A US lithium giant has dropped plans for a large workers' camp in WA's South West that was fiercely opposed by locals but received planning approval from the state.  

Albermale had planned to build a 500-person workers camp near Binningup, 140 kilometres south of Perth, to support its workforce at its lithium hydroxide facility in the nearby Kemerton industrial estate.

But after the plans sparked mass protests from local residents, the $26 billion company has abandoned the proposal and shifted focus to an alternative proposal in Australind, known as Paris Grove.

In a statement, Albermarle Australia Country Manager Beverley East cited difficulties finalising project conditions to meet the company's time frame as the key factor behind the decision.

"We are pleased that Albermarle's Paris Grove proposal for a workforce accommodation precinct at Australind was recently approved, and we are close to beginning construction," Ms East said.

"Paris Grove is a longer-term development and is designed to bring many benefits to the local community, including employment and business opportunities."

Albemarle had been locked in negotiations at the State Administrative Tribunal with the Shire of Harvey over connecting the Binningup proposal to the mains sewer system. 

The company had previously said it would be an expensive requirement.

Ms East said finding sustainable accommodation for the company's workers, amid a significant housing crisis in both the South West and across the state, was a key reason for the company's expansion plans at Kemerton.

Locals relieved by decision 

Farmer Sonia Castro owns 100 hectares next door to the site and had previously raised environmental and planning concerns. 

"As the landowner next door we are super relieved and extremely happy with the outcome," she said.

Craig Maughan from the Binningup Town Association, a group that campaigned against the proposal, said it was a good decision to dump the project. 

"Farmers and the environment will breath a sigh of relief at today's decision," he said.

"The BTA have never been opposed to the expansion just the location of the workers accommodation.

"The year long process and debate has exposed shortcomings in decision-making around workforce accommodation."

The Shire of Harvey had called the proposal "contrary to the principles of orderly and proper planning" and voted against it at a well-attended special council meeting in October 2022.

It raised concerns about around sewage, planning certainty and traffic management. 

But the shire was overruled by the state's Joint Development Assessment Panel (JDAP) which gave the project the tick of approval after four hours of debate.