The global race for lithium, and why Australia sits on a goldmine

Lithium is a soft, silvery metal that most people never see. It is hidden inside the battery of every electric vehicle, smartphone, and grid-scale energy storage system. As the world moves to electrify transport and store renewable energy, the demand for lithium is growing fast, and the countries that hold the largest reserves are discovering that they sit on something strategically valuable in ways that go well beyond the mining industry.

Where lithium comes from

Lithium is found in two main forms: hard rock spodumene deposits and lithium-rich brine lakes, called salares, concentrated in the high-altitude deserts of Chile, Argentina, and Bolivia, a region known as the Lithium Triangle. Australia holds the world's largest reserves of hard rock lithium, primarily in Western Australia, and has in recent years been the world's largest producer by volume. Processing the raw ore into battery-grade lithium carbonate or lithium hydroxide is a separate, chemical-intensive step that has historically been dominated by China, which built its refining capacity early and at scale. The result is a supply chain with mining concentrated in Australia and South America, and refining concentrated in Asia.

Why nations are competing for control

Governments in the United States, Europe, Japan, South Korea, and China all treat lithium supply as a strategic priority, because whoever controls the battery supply chain has leverage over the electric vehicle industry, energy storage, and, by extension, the pace and shape of the energy transition. The United States has passed legislation aimed at building domestic battery supply chains and reducing dependence on Chinese refining. The European Union has identified lithium as a critical raw material and is pursuing agreements with lithium-producing countries to secure supply. China, which processes a dominant share of the world's lithium, has a structural advantage that other nations are trying to replicate or work around.

The environmental and social dimension

Lithium mining is not without cost. Hard rock mining generates large volumes of waste rock. Brine extraction in the Lithium Triangle raises concerns about water use in some of the world's driest ecosystems and about the rights and livelihoods of Indigenous communities who have lived in those landscapes for generations. The International Energy Agency notes that meeting climate targets will require a significant increase in critical mineral extraction, and it has called for stronger environmental and social standards across the supply chain. Whether the green transition can be delivered with genuinely sustainable mining practices is one of the central tensions of the coming decades.

What it means for Australia

Australia is the world's largest lithium miner, which gives the country a significant position in one of the most contested supply chains of the century. The economic opportunity is substantial: lithium exports have grown rapidly and contribute meaningfully to the national trade surplus. The policy question is whether Australia captures more of the value chain by investing in domestic processing, moving from raw ore to refined battery chemicals or even battery cells, or whether it remains primarily a raw material exporter. Federal and state governments have announced programs to encourage downstream processing, but the economics remain challenging while Chinese refining capacity is so large. For Australians, the lithium boom also affects energy security: domestic battery storage could reduce dependence on imported fuel over time.

The bottom line

Lithium is the new oil in the sense that it is a chokepoint resource for the energy system the world is building. Australia is better positioned than almost any other country to benefit, but only if it can move beyond digging it up and shipping it out.

This article was compiled by AI and screened before publishing. See our editorial standards.