US Carmakers Passing Up Lithium From Australia’s First Refinery

(Bloomberg) — The pinnacle of Australia’s first lithium hydroxide refinery says it’s attracted little consideration from US carmakers searching for to purchase the steel that’s essential to the world’s renewable power revolution.

Most Learn from Bloomberg

That’s regardless of Tianqi Lithium Vitality Australia’s plant being one of many few on the planet producing lithium anticipated to be compliant with President Joe Biden’s new legal guidelines designed to interrupt China’s stranglehold on the worldwide battery provide chain.

The three way partnership between China’s Tianqi Lithium Corp. and Australian miner IGO Ltd. in Might produced the nation’s first battery-grade lithium hydroxide at its refinery close to Perth, Western Australia. Chief Govt Officer Raj Surendran mentioned in an interview it’s aiming to succeed in annual full capability of 24,000 tons “towards the again finish of subsequent yr” — sufficient for greater than half one million electrical automobiles.

Whereas TLEA had been approached by Asian and European carmakers, curiosity from the US had been “much less so,” Surendran mentioned, declining to invest why. South Korean consumers had been amongst these most aggressively searching for offers with Western Australian producers, he mentioned.

Learn extra: Breaking China’s Uncommon Earths Grip a ‘Pipe Dream,’ Australia Says

The corporate is contemplating restarting work on a second manufacturing prepare, already part-built, that may double output by round 2025, Surendran mentioned. Albemarle Corp., which produced its first battery-grade lithium in Western Australia in July, is predicted to provide the same quantity.

That might be a lift for US carmakers, as they wrestle to fulfill the situations of Biden’s Inflation Discount Act. Signed into legislation in August, it provides as much as $7,500 in tax credit on electrical automobiles, offered they supply the vast majority of supplies from the US or nations with which it has a free-trade settlement, like Australia.

Story continues

China’s Domination

China accounts for 80% of the world manufacturing capability of lithium hydroxide — a key chemical within the lithium-ion batteries that energy EVs — in accordance with the Worldwide Vitality Company. Surendran mentioned he believed his plant’s lithium hydroxide would qualify as non-Chinese language though TLEA is majority Chinese language-owned, as a result of it’s made in Australia from Australian-mined ore.

“We haven’t bought a definitive view on it, however our robust perception is that we’ll be compliant with the IRA,” Surendran mentioned in a interview final week.

The textual content of the IRA itself isn’t clear whether or not Chinese language possession would disqualify a product from receiving the tax credit, mentioned Daisy Jennings-Grey, a London-based senior value analyst with Benchmark Mineral Intelligence.

“There’s nonetheless a couple of issues that should be clarified, and possession shall be an attention-grabbing a type of,” she mentioned in an interview.

Surendran mentioned the corporate wasn’t actively chasing offtake consumers whereas the plant ramped as much as business manufacturing. “My view is that that is one chemical that sells itself,” he mentioned, including he already had consumers for the primary prepare of manufacturing — South Korean battery maker SK On Ltd. and Sweden’s Northvolt AB.

Learn extra: Australia Might Seize 20% of World’s Lithium Refining by 2027

Australia is the world’s largest producer of lithium, however till this yr has had no chemical refineries, forcing it to ship the vast majority of its ore to China for refining.

Delays, Blowouts

Nonetheless, each Tianqi and Albemarle’s makes an attempt to construct Australian refiners have been plagued with delays and value blowouts. TLEA’s first manufacturing prepare has already value double the anticipated value, Surendran mentioned, and the holdups prompted two prospects to cancel buy agreements.

Lithium costs have greater than doubled this yr as main international carmakers throughout Europe, the US and Asia introduced formidable EV manufacturing targets. Surendran mentioned he anticipated the market to favor lithium producers the rest of the last decade.

“Intelligence for the time being is saying that lithium demand is predicted to double to about 1.5 million tons by 2027, however output shall be barely lower than that,” he mentioned.

Most Learn from Bloomberg Businessweek

©2022 Bloomberg L.P.