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Australian miners continue to look abroad for downstream capacity build out

Liontown and Sumitomo have formed a JV to develop a lithium hydroxide facility in Japan, continuing a growing trend of Australian mineral producers looking abroad for refining expertise and capacity.

Australian lithium mineral project developer Liontown Resources (Liontown) has signed an agreement with Japanese trading corporation Sumitomo Corporation (Sumitomo). This agreement will see both companies investigate the feasibility of producing lithium hydroxide in Japan from spodumene concentrate originating from Liontown’s Kathleen Valley project in Australia. The study will also investigate the feasibility of producing a lithium sulphate intermediate product prior to shipping to Sumitomo’s facilities in Japan. Sumitomo has a significant history within the commodity and mining sectors as well as in the downstream battery manufacturing industry. The signing of this agreement expands the company’s investigations into the lithium sector, having also investigated the possibility of producing refined lithium from lithium brine sources.

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The Australian government has been looking to capture more value from the downstream lithium sector in recent years, offering companies improved royalty rates if they invest in domestic downstream lithium refining capacity. However, recently the industry has seen the development of Australian refining capacity run into delays. As a result, the industry may be seeing a new dynamic of Australian mineral developers looking abroad to develop ex-Australia and ex-China lithium refining capacity with established players in the metals and mining sector via long-term co-operation agreements. This would be to guarantee long-term customers and reduce capital risk to their downstream refining sector. Fellow Australian developer Pilbara Minerals has also looked at a similar route, forming a JV with POSCO to develop a lithium hydroxide facility in South Korea.

With approximately 54% of new mineral lithium supply over the next decade expected to come from Australian sources, Project Blue expects this new industry dynamic to continue in the future. Downstream refineries will look to secure lithium feedstock for their facilities and insulate themselves from price fluctuations in the spodumene spot market and the upstream sector will look to guarantee long-term agreements with customers for their product.


Source: Project Blue

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