It comes after the completion of an updated definitive feasibility study by joint venture company Covalent Lithium.
The updated study provided greater certainty regarding the project's engineering design and capital and operating costs, as well as an increase in concentrator and refinery production capacity from 45,000 tonnes per annum to approximately 50,000tpa of battery grade lithium hydroxide.
The study includes increased flexibility to provide for a second phase of the project to expand production capacity at Mt Holland and the Kwinana refinery.
Preliminary work to evaluate expansion options will commence in parallel with the construction of the first phase of the project.
The final investment decision for the Kwinana refinery is expected early in the 2022 financial year, once environmental approvals are received.
Construction of the mine, concentrator and refinery are expected to commence in the first half of FY22, with purchase of long lead time items commencing in late FY21.
The first production of lithium hydroxide is expected in the second half of the 2024 calendar year.
Total capital costs are estimated at $1.9 billion.
Wesfarmers said it would fund its $950 million share via existing cash and debt facilities.
"The development of the Mt Holland lithium project presents an attractive investment for Wesfarmers shareholders," Wesfarmers managing director Rob Scott said.
"The project capitalises on our Chemicals, Energy and Fertilisers divisions' chemical processing expertise and Western Australia's unique position to support growing global demand for electric vehicle battery materials which will make a crucial contribution to global efforts to reduce greenhouse gas emissions.
"We have been pleased with progress of discussions with key battery manufacturers, which reflect a positive outlook for battery quality sustainably sourced lithium hydroxide."
Last month, shareholders of New York and Santiago-listed SQM approved a capital raising of up to US$1.1 billion to fund growth projects in Australia and Chile.
"We remain confident regarding the outlook for the lithium market and believe that Mt Holland is a high-quality project that will play an important role supporting increased demand for electric vehicle batteries," SQM CEO Ricardo Ramos said.
"We value the partnership that we have established with Wesfarmers and look forward to working together to develop this project."