In the early '90s, as the Australian car-making industry was getting sucked into its death spiral, a tin mine in Western Australia found itself with an abundance of a low-value mineral: lithium.
"We realised we had a hell of a lot of lithium and didn't have much to do with it," recalls Mike King, who was the mining manager at the Greenbushes mine at the time.
"We had lithium everywhere. We were pouring it out the tailings."
Thirty years later, Australia no longer makes cars, but lithium is being touted as the reason for the resurrection of the automotive industry.
The price of lithium has increased many times over, and those WA reserves are being rapidly dug up and shipped overseas, to be turned into the rechargeable batteries that are an indispensable element of the world's effort to decarbonise.
Australian minerals are in most of the world's new electric vehicles (EVs).
So, should Australia make EVs of its own?
Renewable energy superpower? Get in line
For those who saw the Australian auto-manufacturing industry wither and die over decades, the proposal to start it back up may come as a surprise.
The idea gained momentum early last year, with an election-night speech and a think-tank report.
The report came from the Australia Institute in February, laying out the case for "rebuilding vehicle manufacturing in Australia".
Then in May, Anthony Albanese in his victory speech declared: "We can be a renewable energy superpower."
About four months later, in September, Tesla chair Robyn Denholm publicly backed the idea, saying Australia "can and should" manufacture EVs, due to its abundant supply of battery metals.
Days later, energy minister Chris Bowen said, "We can make electric vehicles in Australia. Not only do I think that, so do the EV manufacturers."
The case for EV manufacturing comes down to value-adding: Australia is the world's largest lithium producer, but captures a tiny fraction (possibly as little as 0.5 per cent) of the ultimate value of the mineral it exports.
Almost all of the tens of thousands of tonnes of lithium Australia ships every year is a lightly processed lithium-bearing ore called spodumene.
And most of that ore is waste rock: only about 6 per cent is lithium.
Australia's current role in the global clean energy economy is as a giant quarry, said Peter Newman, a professor of sustainability at Curtin University.
"We've been digging up enormous quantities of lithium, and we send it away and all the clever stuff has been happening overseas," he said.
Eventually, the lithium may end up back in Australia, in the form of electric vehicles, or home energy-storage batteries.
Three-quarters of the lithium in Tesla batteries worldwide comes from Australia.
Hence the argument for local manufacturing. Cars are at the top of a long chain of value-adding, from mining to processing to battery-making.
But there's a catch: other governments have also seen this opportunity. They want to be adding value, to be making the batteries and EVs to sell to the world.
So lots of countries want to be green energy superpowers, said Shannon O'Rourke, CEO of the Future Battery Industries CRC.
"We're seeing very aggressive moves by our allies and rivals to capture the battery industry."
These moves include the US's Inflation Reduction Act, passed in August, which provided billions of dollars of incentives for US clean energy businesses. Europe is looking at similar policy.
Australia could be outmanoeuvred: the EV and battery factories will be built in other countries before we get around to doing it here.
"The US and Australia are locked in a clean-energy arms race," Clean Energy Council CEO Kane Thornton said this week.
"We've already fallen behind."
Finding ways to value-add
The idea of Australia value-adding to the lithium supply chain is a remarkably recent one.
It can be traced back to 2018, with the publication of the first major report making the case for local battery-making.
Published by Regional Development Australia (RDA), the Lithium Valley report was initially Professor Newman's idea.
The report argued that Australia had huge reserves of lithium, which was in increasingly high demand. Instead of Australia simply shipping the rock overseas, why not make the batteries here?
"It all started with Peter Newman," said Colleen Yates, CEO of RDA's Perth office.
"We're pretty much the periodic table of the energy metals. We have to stop breaking big rocks into little rocks and shipping them offshore."
The following year, in February 2019, Professor Newman, Ms Yates and several others formed a delegation to Brussels to spread the message: we have lithium.
At the time, Australia was the second-largest producer of the metal in the world, behind Chile.
But, surprisingly, this hadn't registered with European policy-makers, or large vehicle and battery manufacturers.
"We were just astonished by how little people understood about Australia's role in critical minerals," Professor Newman said.
Everyone thought the lithium came from China, Ms Yates said.
"We said, 'What you're not realising is China is getting the resources from Australia and manufacturing them in China.'"
Four years later, the situation is very different.
Ms Yates, on behalf of Regional Development Australia's Perth office, is being inundated by companies in Europe and elsewhere "very desperate to find lithium supplies".
But even though Australia has large reserves of lithium, it was often hard to satisfy those requests, she said.
The big reason for this was a bottleneck of local lithium processing.
As it happens, this bottleneck is also what's standing in the way of Australian EV manufacturing.
Breaking the bottleneck
EVs are giant battery packs on wheels.
And to make batteries, you need processed lithium.
In May 2022, Australia's first lithium hydroxide processing plant opened in Kwinana, about half an hour south of Perth.
