Call him Shane. In 2022 he flew in on a fortnightly roster to help commission Train 2 of Albemarle's lithium hydroxide refinery at Kemerton, south of Bunbury — a plant the state government had spent three years promising would turn Western Australia's raw spodumene rock into a finished battery chemical, and the South West into more than a place ore passed through. Two years later, in July 2024, that same train was switched off; Shane was one of roughly 300 workers Albemarle stood down as the lithium price the plant had been built around kept falling. He picked up contract work at Mineral Resources' Bald Hill mine in the Goldfields, driving haul trucks through a spodumene pit that had briefly been one of the most profitable mines in the state. In November 2024, Bald Hill went into care and maintenance too, and another roughly 300 names joined the list of people no longer needed. Shane is a composite, standing in for a documented pattern rather than one named worker — but the pattern kept repeating: in February 2026, Albemarle idled Kemerton's last operating train altogether, its chief executive citing a "structural cost gap" that no amount of state support had closed (Albemarle Corporation, media release, 11-Feb-2026). Twice in eighteen months, the same class of West Australian tradesperson rode a commodity price most of them had never bought or sold a tonne of — first up, then down, then, by the time Bald Hill's owner announced a restart in May 2026, up again.
What the government did
Western Australia's lithium bet did not begin with Roger Cook, who became Premier in June 2023, but he inherited it, expanded it, and has staked much of his government's economic diversification story on it. In October 2019, the McGowan government announced it would cap the royalty payable on lithium hydroxide and lithium carbonate at 5% of the value of the spodumene concentrate used to produce them, rather than of the finished chemical — a deliberate discount, delivered through the royalty system, designed to make refining lithium inside Western Australia cheaper than shipping the raw ore offshore for someone else to process (Mining Amendment Regulations (No. 3) 2020 (WA), commenced 27-Mar-2020; Department of Mines, Industry Regulation and Safety, "Lithium royalty amendments now in place"). Two lithium hydroxide refineries were built on the back of that policy and the existing Kwinana industrial strip: Covalent Lithium, the Tianqi Lithium Energy Australia and IGO joint venture at Kwinana, and Albemarle's Kemerton plant near Bunbury, built with WA miner Mineral Resources as a minority partner. Western Australia now produces more than 40% of the world's lithium (approx.), on the state government's own account, and it has pointed to the two refineries as proof it can do more than dig up the ore and load a ship (WA Government, Department of Energy and Economic Diversification, "WA's battery and critical minerals industry," accessed 2026).
The Cook government has kept building on that platform. Its Battery and Critical Mineral Strategy 2024-2030, released 22-May-2024 and backed by a $500 million allocation from the state's Strategic Industries Fund, restated the ambition to move the state "up the value chain" from raw concentrate to processed battery chemicals; government figures released alongside it showed combined sales of copper, cobalt, nickel and lithium climbing from $6.1 billion in 2019 to $22 billion in 2023 (WA Government, media statement, 22-May-2024). When the price collapse hit hardest, the government did not let the mines and refineries fail quietly. On 27-Nov-2024 it announced a $150 million Lithium Industry Support Program: around $90 million in fee waivers from state trading enterprises for the refineries during their ramp-up phase, a further $9.37 million in waived port and tenement fees for miners, and a $50 million interest-free loan facility for producers, all billed as temporary support for an industry the government said employed around 11,000 West Australians (WA Government, "Lithium Industry Support Program to protect critical WA jobs," media statement, 27-Nov-2024).
The strongest case
A resource state backing a genuine, geology-based advantage through a savage but ordinary price cycle
Judge the decision at the point it was made, not against the 2024 price chart, and Western Australia's lithium bet looks like exactly what a resource state should do with what it has. This was not a speculative technology punt; Western Australia holds some of the highest-grade, lowest-cost hard-rock lithium deposits on Earth, led by Talison's Greenbushes mine, and the state's share of world lithium supply, over 40% by its own account, is geology and decades of mining infrastructure, not a subsidy fiction. The 2019 royalty change was cheap, well-targeted policy: it did not hand miners cash, it simply removed a tax disincentive to processing the ore onshore, and it worked well enough to get chemical product out the gate — Covalent Lithium shipped its first battery-grade lithium hydroxide from Kwinana in July 2025, proof the process and the workforce can do it after years of technical delay (Covalent Lithium, media release, Aug-2025). And when the price cycle turned brutal, the government's response was temporary and conditional rather than an open-ended bailout: loans repayable once spodumene cleared US$1,100 a tonne, fee waivers with a stated end date. By May 2026, with prices recovering hard enough that Mineral Resources was restarting Bald Hill and rehiring around 370 workers, the government's patience through the trough looks, on the numbers available today, vindicated rather than reckless.
