The metal is used to make power cells for everyday electronic devices, ranging from laptops to smartphones, as well as being used in electric vehicle (EV) batteries.
Cornish Lithium plans to extract lithium from hard rock in a repurposed China clay pit at Trelavour Downs.
It said it intended to produce about 8,000 tonnes per year of battery-grade lithium hydroxide.
Estimates of the lithium industry’s market value vary, with one report forecasting global revenue worth almost $19bn (£15bn) by 2030.
However, lithium is expected to be in demand worldwide for years to come.
John Flint, of UK Infrastructure Bank, said: “Globally the supply of lithium is far outpaced by demand, and yet in the UK it remains a nascent market.
“Our investment … will greatly accelerate domestic production of a mineral which is critical to the future of EV battery production and decarbonisation of the transport sector.”
Treasury minister Andrew Griffith said: “It fits within net zero, it’s levelling up the Cornish economy … but it’s also really important to securing mineral supply.”