Ken Brinsden Advocates for Strategic Pricing to Boost Western Lithium Production

Ken Brinsden, a key figure in the lithium industry, has proposed the introduction of a strategic pricing system akin to Australia's former wheat desk to aid the critical minerals sector and help it compete with China's market dominance. Speaking at the Diggers and Dealers conference, Brinsden suggested that setting a stable price for lithium and other critical minerals could spur investment in upstream development.

Brinsden, who led Pilbara Minerals and is now at the helm of Patriot Battery Metals, emphasized the need for a structured approach to pricing that would provide a reasonable return for rare earth and lithium companies. "If it's truly strategic, you would set that price and buy that product to facilitate the investment required upstream," Brinsden explained, noting the challenges posed by China's market practices.

The wheat desk, a single-desk marketing system, regulated Australian wheat exports from 1939 to 2008. Under this model, growers' returns were pooled and prices averaged, offering a controlled and predictable market environment. Brinsden believes a similar approach could bolster the Western world's position in the critical minerals market, where China currently holds an 80% share of global lithium chemical production despite possessing only a small portion of the world's lithium reserves.

Western Australia is home to significant lithium reserves, including Pilbara Minerals' Pilgangoora mine and the Greenbushes deposit. Brinsden advocates for building chemical processing facilities in proximity to these mines to enhance competitiveness against China's established supply chain.

"China doesn't have a competitive advantage in raw materials; it's our access to lithium resources in the West that we should capitalize on," Brinsden stated. He stressed the importance of creating a cohesive supply chain strategy to reduce dependency on China, a conversation he noted is gaining traction in the industry.

Brinsden also highlighted the need for government intervention to support supply chain development, a step he argues should have been taken a decade ago. He pointed out China's head start in the market as a significant challenge for Western industries, including the automotive sector, which heavily relies on lithium for electric vehicles.

Discussions on lithium royalty relief, initiated by Liontown Resources' Tony Ottaviano at the conference, resonated with Brinsden, who was involved in similar efforts during his tenure at Pilbara Minerals. The 2020 lithium royalty relief was introduced to counteract price declines, and Brinsden sees merit in this model for sustaining the fledgling industry.

Brinsden expressed that achieving governmental support for such measures is often slow, noting, "It takes a long time to get the politicians across the line." He emphasized the necessity for flexibility and timely intervention in the rapidly evolving industry.

Brinsden's call for a strategic pricing system reflects the urgency for Western nations to catch up with China's stronghold in the lithium market, urging swift action to ensure sustainable growth and development in the critical minerals sector.