The evidence
Layer the state's own figures over that steelman case and a much rougher ride appears underneath it. Western Australia's lithium royalty income went from $261 million in 2021-22 to $910 million in 2022-23 — more than tripling in a single year, briefly overtaking gold as the state's second-highest mining royalty earner behind iron ore's $9.286 billion that year (WA Government budget data, cited in Stockhead reporting, 2023). It then fell 24% to $710 million in 2023-24, and collapsed a further 65% to just $249 million in 2024-25 — a fall of roughly three-quarters from the 2022-23 peak in two years — before climbing an estimated 85% to $460 million in 2025-26 as prices recovered (WA Battery and Critical Minerals Profile, WA Treasury Corporation, Nov-2025; WA 2026-27 Budget, Budget Paper No. 3, May-2026). Four financial years, four almost unrecognisably different numbers for the same revenue line.
The closures behind those numbers were not confined to one company or one town. Mineral Resources put its Bald Hill mine into care and maintenance in November 2024, affecting around 300 workers; Arcadium Lithium announced in September 2024 it would mothball Mt Cattlin, near Ravensthorpe, affecting up to 300 more; Pilbara Minerals placed its Ngungaju processing plant at Pilgangoora into care and maintenance around the same time; and Albemarle idled one of Kemerton's two production trains in July 2024, cutting around 300 jobs, before idling the plant's last remaining train entirely in February 2026 and cutting a further 250 (mining press reporting, 2024; Albemarle Corporation, media release, Feb-2026). Even Talison's Greenbushes mine — the largest, lowest-cost hard-rock lithium operation in the world, and the deposit every other WA project is measured against — cut its spodumene production guidance by around 100,000 tonnes in January 2024 as inventories piled up and prices kept falling (mining press reporting on Talison Lithium guidance, Jan-2024). None of these were marginal, high-cost operators being weeded out. They were the state's flagship lithium assets, cut back or switched off within about eighteen months of the price collapse taking hold.
The critique
None of this makes the original bet wrong, but the government's own record now answers the question a diversification strategy exists to answer, and the answer is not reassuring. The point of building a second pillar next to iron ore was to reduce Western Australia's exposure to a single commodity cycle. Instead, the state added a second commodity that, on its own record, swings harder than the first: iron ore royalties fell by an estimated 17% in the state's worst recent year (WA Iron Ore Profile, Jan-2026); lithium royalties fell by 65% in a single year and by roughly three-quarters from peak to trough in two. Diversifying into a second commodity that falls harder than the first does not reduce a resource state's cyclical exposure — it can concentrate it, especially in the specific regional communities, Ravensthorpe, the towns around Kemerton, the Goldfields camps that feed Bald Hill, that had only just built local economies around lithium jobs when the cycle turned.
The downstream-processing bet fares worse again. The entire case for the 2019 royalty change and years of ministerial rhetoric about moving "up the value chain" rested on refineries like Kemerton actually running. By February 2026, the refinery the government had championed for years as proof Western Australia could out-process its rivals was sitting entirely idle, its owner citing a structural cost gap that no royalty concession had closed. Two years of fee waivers and loan facilities kept mines and refineries alive through the worst of the price trough, at real cost to the state's own trading enterprises' revenue, but they did not change the underlying economics that idled Kemerton's last train regardless. And the support itself has proven harder to wind back than advertised: the November 2024 package was billed as temporary, running to the end of 2026, but on 21-Apr-2026 the government extended fee waivers for Kwinana's and Kemerton's operators through to December 2027, before the original support had even expired (WA Government, "Cook Labor Government extends support for WA lithium industry," media statement, 21-Apr-2026). A public subsidy pitched as a bridge through one cycle is starting to look like a standing feature of how Western Australia keeps its second pillar upright.
Western Australia built lithium as the second pillar under its economy; on the state's own numbers, that pillar has swung harder than the one it was meant to steady.
The risk to the future
A public safety net for a private commodity cycle, with no guarantee the next boom ends differently
The 2025-26 recovery is real: spodumene prices have risen sharply, Bald Hill is restarting with around 370 jobs, and Mineral Resources has lifted its production guidance at Wodgina and Mt Marion. But nothing about this cycle guarantees the next one breaks a different way. Global lithium supply capacity built during the 2022-23 boom, in Western Australia and well beyond it, is still expanding into whatever demand growth arrives — the same dynamic that produced the roughly 90% price fall the state has just lived through. If the pattern repeats, Western Australia now has a second precedent, after iron ore, for treating a mining company's cash-flow problem as a call on the public purse: fee waivers, interest-free loans, and a support scheme extended before its original end date had even arrived. The risk to the future is not that lithium fails to recover; on the current numbers, it already has. It is that a state government which has not built a savings buffer against its first commodity cycle is now managing a second one, more volatile than the first, on the same instinct — support it through the downturn, bank the royalties in the upturn, and hope the next bust lands on a more forgiving budget than this one did.