Call her Priya. In 2022, at the height of the lithium boom, she left an office job in Perth's CBD for a process-technician role at the lithium hydroxide refinery going up in Kwinana, the industrial strip roughly thirty kilometres south of the city. The plant, a joint venture between China's Tianqi Lithium and Perth-based IGO, was the physical proof of a promise state governments had been making for years: that Western Australia would stop merely digging up its minerals and start processing them into the battery-grade chemicals the world's electric-vehicle makers actually pay for. Priya is a composite, standing in for a real workforce rather than one named worker, but the plant and its trajectory are not: it finally shipped its first battery-grade lithium hydroxide in August 2025, years behind its original schedule, and within months its Australian part-owner had written off more than half a billion dollars against it and mothballed the plant's planned expansion. The refinery Priya was hired to help run is the closest thing Western Australia has to a finished example of the government's central economic promise — value-add the resources, don't just ship the rock — and even it has struggled to make money.
What the government did
Diversify WA is not a Cook government invention. The framework was first published in July 2019 under the McGowan government, formalising a long-standing ambition to reduce the state's reliance on any single sector (Government of Western Australia, Diversify WA: Strong Economy, Creating Jobs, Diverse Industries, tabled paper, Jul-2019). McGowan followed with a $1.3 billion diversification package in May 2022, a $100 million Investment Attraction Fund the same year, and, in April 2023 — weeks before he resigned as Premier — the flagship Future State: Accelerating Diversify WA investment prospectus, which named eight priority sectors: energy; tourism, events and creative industries; international education; defence industries; mining and mining equipment, technology and services (METS); space industries; health and medical life sciences; and primary industries (WA Government media statement, Targeted investment opportunities to drive WA's economic future, 5-Apr-2023).
Roger Cook became Premier in June 2023 and has kept the framework running rather than replacing it. His government released a refreshed Battery and Critical Minerals Strategy on 22-May-2024, the first update since 2020, aimed at moving the state further up the value chain from raw spodumene concentrate toward processed battery chemicals (Government of Western Australia, Western Australia's Battery and Critical Minerals Strategy 2024–2030, 22-May-2024). In December 2024 it published the first Diversify WA progress report issued under Cook's own government, and in June 2025 it added a $500 million top-up to the Strategic Industries Fund as part of a $1.4 billion industrial-precincts package (WA Government media statement, $1.4 billion investment to help secure a future that is Made in WA, 19-Jun-2025). Separately, in October 2024 the Cook government signed a Cooperation Agreement with the Commonwealth to develop the Henderson Defence Precinct south of Fremantle as the hub for continuous naval shipbuilding and AUKUS submarine sustainment; in September 2025 the Commonwealth committed a further $12 billion toward building it (Australian Government Department of Defence, media releases, 16-Oct-2024 and 14-Sep-2025).
The strongest case
A resource-rich state has good reason to build on what it already does better than anywhere else
The government's underlying logic is not unreasonable. Western Australia holds some of the world's largest deposits of the minerals a decarbonising, re-arming world actually needs — it already supplies around half the world's lithium — and processing more of that ore at home, rather than shipping the raw rock to be refined elsewhere, keeps more of the value and more of the jobs onshore (WA Government, Diversify WA 2024 Update, 3-Dec-2024). That is a genuinely different strategy from simply digging faster: non-mining business investment reached a record $36 billion in 2023-24, lithium export values grew more than twenty-fold between 2020-21 and 2022-23, and battery and critical-minerals employment rose 14% in a single year (same source). Defence is arguably the strongest example yet. AUKUS submarine sustainment was never going to land anywhere but a state with an existing naval base and a mining-scale industrial workforce to draw on, and the Commonwealth's $12 billion commitment to Henderson — on top of the Cooperation Agreement Cook's government signed a year earlier — locks in a genuinely different, decades-long revenue stream that has nothing to do with the iron ore price. Playing to an existing comparative advantage, rather than chasing an industry Western Australia has no natural claim to, is a defensible starting point for any diversification strategy, and it is a more coherent one than most resource states have managed.
The evidence
Set against that ambition, the underlying concentration has not meaningfully moved. Mining and its associated equipment, technology and services businesses generated 39% of Western Australia's gross state product in 2024-25 (Government of Western Australia, Invest and Trade WA, Mining & METS sector overview, 2024-25 data). The sector paid $10.6 billion in royalties to WA Treasury and attracted $33 billion in capital investment that year — around 62% of Australia's entire mining and petroleum investment — while mineral and petroleum sales reached $220 billion (WA Department of Mines, Petroleum and Exploration, Western Australian Mineral and Petroleum Statistics Digest 2024-25, 11-May-2026).
