SYDNEY (Reuters) - Chinese Premier Li Qiang will meet business leaders and lawmakers in Western Australia on Tuesday, and is expected to visit a lithium processing plant in the resource-rich state on the last day of his four-day visit to Australia.

Li, China's top-ranked official after President Xi Jinping, will attend a business roundtable event in Perth along with Australian Prime Minister Anthony Albanese and leaders of major Australian companies.

Li's visit is the first to Australia by a Chinese premier in seven years and marks a stabilisation in ties between the U.S. security ally and the world's second-biggest economy.

Relations are on the mend after a series of spats over the origins of COVID-19, Chinese blocks on $20 billion in Australian exports and friction over encounters between the countries' defence forces.

Li is scheduled to visit a lithium hydroxide processing plant of Tianqi Lithium Energy Australia, which is 51% owned by Shenzhen-and Hong Kong-listed Tianqi Lithium and 49% by Australian miner IGO, Australian media reported.

Western Australia supplies more than half of the world's seaborne iron ore, with China among its top customers, and half of its lithium. China has been an investor in Australian mining projects though some recent investment in critical minerals has been blocked by Australia on national interest grounds.

Li had visited a South Australian winery and Adelaide Zoo during his tour, where he announced Beijing would provide two new pandas after the current pair go home later this year, before travelling to Canberra.

After meeting Li on Monday, Albanese said Canberra and Beijing will take steps to improve military communication to avoid incidents.

Last month, a Chinese airforce jet dropped flares near an Australian defence helicopter in international airspace over the Yellow Sea, which Australia said was a dangerous encounter. It was the second defence incident in six months.

Albanese said he had raised issues in the Pacific, a reference to Canberra's concern over Beijing's growing security ambitions in nearby Pacific Islands, as well as the case of China-born Australian writer Yang Hengjun, who was handed a suspended death sentence by a Beijing court.

(Reporting by Renju Jose in Sydney; Editing by Stephen Coates)