Lithium is the white metal at the heart of the battery revolution, and Australia mines more of it than any other country. Here’s why prices soared, why they crashed, and what it means for Australian mines.
Lithium is a soft, silvery-white metal. It’s the lightest metal on Earth, and it’s very good at storing energy, which makes it essential for lithium-ion batteries.
Those batteries power phones, laptops, electric vehicles and the large batteries increasingly used to store energy from solar and wind farms.
Australia’s role
Australia is the world’s largest producer of mined lithium. Most comes from hard-rock mines in Western Australia, where lithium is extracted from a mineral called spodumene. Greenbushes, in the state’s south-west, is one of the biggest lithium mines in the world.
Other major producers include Chile and Argentina, which extract lithium from salty underground water, and China.
Most Australian spodumene has been shipped to China for refining into battery-grade chemicals. A few refineries have been built in Western Australia, such as at Kwinana and Kemerton, but they’ve faced technical problems and high costs.
The boom
As sales of electric vehicles took off, demand for lithium soared. Prices for spodumene jumped about tenfold between 2021 and late 2022. Australian lithium miners’ share prices surged, new mines were developed, and the industry became a major export earner.
The bust
Then prices collapsed. By 2024, lithium prices had fallen more than 80% from their peak.
The causes included a rapid increase in supply from new mines in Australia, Africa and China, slower-than-expected growth in electric vehicle sales in some markets, and high levels of stockpiles in China.
Several Australian mines cut production, paused operations or closed, and thousands of jobs were lost. Companies wrote down the value of projects, and some refinery plans were scaled back.
What’s next
Most analysts still expect long-term demand for lithium to grow strongly as the world shifts to electric vehicles and energy storage. Large batteries for power grids and data centres have become a growing source of demand.
The Federal and Western Australian governments have tried to support the industry through measures such as production tax credits for critical minerals processing.
But lithium prices are notoriously volatile, and Australia faces strong competition from lower-cost producers. The industry’s future here depends on whether it can compete on cost, and whether more of the value can be captured by processing lithium locally rather than exporting raw ore.