Here, lithium-bearing ore is converted to lithium hydroxide, turning tonnes of rock into a relatively small amount of white powder.
"This is a boutique product," Professor Newman said.
"One container-load of lithium hydroxide creates thousands of batteries."
Also known as secondary processing, the conversion captures up to a quarter of the ultimate value of the lithium.
Of the world's four largest lithium hydroxide producers, three are setting up shop in WA (often in joint ventures).
China-based Tianqi has the Kwinana processing plant up and running, while US-based Albemarle and Chile's SQM are each building their own processing plants nearby.
But it's unlikely any of this lithium hydroxide will end up in Australian-made EVs.
Put simply, Australia has nowhere near enough lithium processing facilities, said RDA's Colleen Yates.
And the lithium that is processed in Australia is tied up in offtake agreements — contracts for future purchases — as established automakers and battery producers scour the world for supplies of the material.
Tianqi Lithium, for instance, has an offtake agreement with Swedish battery-maker Northvolt, which has contracts with Volvo, BMW and Volkswagen.
"Right now, a lot of places are wanting Australia to do what it's always done, break big rocks into little rocks and ship them off, and then they end up going elsewhere to be processed," Ms Yates said.
"Are we going to continue doing what we've always done?
"Or are we going to look at trying to make sure that those offtake agreements ... are about manufacturing here in Australia?"
How close are we to building EVs?
Despite these issues, Australia is already making batteries and building EVs on a small scale.
Companies like Feline, Gelion and Redflow are making battery cells, with others, such as Redearth and Powerplus, constructing storage systems.
Victoria-based SEA Electric recently partnered with a European company to supply 8,500 electric Toyota Hilux and Landcruiser vehicles to the mining industry.
The conversion of internal combustion engine vehicles will take place in SEA's Dandenong factory.
Australia has the technical ability to make EVs, said Shannon O'Rourke from the Future Battery Industries CRC.
"We are closer than most people think to having an end-to-end value chain in Australia.
"What we don't have is global scale, and we need scale to be cost-competitive.
"If you're not a big player, then it is hard to afford the research and development to maintain pace with global leaders."
That is, Australia has the same manufacturing problem it's always had: a small domestic market.
And with countries such as the US offering tax credits for the purchase of locally made EVs, it may be hard for Australia-made EVs to compete overseas.
An Australian EV brand?
But none of this fazes Professor Newman.
If the big car-makers can't be convinced to manufacture in Australia, then Australia should develop its own car brand, he said.
"You can’t wait for all the other [battery-making] industries to be developed," he said.
"If you have to wait for those other industries, you'll never get there."
He envisions a car made from Australian iron, alumina, copper, lithium and other locally sourced materials.
Australia is the only country with all 11 critical minerals required for EV batteries.
The iron ore would be refined using green hydrogen. The cars would be assembled at plants running on renewables.
"We’re going to have a fully net-zero supply chain, all the way from rocks through to cars," he said.
To break the battery-lithium-supply bottleneck, a consortium of Australian clean energy businesses should simply build its own processing facility, he said.
"There's no shortage of lithium and lithium hydroxide. It's just a question of copying the practice established in Kwinana."
In its submission (published last week) to the National Electric Vehicle Strategy, Tesla made a similar point:
"If Australia is to progress further downstream into manufacturing cathodes, cells and vehicles, it is imperative that lithium refining be scaled rapidly."
In its submissions, the Australian Industry Group poured cold water on the EV manufacturing idea, citing reasons why the internal combustion engine (ICE) car-making industry failed:
"The reasons for the exit of light ICE assembly remain relevant and fatal to the prospect of EV assembly proposals: a small local market; inability of a small number of assemblers to sustain the depth of local supply chain needed to sustain production with high local content; relatively high labour costs; and the vagaries of our volatile exchange rate."
RDA's Colleen Yates had a similar opinion.
"I just honestly don't think that Australia should be looking at producing electric vehicles," she said.
Australia should focus on producing batteries for grid-energy storage systems, rather than entering the fiercely-competitive global EV market, she said.
"There's a whole bunch of other stuff that we can probably better be spending our money on."
A missed opportunity?
Mike King is now retired, but lives close enough to the Greenbushes mine that he can hear the trucks at night.
"I just watch the lithium go from strength to strength," he said.
In 2014, as the global lithium market heated up, the WA-based mine owner Talison Lithium entered into a joint venture partnership with China's Tianqi and US-based Albemarle.
The world's largest hard-rock lithium mine is now entirely foreign owned.
Tesla estimates worldwide production of refined lithium must increase 25-fold by 2035 to meet global decarbonisation goals.
When the price of lithium surged a few years ago, Mr King couldn't believe the mineral they used to throw away had become so valuable.
"And I was totally wrong," he said.
"I think s**t — I made a mistake there, didn't I?"
