The economic potential for a downstream battery industry in Western Australia

The Issue

Despite WA being home to over half of the world’s lithium production, most of the resource is exported overseas where it is processed and used to manufacture batteries.  WA has only recently started to develop a ‘midstream’ processing industry. Battery manufacturing is in its infancy.

Synergies was engaged by the Department of Jobs, Tourism, Science and Innovation (JTSI) to assess the future demand for energy storage in WA and evaluate the economic potential for a local battery assembly and manufacturing industry to service this demand.

The Solution

The analysis included the following elements:

• Desktop research: A review of academic, industry and government publications to understand the battery supply chain and industry context
• Extensive stakeholder consultation: Conducted scoping interviews with subject matter experts to identify broad opportunities for industry development
• Battery demand forecasting: Estimated the energy storage requirements across multiple WA industry sectors out to 2040 and evaluated the proportion of this demand that is likely to be met through Lithium ion (Li-ion) batteries or redox flow batteries.
• Scenario development: Facilitated a workshop with key industry stakeholders, which defined several downstream battery industry scenarios for WA, including a 4 GWh gigafactory, a local battery assembly industry (delivering a total output of 1.2 GWh per annum), and a battery recycling facility capable of reprocessing 160,000 tonnes of waste batteries.
• Economic modelling: Assessed the economic and employment impacts of each scenario using a regional input-output model.

The Results

Based on best available information, Synergies assessed that the annual demand for Li-ion batteries in WA, excluding passenger EVs, will grow to approximately 3 GWh per year by 2030, then reaching 5.4 GWh per year by 2040.

The largest sources of Li-ion battery demand over the period 2030-2040 are expected to be attributable to the mining sector (for powering plant and recharging battery operated heavy vehicles), followed by road freight (battery operated trucks) and electricity grid storage.

This level of demand could support a local downstream battery industry. WA is well-positioned to attract a major cell manufacturing proponent as the state possesses a number of comparative advantages.

However, developing a viable downstream battery manufacturing industry is not without challenges. WA must compete with incentives offered by other governments, both interstate and overseas. The availability of skilled labour, such as chemical engineers and technicians with expertise in advanced manufacturing, may present a challenge. Transporting battery packs for export could also prove problematic due to fire hazards.

Conclusion

There is a relatively short window of opportunity in which to establish a battery industry in WA. Noting the significant support packages offered by governments in other, international jurisdictions, it is possible that the ‘early mover’ battery manufacturers will be enticed to build facilities elsewhere – and once this happens it will be considerably more difficult for WA to position itself as a viable competitor in the global market for batteries.

Synergies identified a suite of actions that the state government could explore to enable a commercially viable downstream industry to develop.