Mining magnates stake their claim on lithium despite fluctuating market

It’s been likened to a Game of Thrones-style scramble for supremacy as WA’s mining heavyweights make a charge on the State’s lithium resources.

A key component in electric vehicle batteries, lithium is fast becoming one of the most valuable and sought-after commodities in the world as the race to decarbonise gathers speed.

And that’s good news for WA as the world’s biggest supplier of the battery metal.

While not everyone is convinced of lithium’s merits — BHP is a considerable holdout — others are all-in with high profile takeovers and land grabs making headlines on a weekly basis.

Billionaire Gina Rinehart’s Hancock Prospecting is in it to win it. Just two weeks after sending US chemicals giant Albemarle packing following a seven-month battle for Liontown Resources, Ms Rinehart has entered another billion-dollar deal to amass an 18 per cent stake in Azure Minerals. The strategic move upset Chilean giant SQM’s bid for the junior explorer.

Chris Ellison’s Mineral Resources has been mining lithium since 2017 when its Mount Marion mine near Wiluna in the state’s Mid-West region entered production. This year Mr Ellison upped his stakes by taking control of Delta Lithium, while last month the courts cleared the way for the company to buy the Bald Hill lithium mine out of administration.

While some caution the lithium boom is more of a bubble, Josh Thurlow, lithium chief executive at Mineral Resources, said the miner isn’t concerned about market volatility and fluctuating prices and is instead focusing on the long game.

“We see there’s some price volatility even in the last five years,” Mr Thurlow told Insider. ”That’s going to happen and we’re not focused on those ups and downs.

“What we do know is that there is and will continue to be an ongoing, increasing demand for lithium. And from what we can see, that demand will outstrip supply over the next 10 years.”

The International Energy Agency estimates global EV sales will reach about 400 million by 2020, a significant jump from about 16 million today. Global lithium supplies will need to grow a whopping 40 per cent in the next 12 months to meet demand.

“I don’t think people have fully understood the scale and the size or exactly what’s required across the globe to transition from where we are now to where our aspirations are, whether that be 2020, 2035 or 2050,” Mr Thurlow said.

Allan Trench, who has had a seat on the boards of ASX-listed companies and is now an academic at the University of Western Australia, said even the most bullish growth estimates in lithium mean the industry will go from being about “10 per cent to 20 per cent” the size of the State’s iron ore operations.

But he conceded it is hard for anyone to fully grasp the economic and cultural role lithium will play in WA in 2050, when the State and the rest of the world are committed to operating at net zero emissions.

“Even five years ago, people were forecasting (the lithium industry’s size to be) a fifth of what we’re at now,” Mr Trench said. “So I wouldn’t believe what anybody’s really forecasting anyway.”

Read the full story in Insider magazine, free with The West Australian on Wednesday.