Tianqi starts lithium battery chemical production in Western Australia

MELBOURNE, Sept 11 (Reuters) - China's Tianqi Lithium has begun production of lithium hydroxide at its Western Australian plant this week, it said, as it flagged a delay to a second phase expansion amid a downdraft in prices for the battery chemical.

The plant in Kwinana, south of Perth, which is slated to be the world's largest lithium hydroxide plant outside of China, will produce 48,000 tonnes per year of the battery grade chemical once its second stage ramp-up is complete.

"All of our focus for the coming months is on getting Stage 1 into steady production and all resources have been channelled towards this," said General Manager Phil Thick in a statement on Tuesday.

The initial phase one ramp-up to 24,000 tonnes is expected to take 12-18 months from now.

"Once we have achieved this, we will return our focus to completion of Stage 2 as customer demand continues to build," Thicke said.

Tianqi in 2017 had said it expected phase two to be commissioned by the end 2019.

The plant comes online amid an extended slump in prices for battery raw materials after Beijing altered its subsidies to electric vehicle makers, which was exacerbated as a rise in global trade tensions also hit demand.

Miners in Australia, which account for roughly half of the world's mined lithium supply, have said they see little respite from the difficult market conditions through year-end.

Tianqi sources its raw material from the state's Greenbushes lithium mine, run by Talison Lithium — a joint venture between it and Albemarle Corp of the United States.

"We expect significant growth in the lithium market, driven primarily by electric vehicles and energy storage, over the next ten years and with the Kwinana plant we are very well placed to take significant advantage of that," President of Tianqi Lithium Vivian Wu said in a statement. (Reporting by Melanie Burton; editing by Uttaresh.V)