Employment tells a different but related story. The same Statistics Digest counts 138,257 on-site full-time-equivalent positions in mining and mineral exploration in 2024-25 — a record — against 1.64 million West Australians in work as at February 2025 (ABS Labour Force data, cited in WA Government media statement, WA dominates with strongest employment and population growth, 20-Mar-2025). On those two figures, mining's own workforce directly accounts for roughly 8% of the people the state employs (approx., different reference periods), even as it generates almost four-tenths of everything the state produces. That gap is precisely the diversification problem in miniature: an industry this capital-intensive can fund the budget without employing the breadth of West Australians a modern, growing state needs jobs for, which is the strongest jobs-based argument for building other industries alongside it, whatever their commodity exposure.
The critique
Seven years after the first Diversify WA framework and two years after its own refreshed Battery and Critical Minerals Strategy, the government's most advanced test case for value-adding the resources is losing money at a scale that dwarfs the diversification budget meant to build more of them. The Kwinana lithium hydroxide refinery — a joint venture between Tianqi Lithium and IGO known as Tianqi Lithium Energy Australia, designed for 24,000 tonnes of annual capacity — finally produced its first battery-grade product in August 2025 (Covalent Lithium, company announcement, Aug-2025). But IGO's own results told a starker story: for the half-year to December 2024 alone, its share of the joint venture's losses came to $602.2 million, contributing to a $782 million net loss for IGO; the venture's full-year loss for 2024-25 reached $955 million, and IGO has since fully written off its 49% stake, at a cost of $605 million (IGO Limited, ASX-reported half-year and full-year results, as reported by Mining.com and other financial media, Feb-2025 onward). In January 2025, IGO and Tianqi jointly agreed to halt all further work on the refinery's planned second production line. This is not a project that failed to get built — it is the state's flagship example of downstream processing, running, and still losing close to a billion dollars in a single year, because global lithium prices collapsed faster than the plant could be commissioned.
Fortescue's Green Metal Project tells a similar story at a smaller scale. The pilot plant under construction at Christmas Creek is designed to produce around 1,500 tonnes of green iron a year once operating — a target Fortescue has already pushed back from 2025 to 2026 — from a company that exports more than 180 million tonnes of raw iron ore annually. Even if the pilot succeeds on schedule, it will process a fraction of a per cent of what the company currently ships unprocessed. Western Australia's export volumes make the same point at industry scale: 546 million tonnes of ore left through Port Hedland alone in 2024-25, almost all of it destined to be turned into steel somewhere other than Western Australia (WA Iron Ore Profile, Jan-2026). None of the government's Diversify WA documents sets a target date or a tonnage for when that changes.
The dollar figures follow the same pattern. The Strategic Industries Fund, the government's flagship vehicle for building non-mining industry, has been built up to around $1 billion since it was established — smaller than the royalties WA Treasury collects from mining in a single ordinary year, let alone the $10.6 billion it collected in 2024-25. Genuine wins exist inside the diversification numbers: non-mining investment did reach a record $36 billion in 2023-24, and AUKUS-linked defence spending is real and multi-decade. But a state whose flagship diversification vehicle is worth roughly one-tenth of a single year's mining royalties, chasing an industry — critical minerals processing — that is itself subject to the same commodity-price cycle the strategy exists to escape, has not yet demonstrated it can outrun the thing it says it is diversifying away from.
Western Australia's most advanced proof that value-adding the resources works is a refinery that lost the better part of a billion dollars in the year it finally started working.
The risk to the future
Diversifying into more mining is not the same as diversifying away from mining's price cycle
Two of the government's headline diversification sectors — critical minerals processing, and to a lesser extent defence manufacturing that draws on the same industrial workforce — sit inside or immediately alongside the mining industry, not outside it. That means a genuine commodity downturn does not spare the diversification strategy; it can hit the diversification strategy first, as the Kwinana refinery's losses through the 2023-25 lithium price collapse already show. The Henderson Defence Precinct is the clearest exception, because its revenue comes from Commonwealth defence budgets rather than commodity prices — but it is also the diversification project most exposed to a different kind of risk. A $12 billion Commonwealth commitment, on top of infrastructure that independent planning advice cited in coverage of the announcement suggests could ultimately cost around $25 billion (approx.), running over a build timeline of decades, depends on Canberra's ongoing political and fiscal appetite for AUKUS at least as much as it depends on anything Western Australia itself controls. If iron ore royalties fall as WA Treasury's own forecasts already show they will, and the state's most advanced downstream-processing bet keeps losing money, Western Australia risks entering its next commodity downturn having spent seven years and well over a billion dollars proving that diversification is difficult, without yet proving that it is possible.