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Editorially Speaking: Lithium industry represents brave new world for mining

October 15, 2016   Don Horne




They’re calling it the new gasoline, and a handful of early adopters in the Canadian mining industry stand to benefit from it in a very big way.

The lithium sector is undergoing a modern- day boom following Elon Musk’s announcement of Tesla’s Model 3. The celebrated California automaker has received about 400,000 pre-orders to date for the highly anticipated electric car, which has a starting price of around $35,000.

The first cars expected to ship in late 2017. The Model 3 is expected by many experts to signal a real change in the electric vehicle industry, which has toyed around in the fringes for years, but now, when combined with new emission regulations, seems poised to go mainstream. This plays well for lithium producers, with demand signalling an opportunity to increase input, as well as a window for new companies to join the fray.

Industry analysts such as Benchmark Minerals Intelligence predict demand for lithium in batteries will double within the next four years to an estimated 100,000 tonnes of annual capacity. Currently, the lithium sector is dominated by four main producers: Rockwood Lithium, Soc. Quimica & Minera de Chile SA (SQM), Albermarle Corp. and FMC Corp. Combined, the quartet make up as estimated 90 per cent of the market. FMC is already gearing up for future demand signalled by the auto industry. In July, the Philadelphia-based company announced plans to increase capacity at its operations by 4,000 tonnes by 2017 following announcement of a partnership.

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This follows an earlier announcement to add an additional 4,000 tonnes by the middle of next year, raising the company’s total global lithium hydroxide capacity to 18,000 tonnes. FMC said it plans to eventually raise the company’s annual output to at least 30,000 tonnes. Rockwood, SQM and Albermarle are making similar plans. SQM recently acquired 50 per cent of an Argentinian Lithium Americas Corp. property.

Meanwhile, in its second-quarter report issued in August, Albemarle noted Lithium and Advanced Materials reported lithium net sales of $233.4 million were up 9.6 per cent from the same time last year The North Carolina-based company attributed $18.1 million of that increase to increased lithium sales volumes.

In Canada, several smaller players are expected to jump aboard the lithium train. Vancouver-based Lithium X announced in July that it has mobilized a drill rig to commence the Phase 1 exploration program at its Clayton Valley North Lithium Project in Nevada. Clayton Valley is home to Albemarle’s Silver Peak mine, the only lithium production facility in North America. Lithium X, which is headed by founder and CEO Brian Paes-Braga, says it controls the largest land position in Clayton Valley, located approximately 300 kilometres from Tesla’s Gigafactory.

Lithium X also owns half of the Sal de los Angeles lithium brine project in Argentina, which is undergoing pump tests where previous drilling intersected higher-grade lithium brine in predominantly sand and gravel aquife. Earlier this year, the company secured a deal to own up to 80 per cent of the Argentinean operation. Other Western Canada-based lithium companies are similarly ramping up their international portfolio.

Vancouver-based Lithium Americas Corp., formerly Western Lithium USA Corp., Lithium Americas, announced earlier this summer it had entered into a $25-million joint venture with SQM on its project in Argentina. “One of the principal objectives of the joint venture is to leverage the technical experience of SQM to materially de-risk the development of Cauchari-Olaroz and to successfully advance the project to bring new supply to the market on a timely basis,” Lithium Americas CEO Tom Hodgson said in announcing the partnership this past spring.

“Lithium plays an important strategic role in the energy revolution and it is critical that our industry respond by delivering more supply to meet increasing demand.” Also busy has been Vancouver-based Goldrea Resources Corp., which announced in July it had completed a land acquisition to triple the size of its lithium play on the Gaspe peninsula in eastern Quebec.

Nemaska Lithium, meanwhile, is moving forward on its wholly owned Whabouchi mine in Quebec. The company expects 500 tonnes of concrete production (TPA) expected next year.

In June, China-based Jilin Jien Nickel Industry Co., also acquired the previously defunct Quebec Lithium mine for an undisclosed amount.

RB Energy, which once claimed its Quebec mine would produce “the highest- quality lithium carbonate in the world,” halted operations in 2014 when it became uneconomical due to low market prices.

Jamie Zachary

10-17-16


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