The US company is planning to build the facility in the Kemerton industrial park on the outskirts of Bunbury, a coastal town 180km south of Perth.
In April last year, Albemarle signed a two-year option to lease a site at Kemerton and submitted a plan to the EPA in November.
It is proposed that the Kemerton plant will produce up to 100,000tpa of lithium hydroxide from five 20,000tpa process trains.
That would make it double the size of Tianqi Lithium's A$717 million lithium plant under construction at Kwinana, south of Perth.
The construction of the trains will be staged over 10 years, with Albemarle targeting construction of the first to begin this year.
Albemarle owns 50% of the Talison Lithium, operator of the Greenbushes mine.
Greenbushes is currently the focus of a A$320 million expansion, with Talison already studying a further lift in output.
Albemarle CEO Luke Kissam said on the company's earnings call last month that it was aiming to commission the first 40,000t of capacity at the Kemerton hydroxide facility in 2021.
EPA chair Dr Tom Hatton said the proposal was environmentally acceptable.
"Following a comprehensive environmental assessment process, we concluded this manufacturing plant proposal could proceed, subject to a flora and vegetation monitoring and management plan to minimise the potential impact on threatened flora and fauna, most notably Carnaby's black cockatoo, forest red-tailed black cockatoo and Baudin's black cockatoo," he said.
"Albemarle will also be required to develop a water management plan, to ensure quality and quantity of offsite surface and groundwater is maintained throughout construction and operation of the plant, as well as an offset strategy and greenhouse gas reporting."
The EPA report is open for a two-week public appeal period, closing June 29, before WA Minister for the Environment Stephen Dawson makes the final decision.
