KALGOORLIE, Aug 10 (Reuters) - Australian miners are ramping up exploration for lithium even as prices dip, betting on renewed strength in the raw material used for rechargeable batteries.
Australian miners' enthusiasm for lithium projects appears undimmed by sliding prices as they expand their exploration and development efforts on the back of expected strong demand for battery chemicals.
Australia accounts for around half the world's supply of lithium where it is mined from hard rock deposits, with the rest of the world's supply found below salt lakes, mostly in Argentina, Bolivia and Chile.
A flurry of new hard rock projects that are now beginning to ship have been blamed for a 44 percent drop in lithium carbonate prices this year.
Delegates at the Diggers and Dealers mining conference in Kalgoorlie, Western Australia, said they were turning their focus to growth via exploration, and were expanding into lithium.
"We are very comfortable with our debt position we are looking to reallocate towards growth," said Elizabeth Gaines, CEO of world No. 3 iron ore miner Fortescue Metals.
"We have a lot of very talented people who have worked in other commodities and we have been drilling for lithium. For us its more its more about scale. Our exploration activities are focused on identification and if we think its something of sufficient scale then wed look to develop it ourselves."
Independence Group, which already has battery-related interests via its Nova nickel mine in Western Australia, is increasing its exploration and plans to grow its presence in the battery business.
"Our mainstay would be copper, nickel cobalt," chief executive Peter Bradford told Reuters, "(but) we have also got our exploration guys looking for high-quality, world-class lithium projects."
Independence Group is investing A$51 million over the 2018 financial year in exploration and has been snapping up nearby mining licenses since the commodity price crash of 2016 and has increased its landholding by 400 percent.
China's new energy vehicle sales are expected to grow by 40 percent in 2018, according to an industry body, after the country's traditional automotive market slowed sharply in 2017.
Pilbara Minerals, which is planning to more than double capacity of its Pilgangoora lithium mine in Australia's north west, expects the lithium market to recover by early next year.
"People want to blame the increase in spodumene supply for the price coming off in China and I just do not agree with that thesis," managing director Ken Brinsden told reporters. Spodumene is a lithium source mineral.
Brinsden said lithium carbonate prices had fallen because of a step change in China's subsidies to favor new technology that allowed battery-powered vehicles to travel further on a single charge, as well a burst of low-quality supply from Australian salt-lake lithium producers.
"They've had this little burst of new production coming through and they just dumped it into the market and its really affected the price."
(Reporting by Melanie Burton Editing by Eric Meijer)