Professor Klinken said Western Australia's competitive advantage as a producer of some battery raw materials needed to be quickly leveraged to capture a greater share of the value present in the booming battery supply chain.
Australia is the world's largest producer of lithium, with exports forecast to continue to increase as a number of new West Australian mines start production.
But the state is not just a lithium powerhouse. It hosts cobalt, graphite and has a substantial nickel industry — all used in the production of cathodes and anodes for lithium-ion batteries.
Some West Australian miners are investing in advancing further downstream — lithium producers are building processing facilities to improve the quality of their products, Mineral Resources has teamed up with clean-tech junior Hazer to produce synthetic graphite and major nickel producer BHP is studying whether it could produce a cathode precursor product.
Professor Klinken said the clear next step for the burgeoning sector was to "package it all together".
"We need to ask ourselves what is in the best interests of the state and the best interests of the nation," Professor Klinken told The Australian Financial Review.
"We are really good at mining and extracting, we are now looking at processing which is great but let's not shut our eyes to other opportunities.
"Let's have a look at the economics of it and see if it is really possible.
"Intuitively I think it is with Australia's modern technology, the smart people we have and the raw materials we are blessed with. We also have a university that is already manufacturing these things - can we take it up another scale?"
Earlier this year, Australia's first lithium-ion battery was built by the Queensland University of Technology in a purpose-built pilot facility.
At the time, Professor Peter Talbot from QUT's Institute for Future Environments said the technology and processes developed as part of the project could be used by any commercial battery manufacturing company and could kick start a lithium-ion battery manufacturing industry in Australia.
Industry participants approached by the AFR argued that, despite being endowed with many of the necessary natural resources, battery manufacturing in Australia would struggle to compete with established producers such as Japan's Panasonic or South Korea's LG Chem. Building the necessary skills in the workforce and qualifying products with end-users were also flagged as likely challenges.
But Australian Advanced Manufacturing Council chairman John Pollaers said building lithium-ion batteries in Australia was "a very real opportunity".
Mr Pollaers said he believed there was an opportunity for companies with existing manufacturing capability, from Australia or offshore, to enter the sector, possibly with government assistance.
"I think it is an example of the kind of value-add for our raw material base in Australia that is completely feasible and puts us in step with the advance of new energy technologies," Mr Pollaers said.
Professor Klinken acknowledged there was a perception manufacturing in Australia was too expensive but encouraged industry to "step up a little bit and be prepared to take some risks".
On Tuesday, the West Australian government launched a $16.7 million New Industries Fund which Innovation Minister Dave Kelly said would consider proposals that demonstrate "potential to develop new economic opportunities and create WA jobs".
While the fund is primarily a vehicle to support new and emerging businesses, Mr Kelly said the state wanted to attract more downstream processing and "would be interested to engage with any substantive companies who are interested in manufacturing lithium-ion batteries in WA".