An Australian start-up backed by the miner Rio Tinto is raising funds to develop a lithium extraction technology that could open up new reserves of the key battery ingredient and reduce the world’s reliance on China to refine the commodity.

ElectraLith, spun off from Melbourne’s Monash University, said it had successfully produced battery-grade lithium hydroxide from a variety of raw lithium types. After attracting investment from Rio Tinto and Britain’s IP Group, it now intends to raise $15mn to build its first facility for further development and commercialisation of the technology.

The start-up is one of a small number of companies developing “direct lithium extraction” technology, which could transform the sector by substantially reducing the cost of lithium mining and opening up previously unviable deposits.