The Future Battery Industries Cooperative Research Centre has confirmed the technical and commercial feasibility of lithium-ion battery cathode precursor manufacturing in Western Australia as part of a broader push by the country's battery mineral hopefuls to move downstream to entice bankable off-take deals and elusive debt financing.
A study released July 8 by the center, also known as the FBICRC, laid out the viability of repurposing a BHP Group nickel sulfate pilot plant at the Commonwealth Scientific and Industrial Research Organisation's Perth base. The pilot plant was also the motivation for the construction of an industrial-scale nickel sulfate plant at the Kwinana nickel refinery south of the city, which is ongoing.
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| The pilot plant in Perth, Australia, to test BHP's nickel products for the battery market. |
Battery manufacturers need to provide statistically representative numbers of good performing cells, which could be in the tens of thousands or more, to validate their material, necessitating a basic capability to produce several hundreds of kilograms of material with consistent performance characteristics. The repurposed BHP plant will seek to achieve this.
Some cobalt sulfate is available from the nickel refinery, and additional material will be made available by New South Wales-based producer Cobalt Blue Holdings Ltd. Western Australia-based Pilbara Metals Group is expected to provide manganese sulfate and Tianqi Lithium Australia Pty. Ltd. will provide lithium hydroxide.
While the FBICRC already committed A$300,000 for the scoping phase of the pilot plant to verify technical and processing capability, the project's final cost is expected to include more than A$10 million in cash over four years.
Renascor Resources Ltd. recently outlined results of a technical study for a combined mine and battery anode materials operation for its Siviour graphite project in South Australia, with startup costs for the battery anode operation estimated at A$90 million. The net present value of the combined operation was estimated at A$713 million, with a 33% internal rate of return, while annual average EBITDA was estimated at A$156 million.
The company estimated that combining the downstream operation with the mine would result in gross operating costs of US$1,989 per tonne of purified spherical graphite, or PSG. Renascor aims to produce 28,000 tonnes per year of PSG, demand for which is expected to increase to 2.5 million tonnes by 2030.
Graphite developers struggle to secure battery support outside of China as the Asian giant controls 100% of the downstream market, though its domination of demand may be starting to shift, Renascor Managing Director David Christensen said in an interview. Non-Chinese demand in the industrial market has not yet been sufficiently strong to lead to large-volume off-take contracts from bankable end-users, he added.
The FBICRC expects the global automotive lithium-ion battery market to grow 11% per year to reach US$95.3 billion by 2030, with 500 GWh per annum of battery factories planned to be commissioned by 2025 in Europe alone.
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| Renascor Resources Managing |
Christensen said it became clear during more serious off-take discussions after completing Siviour's definitive feasibility study in late 2019 that the kind of customer who could offer a bankable contract wanted PSG, not just graphite concentrates.
Renascor has since secured in-principle support from government-owned Export Finance Australia for the combined project and engaged European investment bank ABG Sundal Collier ASA to help arrange financing.
Christensen said the integrated project was more appealing to ABG Sundal Collier as it provides more direct exposure to electric vehicle growth, with the added possibility that it will qualify as a green bond, which would be a "major change for mining projects."
The FBICRC's COO, Jacques Eksteen, said in a July 3 LinkedIn post that it is also collaborating with ASX-listed Mozambique graphite producer Syrah Resources Ltd., among others, on a "super anode project" focusing on environmentally friendly approaches of graphite refining and related processes to aid anode material production.
Broader implications
Queensland University of Technology Professorial Fellow Peter Talbot, who established Australia's first lithium-ion battery pilot manufacturing facility and wrote the FBICRC report, said the study shows that even going one step down the supply chain would net multiples for the potential return on investment for a battery mineral project.
For example, graphite sells for about US$500/t as a refractory or lubricant agent, but battery-grade synthetic PSG can be worth up to US$20,000/t, he said in an interview.
Benchmark Mineral Intelligence Product Director Andrew Miller told S&P Global Market Intelligence the development of high-purity processing capacity is crucial for suppliers targeting the value-added sectors of the graphite market, and particularly important for new suppliers that need to show a shift downstream to support the economics of new operations outside China.
"Graphite mines that have been developed outside China struggle to compete on concentrate costs, but as you move downstream — whether to high purity or spherical graphite grades — the industry requires a much more refined product and the margins are higher," Miller said.
As well as competing on existing technologies, Miller said several companies are also developing new processes of refining graphite that can compete with existing producers on cost and environmental footprint, so it is in the interests of downstream users to help develop these new projects, either through direct off-takes, investments or partnerships.