An Australian company will test whether it can reduce emissions from electric vehicle batteries in a $38 million trial that could boost the nation's export potential.
Western Australia firm PLS revealed on Friday that it would build a demonstration plant to produce more efficient lithium materials after securing a grant from the Australian Renewable Energy Agency (ARENA).
The project is the second critical minerals investment by the government-backed organisation and comes amid heightened demand for EVs and home batteries due to worldwide oil shortages.
PLS, previously known as Pilbara Minerals, confirmed it would build a demonstration plant to test electric kiln technology that could significantly cut carbon emissions from hard-rock lithium processing using renewable energy.
The plant is expected to produce its first materials before the end of September and, once fully operational, will process 3000 tonnes of lithium phosphate per year.
The company signed an offtake agreement with Chinese firm Ningbo Ronbay New Energy Technology for the trial and would collect feedback about the material to assess whether it could be part of a longer-term commitment, PLS chief executive Dale Henderson said.
''Global battery supply chains are still taking shape in this high-growth market,'' he said.
''Over time, the most competitive and technically viable pathways will determine where long-term value is captured.''
Australia is the world's largest supplier of lithium along with the mineral spodumene, which is used to create chemicals for batteries used in EVs and home energy storage.
Despite high demand for the material, Australian companies typically do not process it before sale, potentially missing out on income, ARENA chief executive Darren Miller said.
''Australia supplies more than half of the world's spodumene but refines only a small portion at home,'' he said.
''This project is an important step in building Australia's capability to produce low-emissions battery materials onshore and to capture more value from the global transition to clean energy.''
The funding comes two months after ARENA invested $5 million in Queensland start-up Banksia Minerals to test low-emission copper processing.
Global demand for lithium-ion batteries grew by 20 per cent in 2025 to represent a market worth $US150 billion, according to a report from the International Energy Agency.
But demand for the resource is expected to further rise sharply as oil supplies from the Middle East remain under threat, and as EV use surges in Australia and abroad.
