The Government of Western Australia (WA) has amended the royalty regime for the state’s fast-growing lithium industry that will encourage downstream processing and manufacturing.

The government capped the royalty rate for the lithium hydroxide and lithium carbonate at 5%, where those are the first products sold and the feedstock is lithium spodumene concentrate.

The WA Government said that the royalty rates will be introduced as soon as possible.

This new royalty amendment clears up any uncertainty on lithium royalties compared to previous regimes. It will further support WA’s battery materials sector and ensure that all lithium manufacturers are treated equally.

The recent regulation involved consultation with the industry as part of the government’s Future Battery Industry Strategy.

It also fuels further downstream processing of lithium in WA.

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Western Australia Mines and Petroleum Minister Bill Johnston said: “The McGowan Government is committed to supporting Western Australia’s battery materials industry. Updating the royalty arrangements provides a fairer system for all lithium producers and will enable Western Australia to move up the battery value chain beyond mining and processing.

“This will create more jobs and encourage innovation in meeting the needs of the growing demand for electric vehicles and battery storage systems.

“Western Australia is increasingly becoming an internationally attractive destination for downstream processing and manufacturing of lithium and other battery minerals.”

In August, the WA government and agencies collaborated with science experts and a wide range of industry representatives on a new mine closure criteria for mine sites across the region.

This July, the government approved mining giant BHP’s expansion proposal for its Pilbara operations over the next 50 to 100 years.