Will Tesla’s $1B Investment In Australian Minerals Inspire Australia To Start Refining Its Own Lithium With Renewables

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Recently, Tesla announced that it was going to spend $1 billion or more on Australian minerals, and Tesla’s Chair Robyn Denholm shared some interesting information about how her home country processes lithium. It doesn’t. It sends the lithium over to China to be refined, which isn’t good for the environment since China’s grid is still quite dirty and also comes with geopolitical issues. Australia has the Hornsdale Battery and is more well known for having a high portion of clean, renewable energy (especially in South Australia), so it makes sense that the country would ship off its lithium to China — just kidding. Actually, it’s pretty senseless.

Robyn Denholm Speaks At Minerals Council Event

Tesla wants to support Australian miners and the nation’s involvement throughout the EV supply chain, and this includes the possibility of EV manufacturing. On June 2, Denholm spoke at the Minerals Council of Australia event in Canberra, a conference several mining executives attended.

At the conference, the Tesla Chair announced that Tesla would be investing over $1 billion into Australia’s minerals supply, noting that each EV has around $5,000 worth of minerals in it. Australia has the capability to supply almost all of those minerals.

“At the heart of everything we do in our quest to accelerate the transition to sustainable energy is the lithium-ion battery — one of the most important technologies of the century,” she said. Tesla’s mission is to accelerate our transition to sustainable energy.

“There is a global transition to sustainable energy underway and this presents a huge opportunity for Australia,” she said.

She also said that three-quarters of Tesla’s lithium feedstock is sourced from Australia — along with over one-third of its nickel. Denholm noted that the cost of the materials makes up most of the battery costs. The cathode is the most expensive part of the battery and the majority of the fixed costs comes from nickel and lithium.

“All up, there’s about $6,000 worth of minerals and metals in every EV, $2,000 of which are for the batteries, and Australia is capable of supplying almost all of it,” she stated while adding that Tesla wants to work with the attendees to the conference in order to “seize this enormous economic and environmental opportunity.”

“A values-led mining industry has greater value to Tesla and an increasing portion of the global marketplace,” she explained.

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Processing Battery Raw Materials Locally Has Significant Environmental Benefits

Denholm pointed out that there would be 10 times less carbon pollution if Australia’s spodumene was converted to lithium chemicals in Western Australia and noted that refined lithium weighed much less than the raw materials — making it less expensive to transport.

“Mining processes currently account for about half the carbon footprint of a battery cell, and the best way to reduce the carbon footprint of minerals is to stop shipping them between 6,000 and 9,000 kilometers of ocean before refining them,” she said.

She pointed out that the calcination step in refining is energy intensive and is almost always done offshore with coal-based energy grids. Calcination is the heating of a solid chemical compound to high temperatures with either an absence or limited supply of air or oxygen. This removes impurities or volatile substances — sometimes with the goal of incurring thermal decomposition, which is also known as thermolysis.

Denholm said that this could be done in Australia with renewable energy from a cleaner grid, more modern plants, and a shorter supply chain.

The World’s Top Lithium Producer in 2020 Exported 0% of the Refined Product Suitable for Battery Cells

Denholm explained that her home country was the world’s top lithium producer last year, yet it exported 0% of the refined product that is suitable for battery cells. Australia’s market share of the world’s lithium last year was 49%.

“Tesla estimates that last year, Australia supplied approximately 49 percent of the world’s lithium ore — spodumene — but zero percent of the refined product suitable for battery cells. That lithium sold for about $100 million US dollars — but if it was processed onshore in Australia, the value would have been more like $1.7 billion dollars.

“So that’s a $1.6 billion annual opportunity and growing.

“Australia is the only country in the world with resources in all three of the critical battery metals, as well as other minerals required for the clean energy transition.”

The government even said that spodumene exports are slated to rise from 1.6 million tonnes in the fiscal year of 2021 to 3.9 megatonnes in the fiscal year of 2026. There are planned expansions at Western Australia’s Greenbushes mine as well as downstream lithium hydroxide plants that are currently under construction.

Alice Yu, a senior metals analyst at S&P Global Market Intelligence, pointed out that Tesla’s statement signaled the significance of Australia’s supply of lithium raw materials in meeting Tesla’s expansion plans. Giga Shanghai will be expanding further and construction continues at Giga Berlin.

Caspar Rawles, an analyst at Benchmark Mineral Intelligence who CleanTechnica interviewed earlier this year, also shared some thoughts. He noted that $1 billion “sounds like a huge amount of money — we’re just talking about the raw materials alone.”

EVs Need To Account For Closer To 100% Within 30 Years To Reach Net-Zero Emissions

Denholm pointed out that EVs account for less than 1% of vehicles globally. She said that this needs to be “much closer to 100%” within the next 30 years in order to reach net-zero emissions. For now, the global lithium-ion battery market is projected to be worth around $400 billion by 2030. This is 8 times the revenue generated from Australian coal exports in 2020, Denholm pointed out.

“Australia can make great things, the foundations of which are laid by the Australian mining industry,” Denholm said.

You can read more about Tesla’s plan to spend $1 billion on minerals in Australia here and here.

Some Final Thoughts

In a blog post written in 2020 by Solar Quotes, the author spoke of Australia’s “persistent inability to grab its own opportunities.” This was a reference to the carbon footprint of transporting ore to China. According to the article, Jade Partners estimated that processing Australia’s spodumene in China has a carbon impact of 14.8 tonnes of CO2 per tonne of lithium hydroxide. Australia wasn’t the only nation mentioned in this article, as it compared the CO2 emissions of lithium mined from four countries and shipped to China for processing.

Australia was the third-highest in that comparison. The factors that result in elevated CO2 intensity of lithium hydroxide are:

• Roasting the spodumene concentrate.
• Chemical conversion.

The author noted that China is the worst place in the world to process lithium.

I think that by investing over $1 billion in Australian minerals, Tesla could be encouraging Australia to start processing its own minerals at home instead of sending them to China to be processed on a grid that uses too much coal. It makes sense for clean vehicles to have their batteries processed with renewables, and perhaps Denholm’s work with Tesla along with her being a prominent citizen of Australia can help change this toxic habit.

Australia should use this opportunity — this investment — to start refining its minerals domestically with renewable energy. It would be a win for Australia and its citizens.