This is how the busiest port in Western Australia intends to reduce its reliance on iron ore prices.

Plans for a billion-dollar lithium plant for Western Australia’s Pilbara are raising eyebrows across the industry and have locals curious about what proponents are pitching.

British chemical company Alkemy Capital Investments has announced plans to build a four-train lithium sulphate (LSM) refinery in Port Hedland off the back of its increased use in batteries for electric vehicles and renewable energy technology.

“Lithium demand is surging … demand is expected to grow by over 600 per cent over the next decade, so it’s absolutely booming at the moment,” Alkemy commercial manager Alex Della Bosca said.

Under the plans, the company would refine 180,000 tonnes of concentrate into lithium sulphate before further processing takes place off shore.

Longer term, 720,000 tonnes of spodumene concentrate processed each year at the Port Hedland site would produce 96,000 tonnes of lithium hydroxide — all to supply Europe’s fast-growing electric battery market.

Alkemy Capital Investments plans to build Australia’s first lithium sulphate refinery.(ABC News: Rachel Pupazzoni)

Ms Della Bosca said most lithium exported out of Australia currently was in a spodumene concentrate which contained 6 per cent lithium and 94 per cent waste.

“To us, it makes no sense to load up our ships with waste in order to decarbonise the transport industry, so what we want to do is bring as much of the downstream processing to WA as possible before shipping to the UK,” she said.

Approvals are underway, but Ms Della Bosca said the four-train refinery would be built in an area near Pilbara Port Authority’s proposed battery metals hub, Lumsden Point, and cost in the order of $1 billion.

“We’re in the very early stages at the moment and we haven’t quite released our numbers yet, but looking at similar projects within this space, they’re set at around $200 million to $250 million per train.”

Pilbara Minerals spodumene rock — Most lithium is exported from Australia in a concentrate that contains 6 per cent lithium.(ABC News: Rachel Pupazzoni)

Port Hedland part of the ‘lithium century’

Billions of dollars in iron ore leaves the port — WA’s busiest — each year, but none of it is processed on shore.

The value of WA’s iron ore sales rose to a record $157 billion in 2021, of which Port Hedland accounted for 61 per cent, according to the state government.

Lithium exports have also risen, reaching a record $1.7 billion last year.

Port Hedland Mayor Peter Carter described Alkemy’s plans as a “fantastic opportunity” for the town to diversify away from its reliance on iron ore exports.

a man in a suit stands in front of palm fronds — Peter Carter welcomes companies that can diversify the region’s economy.(ABC News: Eliza Borrello)

“While it’s still in the early stages, it holds great promise for Port Hedland,” Cr Carter said.

“One of the greatest things is diversification for our town — everyone knows Port Hedland’s growth is on iron ore, iron ore, iron ore.

“But all these other new companies, to grow our town by another 10,000 to 15,000 people outside the iron ore sector in the renewable areas and other areas like that, it’s great for our town.”

Lithium industry veteran and International Lithium Association chair Anand Sheth said Port Hedland had been considered for downstream processing for years but until now was not viable.

“[Downstream processing] is a very good next step for Australia to go into,” he said.

“I’ve been in this industry for 22 years and it wasn’t very practical in the past to do it because of the pricing and the cost.

“But now, it is supportive — the whole industry, the whole value chain is supportive of this downstream processing in Australia.”

Mr Sheth said investment by Pilbara Ports Authority into container shipping had been the “most critical point” to this viability.

“I think everything is in place for Port Hedland to have that downstream processing today or tomorrow.

“This is the lithium century.”

Port Hedland is about 100km from lithium mines such as Pilbara Minerals’ Pilgangoora site.(ABC News: Hugh Sando)

Port a ‘perfect’ location

With the Pilbara’s latest mining boom underway and national shortages of labour and construction materials, Ms Della Bosca said Alkemy was “acutely aware” of the challenges it faced building a refinery in the region.

The proximity to lithium mines in the Pilbara as well as the port of Port Hedland — the world’s largest bulk export port and Australia’s largest container export port — made it the ideal location, she said.

“It just makes sense to us; we’re both speaking the same language and in so many different ways.

“It’s a world-renowned port, it’s the perfect spot for us to build our lithium sulphate refinery.”

Opportunities to diversify from China

While Europe is well known for its vehicle production, Ms Della Bosca said it was an emerging market for lithium processing.

She expected Alkemy’s plans would give Australian miners an alternative market for their product, with China dominating lithium refining.

“[China] is going to need all the lithium that they’re refining for their own net-zero targets, so we are seeing new markets growing such as Europe and they’re going to need their own lithium capacity,” Ms Della Bosca said.

“We are seeing that particularly WA miners want to diversify who they’re selling to, they want to de-risk their portfolio in a way, so they want access to the European market.”