Construction has started on what is expected to be the world's largest lithium refinery.

The $1 billion Kemerton-based refinery, led by United States company Albemarle, should be able to produce 100,000 tonnes of lithium hydroxide each year.

Albemarle’s David Klanecky said the materials are in demand across the globe for things like batteries, greases and ceramics.

“If you look at the global demand for lithium last year across the globe in every application, [it was] around 270,000 tonnes,” he said.

“That's a third of the capacity that was last year the global demand for the entire market.”

Premier Mark McGowan celebrated the progress too.

“Going up the value chain in lithium means that it improves the prospects of us eventually being able to build batteries here in WA,” he said.

“We know that's a long way off, but we have to start the process towards getting to that point.”