the Wodgina mine and the requirements of the successful bidder.
The company launched a sales process for a 49 per cent stake in the Wodgina ore body and non-processing infrastructure in May, after it received a series of unsolicited bids from various lithium processing groups, battery and car manufacturers and international commodities traders interested in taking a direct investment in the project or to secure offtake rights.
While lithium prices have halved in China this year due to inceased supply, the longer term outlook for the sector is bright as electric vehicle sales take off on the back of government policy to encourage adoption of new energy vehicles.
China, which accounts for around half of all electric vehicles sold worldwide, has mandated for 12 per cent of all cars on its roads to be powered by electricity by 2020.
NEV sales in China are expected to reach 1.1 million in 2018, an 83 per cent increase on last year.
Mineral Resources said its lithium hydroxide plant would be constructed in a staged approach, comprising up to four modules which would each produce 28,400tpa.
Each module would take around 18 months to construct.
Mineral Resources said its board of directors had given in-principle approval for the plant to be built, subject to several conditions, which include the completion of a definitive feasibility study and the determination of a preferred location for the plant.
If those conditions are met, construction could commence early in the 2020 financial year.
“Construction of a lithium hydroxide plant will see Wodgina become Australia’s first fully integrated downstream lithium operation,” Mineral Resources said in its report.
“Conversion of the Wodgina spodumene concentrate into lithium hydroxide will enable Mineral Resources to realise the maximum value from the Wodgina ore body,”
Construction of Mineral Resources’ spodumene concentrate plant at Wodgina is ongoing, with commissioning of the first 278,000tpa module to begin in the second quarter of the 2019 financial year.
Mineral Resources is currently producing lithium direct shipping ore at Wodgina, which is one of the largest known hard rock lithium deposits in the world.
It has exported 3.5 million tonnes of lithium DSO since production began in April this year.
The company expects the mine to have a 30-year production life.