Batteries Providing The Power For Lithium Australia
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Lithium Australia sees itself as a 'disruptor,' developing lithium extraction technologies that change the game in lithium supply. It now has access to lithium deposits on three continents, and will have ample opportunity to test whether its hydro-metallurgical approach can do the job at the low operating costs it projects.
Imagine there is a commodity that everyone wants: demand for it is projected to at least double between now and 2025. You have joint ventures with the holders of three deposits of this commodity in Australia, one in Europe and one in Mexico, and wholly own another prospect in Australia – with your European joint venture a potential mega-deposit. And you have 25-year exclusive licensing rights to technology that is a potential game-changer in how can extract this commodity from a former waste material, at unheard-of low processing costs. You’re so confident in this commodity, it is the name of your company.
That is the situation that Lithium Australia NL (LIT) finds itself. Lithium Australia is poised to open up a whole new source of its namesake commodity, just when the demand for portable power, lithium-ion batteries in electric cars and home batteries, and power storage for the renewable energy sector are driving the consumption of lithium higher.
The world’s lithium supply is split roughly between hard-rock mining of spodumene and pegmatite deposits found mainly in Australia and Canada, and the lithium-containing brines, volcanic in origin, found in desert areas in Chile, Argentina, Bolivia and China. South American brine production emerged in the 1980s, as a lower-cost alternative to hard-rock mining, using solar evaporation from soluble salts to concentrate lithium. But mining remains competitive because of higher grades of lithium: Talison Lithium – which produces the world’s highest-grade lithium from its Greenbushes pegmatite mine in Western Australia – still supplies more than 30 per cent of current global requirements, and three-quarters of Chinese demand (LIT has a project area next to the Greenbushes mine.)
Lithium is also found in mica ores, but these are usually about half the grade of the 6 per cent lithium oxide grades common in spodumene. Spodumene is roasted and leached – at huge energy cost – and this has always made mica ores uneconomical, in fact they are considered virtually as waste product of hard-rock lithium mining, dumped straight in the tailings pile.
Enter Lithium Australia, and its technology partner, Strategic Metallurgy Pty. Ltd. The latter has developed a hydro-metallurgical technique to extract the lithium from mica ores, through crushing, grinding and flotation to produce a concentrate. Lithium Australia says this process, called L-Max, “removes the energy step from the equation,” allowing the long-overlooked mica ores to come into the picture. In fact, Lithium Australia says it can bypass the mining process altogether, and move directly to treatment of tailings and ores previously regarded as worthless.
The company’s target cost is in the US$1,500–US$2,000 per tonne of LCE (lithium carbonate equivalent) per tonne: most lithium producers are above US$3,000, with the cheapest brine producer operating at about $US2000 a tonne, while the spodumene miners are in the US$4,000–US$5,000 a tonne range.
LIT has produced battery-grade lithium carbonate from Lepidolite Hill in Western Australia and Cinovec in the Czech Republic, has recovered lithium from two other European deposits and is examining further deposits at Ravensthorpe, Lake Seabrook and Pilgangoora in Western Australia. Its most recent deal, signed earlier this month, will see it tie-up with Toronto-listed company Alix Resources Corporation to apply Strategic Metallurgy’s process to Alix’s Electra lithium project in Mexico.
The Cinovec project is the main focus at present. Owned by fellow ASX company European Metals Holdings Limited (EMH), Cinovec is a potentially huge lithium mica (and tin) deposit in the Czech Republic, located 100 kilometres northwest of Prague, and close to the country’s border with Germany. Cinovec is a significant lithium deposit, with an inferred resource of 514.8 million tonnes of ore containing 0.43 per cent lithium superoxide, giving 5.5 million tonnes LCE, with an additional exploration target of 350 million–450 million tonnes at 0.39–0.47 per cent LiO2.
A scoping study has been done and the project is advancing to feasibility study stage. Crucially, a plant test at Cinovec in April produced very high-purity (99.5 per cent). Leaching the float concentrates achieved extractions of up to 97 per cent, and the process again demonstrated a very low energy footprint.
It is also capable of generating significant by-product credits: potassium was also recovered at Cinovec as potassium sulphate, a valuable by-product with direct application as fertiliser. The Cinovec test backed up the first plant test, conducted in Australia in November 2014 with mica ore from Lepidolite Hill at the Coolgardie project in Western Australia, which delivered 99.6 per cent battery-grade lithium carbonate purity, also with potassium sulphate as a by-product, a lithium yield of 81 per cent and a Li2O grade of 3.34 per cent.
At present 32 per cent of lithium goes to the glass and ceramics market, with 22 per cent going to batteries, and the remainder spread over lubricants, chemicals, pharmaceuticals, metallurgical powders, aluminium production and minor uses. Chile and Australia dominate production, with 38.2 per cent and 36.8 per cent respectively. However, Lithium Australia says the demand for electric vehicles is projected to rise from 200,000 a year at present to 40 million by 2050 – meaning the current use ‘pie chart’ of lithium is going to be radically changed.
It is not only electric cars, home batteries, and power storage for the renewable energy sector that the company is banking on. It also says infrastructure sharing by consumers and utilities, the implementation of ‘smart grids’ to allow individual control of power, and growth in use in communication and consumer electronics are also very positive drivers for lithium.
The Cinovec project is ideally located to tap the European market. For its part, the Alix deal sees LIT getting closer – geographically, at least – to the US$5 billion Tesla “Gigafactory 1,” a lithium-ion battery factory being built primarily for Tesla Motors in Nevada, USA. When fully operational, the Gigafactory will make as many lithium-ion batteries a year as were made in the entire world in 2014 – and will be one of the largest buildings on the planet.
Lithium Australia sees itself as a “disruptor,” developing lithium extraction technologies that change the game in lithium supply. It now has access to lithium deposits on three continents, and will have ample opportunity to test whether its hydro-metallurgical approach can do the job at the low operating costs it projects. The company says it wants to “dominate” global lithium inventories: it is certainly building up an impressive swag of its own inventory, and it is in the happy situation of having a process that appears to work on mica ores. Many hard-rock lithium producers have this stuff sitting around as waste – and they have no idea what to do with it.
Known until August 2015 as Cobre Montana, Lithium Australia is capitalised at $13 million, but appears to be a stock going places, having risen from 4.4 cents a year ago to 10 cents. Lithium demand is on the rise, and the company named after it is following.
James was founding editor of Shares magazine, and oversaw one of the most successful magazine launches in Australia. He has also written for BRW, Personal Investor, The Age and Management Today, and was subsequently personal investment editor at The Australian and editor of financial website, investorweb.com.au