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| The Commonwealth Scientific and Industrial Research Organisation pilot plant in Perth, Australia, to test BHP's nickel products for the battery market. |
A report is due within a month on what is needed to repurpose BHP Group's battery-grade nickel sulfate test plant in Perth, Australia, into a cathode precursor production pilot plant to demonstrate the country's ability to play a role in the electric vehicle supply chain midstream where higher margins are available.
BHP originally worked with the Commonwealth Scientific and Industrial Research Organisation to build a pilot plant at the latter's site in Perth that replicates all aspects of BHP Billiton Nickel West Pty Ltd.'s Kwinana plant south of Perth.
Samples from up to 100 kilograms of dry nickel sulfate a day produced from that plant were sent to Asian EV battery makers to test quality ahead of BHP building a full-blown nickel sulfate plant in Kwinana to capitalize on the EV battery boom.
That test plant will now be repurposed as a similar-scale flagship project of the Future Battery Industries CRC, formed in July 2019, to demonstrate the feasibility of manufacturing mixed hydroxide nickel-manganese precursor in the state, and that it can be converted into lithiated and calcined cathode active material. The project also seeks to see if waste products can be converted into useful by-products.
To this end, the CRC has commissioned Queensland University of Technology and Hatch Pty. Ltd., at a cost of A$100,000, to study the feasibility of converting BHP's pilot plant, including what equipment is needed and what can be repurposed to establish the qualification requirements of European EV makers for the products Australia could potentially produce.
The four-year project will cost A$13.2 million, with A$300,000 already committed to the feasibility stage for a pilot operation as well as verification of technical and processing capability.
Next step
CRC CEO Stedman Ellis told S&P Global Market Intelligence that the report, which will arrive within a month, will study Australia's ability to take the next step down the EV battery supply chain beyond the various upstream-focused processing plant investments in the state underway by Tianqi Lithium Corp., Albemarle Corp., Covalent Lithium, BHP and Northern Minerals Ltd.
A new report issued May 18 by the CRC on the security, sustainability and Australian policy options around the governance of battery value chains noted Australia has no projects targeting more sophisticated components such as cathodes, other precursors or cell production that have reached final investment decision.
As the bulk of value-adding occurs in the midstream and downstream stages, this means Australia captures just 0.53% — A$1.13 billion — of the value realized in global battery production, the report said, citing Australian Trade Commission data.
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It also noted that while Australia has the highest rank of any battery mineral producer in industry surveys on investment attractiveness, policy perceptions and mining practices, the plethora of federal and state government initiatives on the sector have been focused on the upstream side, as the chart to the left shows.
Geopolitical think tank Perth USAsia Centre's research director Jeffrey Wilson, the report's author, said midstream processing was a natural "next step" that could be built upon existing minerals capability and is, therefore, where policy efforts will generate the greatest return on investment.
International trade, investment and technology partnerships with key global players should also be sought to fulfill Australia's midstream ambitions, he added.
"The cathode accounts for about one-third of the total cost of a lithium-ion battery, with high nickel content cathodes being able to deliver high energy density, with less capacity fade, while replacing the need for most of the scarcer cobalt and the risks associated with countries which may have less ethical supply chains and labor practices," Ellis said in his latest CEO report in March.
CRC's May 18 report said that while several lithium hydroxide processing projects have recently been launched in Australia, China still does just over half the world's lithium refining into carbonates or hydroxide despite producing just 9% of primary lithium. This limits the expansion of Australian lithium production as capacity at Chinese facilities has failed to keep pace with the growing output of primary lithium.
China is similarly a dominant player in the refining of non-lithium battery minerals, doing most of the world's rare earth and vanadium refining based on locally extracted ores. China also accounts for 58% of the world’s refined cobalt, mainly sourced from the Democratic Republic of the Congo, and 29% of refined nickel, sourced from Southeast Asia.
As the chart below reproduced from CRC's report shows, the geographic link between mining and manufacturing has "largely disappeared" by the stage of chemical conversion of feedstock lithium in either carbonate or hydroxide form into precursor chemicals that can be manufactured into cells.
"Only Chile maintains a meaningful (if small) presence in the chemical derivatives market, while Australia and Argentina are no longer present at all," the report noted, with the chemistry market instead dominated by battery manufacturers in Asia. China produces 56% of chemical derivatives, with Japan and Korea accounting for a further quarter of world production.
