Lithium royalty changes for downstream processing

The state government has factored in lithium hydroxide and carbonate into its royalty arrangement for lithium producers, which it claims will encourage downstream processing and manufacturing.

A 5 per cent feedstock royalty rate for lithium hydroxide and lithium carbonate will now be introduced.

This extends the royalty coverage to encompass Tianqi Lithium’s newly built lithium hydroxide plant in Kwinana and Albermarle Corporation’s Kemerton plant, which is currently under construction.

The amendments clear up any uncertainty regarding lithium royalties, compared with the previous regulations, the state government said.

It said the review into lithium royalties, which is part of the government's Future Battery Industry Strategy, involved extensive consultation with industry.

Mines and Petroleum Minister Bill Johnston said the state government was committed to supporting Western Australia's battery materials industry.

"Updating the royalty arrangements provides a fairer system for all lithium producers and will enable Western Australia to move up the battery value chain beyond mining and processing,” he said.

"This will create more jobs and encourage innovation in meeting the needs of the growing demand for electric vehicles and battery storage systems.”

Industry peak groups have welcomed the announcement, with Association of Mining & Exploration Companies chief executive Warren Pearce saying the announcement helped WA compete internationally to lock its place in the global lithium value chain.

“Defining the royalty provides certainty for companies investing in WA and will support the financing of projects and further investment,” he said.

The Chamber of Minerals and Energy of WA chief executive Paul Everingham echoed this sentiment.

“The royalty regime was not originally designed to accommodate the extent or scale of downstream processing that is proposed for lithium minerals,” Mr Everingham said.