Western Australia is in prime position to capitalise on the emerging battery technology sector, but it is a marathon rather than a sprint as demand for battery products from outside of China grows amongst end-users, as well as the acceptance that ethical practices come at a higher cost.
Western Australia is in prime position to capitalise on the emerging battery technology sector, but it is a marathon rather than a sprint as demand for battery products from outside of China grows amongst end-users, as well as the acceptance that ethical practices come at a higher cost.
Speaking at the Investor, the Shaper and the Policy Maker lunch, hosted by Cannings Purple and Regal Funds Management in Perth today, Regal Portfolio Manager Julian Babarczy, Tianqi Lithium Australia General Manager Phil Thick and Mines and Petroleum Minister Bill Johnston led a panel to discuss the future of the battery technology sector and the opportunities that lie ahead for WA.
Mr Thick told delegates that while the technology sector has experienced a rapid evolution in WA over the past few years, but the industry hasn’t flown too close to the sun.
“This is not a boom and there’s no bubble that’s about to burst; I think anybody who looks at the forward projections, the numbers say that we are actually going to really struggle to meet demand (for technology materials) over the next 10 years,” he said.
“And yes, pricing has corrected a bit over the past few months but that’s expected in this market, but I think the projections of a fivefold increase in demand for lithium products in the next seven years is real and it is supported by nearly all of the analysts.
“But we’ve got such a great advantage here in WA because of the resources that we have to take that next step downstream and then, rightfully, talk about where that leads to.”
But he cautioned that the path towards battery production was a lot of steps down the chain.
“We really have to crawl before we walk here; we’re currently not even producing the processed lithium hydroxide or lithium carbonate, so the potential is certainly there; the desire to have supply of battery products from somewhere other than China is very strong amongst end-users… we are certainly in a strong position both geographically and on the timeline to take great advantage of that.”
Mr Babarczy agreed with Mr Thick’s remarks, adding that while WA is perceived to be a higher cost environment, that was the result of the regulatory overlay that’s coming through battery-related commodities.
“We’re seeing a stronger-for-longer pricing environment which means that there is more profit that can be made out of some downstream processing out of WA,” he said.
“As an investor in the space as well, I’ve got to make a choice of where I want to deploy my capital; do I want to put it into a mine or in a downstream processing facility?
“From my point of view, the mine is probably where a lot of the economic return is going to accrue over the next decade or two.”
Mr Johnston said one question that needed to be put to the end-users of battery technology materials was what their customers were demanding.
“I point out to people that Apple has recently invested in technology with Rio Tinto and Alcoa about low-carbon refining of aluminium; so why is a phone company investing in aluminium processing? Because their customers are asking for a lower carbon content in the products they buy.
“So, there’s actually an interesting thing here where Australia’s high regulatory framework is now a strength in dealing with end-users – the battery consumers rather than the battery manufacturers – so that’s something that we need to have a look and see how we can take advantage of the high standards we have here.”
Mr Thick added to that, saying one thing WA had was quality and ethical overlay that the end-users are looking for.
“Our customers will come to us and ask about every element of our supply chain; child labour exploitation, slavery etc… we have to through every element of that chain, even where we are buying our plant equipment from, because they don’t want to be exposed down the track by the media for having any links to unethical practices,” he said.
“The world is looking for supply outside of China, and from a reliable, high-integrity countries, and that’s something that we can offer. It’s a huge advantage for us here in WA.”
