Although demand prospects look robust in the long-run as auto industry embraces electric vehicle, supply overhang and slack demand this year weighed on prices. The market currently has supply overhang for battery materials and lithium and cobalt prices have been falling since 2018.
The deterioration in the global economic outlook and policy factors, such as cuts to Chinese subsidies for the electric car market, are having a dampening effect on demand. This has seen some Australian projects moved to the backburner, while ASX-listed lithium miner, Alita Resources, has entered voluntary administration.
Tianqi and Albemarle cited slower-than-expected demand growth as a key factor in their decision to put the planned expansion of Greenbushes – already the world’s largest producing lithium mine – on hold. Tianqi has also paused construction of the second stage of its lithium hydroxide processing plant in Kwinana. However, over the longer term, industry players appear confident that demand will return.
Along with battery commodities, hydrogen is a clean-burning fuel under close consideration since it produces only water when consumed in a fuel cell. It can be produced from a variety of domestic resources such as natural gas, nuclear power, biomass and renewable power like solar and wind. It can also be used in a range of industries, including transport and electricity generation, and can be stored and exported.
Hydrogen technologies also offer a way of reducing emissions from steel making’s use of coal. This could see the steel industry shed its reputation as a climate threat. Western Australia has the potential to further develop an industry for renewable hydrogen, given its land and renewable energy resources.
Australia has seen some momentous shifts in the mining industry over the past 15 years.
Investment boomed in the late 2000s and early 2010s on the back of the huge number and size of oil and gas, iron ore, coal and other mineral projects. As the investment phase wound down and the operations phase ramped up, exports began their boom.
Australian exports have consistently been setting new records, driven by both volumes and prices for mining commodities, as well as tourism and education exports. Consequently, Australia recorded its first current account surplus since 1975 in Q2 2019.