Mr Ottaviano did not refer to the Albemarle bid or to reports at least one other takeover suitor has emerged, but raised the prospect of forming a partnership with an established player in downstream lithium processing.
He said the IRA was having a profound effect on capital flow with more and more downstream lithium processing assets being built outside of China, which until now has dominated the space.
“The view we have in house is that it’s going to 50/50 (China and non-China processing capacity) by the time we reach the end of the decade, and we also see that in battery cell manufacturing,” he said.
Albemarle announced on Wednesday that it was doubling the size of its existing lithium hydroxide plant in WA built to process its share of spodumene from the Greenbushes mine part owned by China’s Tianqi. Charlotte-headquartered Albemarle sends spodumene from the Wodgina mine, its other major lithium asset in WA, to China for processing into lithium hydroxide.
Mr Ottaviano said Liontown was weighing up how far it wanted to move downstream and the best jurisdiction for any lithium hydroxide plant, with a partnership and sites in the US and Europe on its radar.
He said the technology involved in producing an intermediate lithium product was in the wheelhouse of mining companies, but moving further downstream is much more complex.
Mr Ottaviano said producing a 40 per cent to 50 per cent intermediate lithium product onshore could open the doors to building “finishing plants in North America or Europe” that were IRA compliant.
“The back end of those plants (lithium hydroxide) are very complex chemical sets so bringing in a partner to potentially work with us on the finishing plants may have some attraction,” he said.
“They’ll bring their technical know-how, but they’ll also bring their market reach for us to benefit from.”
Based on some industry analysis, Albemarle is on track to produce almost 14 per cent of the world’s lithium in 2024. In addition to the Kemerton hydroxide plant, which it expects to qualify for IRA benefits, it owns plants in China in partnership with Chris Ellison’s Mineral Resources and has signed off on building a plant in North Carolina.
Albemarle has also flagged using lithium from any expansions and acquisitions in WA to feed a plant built close to European carmakers.
Mr Ottaviano estimated the cost of building a lithium hydroxide plant in WA would be three times the cost of building in China. However, he said the operating costs were about equal in China, Australia and other jurisdictions, with the incentives on offer in the US impossible to ignore.
“The power of the incentives and grants that have been offered by the US government to attract investment in that country cannot as a board member be overlooked,” he said. “We need to seriously look at those incentives, and we need to discuss that with the government here.”
Mr Ottaviano said the Albanese government should look at providing land and other assistance to encourage onshore processing.
Liontown started mining at Kathleen Valley in January and is weighing up whether or not to ship unprocessed lithium ore. It has sent bulk samples to a shortlist of customers.
Mr Ottaviano said a business case on direct shipping ore would go to the board at the end of June. It would be an interim step to bring in income until Liontown starts producing 6 per cent spodumene from a concentrator at Kathleen Valley.
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