Western Australia’s proposed Lithium Valley concept that could see Western Australia grab a larger share of the $213bn lithium-based battery value chain is under threat from the Federal Government’s proposed moves to limit R&D funding. Limiting the annual R&D rebates to $4m could make Australia noncompetitive with other parts of the world, according to Lithium Australia.
Western Australia’s opportunity to carve out a larger share of the $213bn lithium-based battery value chain could be under threat by federal Government moves to change the existing research and development grants and rebates system in its latest Budget.
Perth based ASX listed lithium explorer and technologist, Lithium Australia said in a statement this week that the proposed new R&D grant restrictions could kill off the opportunity for Western Australia to become an all encompassing, globally significant lithium hub before it even begins.
Regional Development Australia recently flagged the potential for Western Australia to capitalise on the lithium battery boom by moving beyond simply exporting concentrated ores.
The federal Government regional development organization said W.A could potentially create tens of thousands of jobs and capture billions of dollars in revenues if it could become a centre for the processing of battery metals and the manufacturing and recycling of lithium-ion batteries .
Western Australia is blessed with most of the world’s largest lithium deposits which has led to the creation of the “Lithium Valley” concept for the state.
The Lithium Valley concept for W.A is a variation of the highly successful “Silicon Valley” tag that was attached to a Californian region that became synonymous with the ground breaking development of the silicone chip in the 1980’s.
Lithium Australia said “The Federal Government’s proposed moves to limit R&D funding could result in this initiative to capture more than the current 0.5%, or $1.1bn stake in the lithium battery value chain being stillborn.”
Lithium Australia Managing Director Adrian Griffin said: “Australia's lithium industry risks being consigned to international backwaters if such an opportunity to become a global front-runner in the emerging battery technology race, is allowed to slip.”
“The window for this opportunity is closing fast. If Australia shows initiative by providing R&D incentives for industry, we can capture an extra 12-27%, or an estimated extra A$25-57 billion, of the value of the lithium chain globally.”
“But Australia will never get there unless the Federal Government removes its newly imposed cap, which limits research and development rebates within the lithium-related sector to A$4 million a year maximum for development companies with less than $20 million a year in revenue.”
“Previously, the rebates were open-ended for revenue-limited operations, which in reality, are the companies driving the current push to carve a greater space for Australia’s abundant 'new energy' resources in a rapidly expanding global battery market.”
“Ironically, while the Federal Government continues to allow open-ended R&D rebates for the biotech sector, if its proposed cuts prevail elsewhere, they will destroy any hope of establishing a locally-based Lithium Valley. “
Mr Griffin, is also a founding director of Northern Minerals who is close to commissioning its Browns Range heavy rare earths pilot plant in Western Australia. He said that the plant would not have gone ahead without the R&D rebates sitting at the levels they were at when the go decision was taken by the Northern Minerals board at the time.
“Tellingly, it's exactly the type of project envisaged for an Australian-based Lithium Valley, but the potential for that will be lost if the former rebate environment is not reverted to by Federal legislators,” Mr Griffin said.
Lithium Australia has started production of lithium-iron-phosphate battery cathode material from its pilot plant in Brisbane and is aiming to lead the space locally as the demand for more powerful and longer lasting lithium-ion batteries picks up.
Lithium Australia is looking to develop an innovative, large-scale lithium processing pilot plant near Kalgoorlie in W.A using its chemical processing technology known as “Sileach”.after many years of research and development.
The plant will be capable of producing up to 2500 tonnes per annum of lithium carbonate.
Mr Griffin said the former Federal Government R&D rebate scheme would have been a significant contributor to the lithium processing pilot plant in Kalgoorlie but under the new capped arrangements, it will attract only $12 million over the plant’s three year development and commissioning period.
“In addition to our local holdings, Lithium Australia owns an advanced lithium project in Germany, ideally suited to supporting the same project. If we built our pilot plant there under our strategy to establish a central processing hub in Europe to support battery production for the expanding electric vehicle industry, the magnitude of R&D rebates would exceed four times that available in Australia,” Mr Griffin added.
“So Lithium Australia does have choices, but in a market environment where capping Federal annual R&D rebates to $4 million makes WA, and Australia as a whole, uncompetitive with other parts of the world in this rapidly expanding global batteries arena.”
“Clearly, if we are to pursue the Lithium Valley concept with passion, as we all wish to, the Federal Government needs to recognise the innovative status of the industry, as it does with biotech, and retain an R&D environment competitive with other jurisdictions and this developing industry.”
Last week, the West Australian government released a comprehensive report backing the establishment of a Lithium Valley concept in W.A, with locations such as the regional town of Kwinana currently favoured.
It noted that whilst the first signs of the Lithium Valley concept being developed were apparent at two sites, these investments were based upon business decisions made months or years ago and that a proactive approach is required to build on this momentum.
The report also urged the Federal Government to set up an industry cooperative research centre in Perth and a bid led by Curtin University to launch a battery focused cooperative research centre in the city has already garnered strong support.
Mr Griffin said; the findings of the report clearly indicate that Australia is currently in a 'rare lithium box seat'.
“We can combine low sovereign risk, widespread energy-metals resources and proven regulatory controls to deliver the type of sustainable and ethical supply lines now desperately sought by European and Asian customers, investors and financiers keen to exit the existing Chinese lithium supply chain,” he added.
“New-era batteries are a fledgling industry. If Australia is to help freestanding, commercially-based cathode powder businesses evolve, or encourage further research into recycling of multi-metal batteries, substantial R&D funding will be required, so a complete re-evaluation of the rebate scheme by the Federal Government, is certainly warranted.”
“Providing Australia’s battery industry with preferred status under the R&D rebate scheme is a small price to pay for achieving first-mover status, worldwide industry upside and leadership via WA's Lithium Valley.”