The Western Australian Government has unveiled a funding support package of up to $150 million to help the lithium sector amid the critical mineral’s downturn.
Cyclically low lithium prices have been primarily triggered by a supply surplus caused by increased cheaper lithium from countries like Indonesia and China, which have less stringent environmental, social and governance (ESG) standards. A decrease in global electric vehicle (EV) sales also played a part in the decline, despite EV demand rising.
As a result, several mines and processing plants have been temporarily suspended and thousands of jobs have been impacted, with the most recent example being MinRes’ Bald Hill lithium mine in WA.
In response to similar incidents and discussions with industry representatives earlier this year, the WA Government will provide financial support to lithium miners in the ramp-up production phase and the downstream processing stage for a two-year period, after which lithium prices are expected to recover.
“WA’s lithium industry supported more than 11,000 local jobs last financial year and has three new lithium hydroxide refineries currently in construction or commissioning,” WA Premier Roger Cook said.
“This package will provide important temporary and responsible support for WA’s fledgling lithium industry, taking into account the extremely challenging market conditions it is facing.”
The support program will see government trading enterprises such as DevelopmentWA, Synergy and Water Corporation temporarily waive government fees to support the continuation of lithium downstream processing for $90 million.
Miners in the ramp-up phase will have their port charges and mining tenement fees waived for up to two years for $9.37 million maximum.
A $50 million loan facility will also be available to help miners access temporary interest-free loans to help sustain their operations. Companies will be chosen based on their current financial position and operational plan.
Those granted a loan will be required to repay the loans through regular quarterly payments over the two years following the end of the interest-free period, which will cease after average spodumene concentrate prices have exceeded $US1100 ($1696) per tonne for two consecutive quarters, or by June 30 2026.
WA Mines and Petroleum Minister David Michael said the funding package will help protect thousands of jobs vital to the state’s future as a critical minerals powerhouse.
“Our lithium miners are experiencing very challenging conditions currently, but we know they will play a crucial role in the future energy transition,” Michael said.
“We’re providing them with temporary and responsible support now to give them the best chance of continuing to supply the world with lithium products today and well into the future.”
The Association of Mining and Exploration Companies (AMEC) has welcomed the support program, with AMEC chief executive officer Warren Pearce saying it “stabilises the future of an important emerging industry”.
“This is a sensible defensive policy that will help Western Australia’s lithium sector weather the downturn in the market,” Pearce said.
“This program will ensure lithium producers across the sector have the best fighting chance to counter the turbulent global headwinds.”
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