COMMENT: Freshly minted WA Mines Minister Peter Tinley probably could not believe his luck last week when the company behind the Greenbushes lithium mine announced it intended to double production.
News of jobs and royalties is welcome in this morbid part of WA’s economic cycle.
Nicer still is that the expansion will feed a downstream processing plant — the holy grail of resources policy — at Kwinana.
There is little doubt that the jump to 1.34 million tonnes of lithium concentrate a year at Greenbushes will clear the necessary regulatory hurdles.
It will be the first of many expansions by lithium players to which Mr Tinley will likely give the green light over the next few years.
He takes over the portfolio as Pilbara Minerals and Altura Minerals prepare to start production at their own mines.
As he steers the industry through this early growth stage, Mr Tinley should deal with the owners of Greenbushes with one eye on the recent pages of history.
When Rio Tinto and BHP Billiton used their supply power to flood the iron ore market they contributed to price falls that sent junior competitors to the wall and devalued a resource owned by the people of WA.
The Greenbushes lithium mine, 90km south-east of Bunbury, is the world’s biggest.
Analysts at Morningstar reckon Talison, the joint venture between China’s Tianqi and US firm Albemarle, is the gorilla in the room.
“As electric vehicle penetration increases… we anticipate Albemarle and its Talison joint venture will be able to fulfil a sizeable portion of incremental demand,” analysts noted recently.
Mr Tinley needs to be mindful that Tianqi and Albemarle can influence the supply and price of this resource in ways BHP and Rio can only dream of.