Chile - The World's Biggest Lithium Venue Gears Up For The Fast-Growing EV Market
VANCOUVER, BC / ACCESSWIRE / December 4, 2017 / The global electric vehicle revolution has gone up like a rocket ship. Lithium - the key component in EV batteries - has become the hottest commodity. Its price has gone up from $5,000 per metric tonne to almost $15,000 per metric tonne due to surging demand from companies such as Volkswagen and Tesla. Volkswagen to spend $40B on electric cars and technology through 2022.
Electric Vehicles Are The Future:
Investor appetite for lithium market can only grow steadily higher, and shows no signs of cooling down. The lithium boom isn't a mere 'flash in the bucket' event, it's a long-term mega-trend that is arising from another major societal and technological level change – the electric car revolution.
Lithium carbonate prices were expected to hit $10,000 per metric tonne over the next few years but have since blown away those predictions, escalating as high as US$30,000 per tonne last year and currently sitting around US$15,000 per tonne.
The Lithium Sector Is On The Rise:
Lithium demand came very close to exceeding supply this year. Demand reached 217,000 tons. The market is currently able to supply 227,000 tons.
It’s estimated that lithium demand will reach 785,000 tonnes annually by 2025, an increase of over 360%.
Global sales of electric vehicles in 2025, which rely on Lithium, are estimated to increase from 1 million units (1% market share) in 2017 to 14.2 million units (13.7% market share).
Anticipated supply of lithium in 2025 is projected to be short of demand by 26,000 tonnes.
(Future estimates provided by mineral research consultant Roskill)
Chile - The World's Biggest Lithium Venue:
Because of the rising lithium demand and the massive reserves that Chile boasts, major mining companies like the Chilean-based SQM and U.S.-based Albemarle have set up camp at Salar de Atacama, the largest salt flat in Chile containing the highest lithium and potassium concentrations in the world.
Deposits around Atacama have also been snapped up by up-and-coming mining companies, notably Bearing Lithium (BRZ.V) (BRGRF), which owns the 4,463-hectare Maricunga project, second in grade only to the Salar de Atacama.
In September 2017, Bearing Lithium acquired Li3 Energy Inc., which owns a 17.7% interest in the 4,463-hectare Maricunga lithium project in Chile. The other joint venture partners on the project are Minera Salar Blanco (MSB) and Lithium Power International (LPI).
Both Bearing and MSB are free-carried under the JV, with LPI funding the delivery of a definitive feasibility study (DFS) on the project. LPI is listed on the Australian Securities Exchange with a market capitalization of $144 million (Australian).
Maricunga - The Highest Grade Undeveloped Lithium Project:
The Maricunga project is the highest-grade undeveloped lithium salar in the Americas.
It is the second-best project in the world in terms of grade after Salar de Atacama, which accounts for 100% of Chile’s lithium production and about 40% of global production.
Over US$30 million has been invested in the project to date.
In September, the company released an NI 43-101 resource estimate for the project, showing:
A measured and indicated resource of 1.72 million tonnes of lithium carbonate equivalent (LCE);
An inferred resource of 0.43 million tonnes LCE;
Average lithium concentration above 1,100 mg/L;
Recent drilling has delineated grades up to 1,382 mg/L lithium and 11,041 mg/L potassium.
The JV has signed Australian engineering company WorleyParsons, which previously worked with SQM in expanding the Salar de Atacama operations, to a multimillion-dollar contract to lead the project design and feasibility work.
Management expects to have a preliminary economic assessment (PEA) ready by Q4 2017 and a definitive feasibility study (DFS) in mid-2018. The PEA will be based on an estimated annual production of 20,000 tonnes of lithium carbonate. The PEA will include process flow diagram of major units, process description to define the concentration and purification, equipment list, general arrangement of production ponds, plant block diagram and conceptual report for electrical generation. The study will also include capital and operational expenditures and after-tax cash flow forecasts and cash flow sensitivity to key inputs. Pending the receipt of all necessary permits, the project could begin construction in 2019 with ramp-up and production the year after.
It is important to note that POSCO, one of the world’s largest steel manufacturers, has invested US$18 million into the project and developed a proprietary lithium extraction technology that recovered over 80% of lithium from brine in under 24 hours. POSCO holds a 7% interest in Bearing Lithium and has joined the board of directors.
Recently, Fulin Group, a major Chinese consolidated company, has shown a considerable interest in investing in the project.
The Chilean government has also defined lithium mining as a priority in the country, granting companies like Albemarle and Codelco permits to expand their lithium operations.
Other Major Lithium Players In Chile:
Sociedad Química y Minera de Chile S.A. is planning to expand its production at Salar de Atacama from 15,000 tonnes per year to 63,000 tonnes per year, expected to be completed by mid-2018. In addition to Salar de Atacama, SQM has a joint venture with Lithium Americas Corp. to develop the Cauchari-Olaroz project, comprising approximately 70,000 hectares in Jujuy province, Argentina.
Based on an NI 43-101 definitive feasibility study on Cauchari-Olaroz released earlier this year, the project is designed to produce 25,000 tonnes of battery-grade lithium carbonate per year in the first phase, with production expected in 2019 and a planned investment of US$425 million. A second phase, aimed at doubling output to 50,000 tonnes per year, would require an additional US$250 million.
The Cauchari-Olaroz project has also received personal backing from Argentina President Mauricio Macri. The provincial government confirmed earlier this year that the project has all the permits necessary to begin construction and operations.
Albemarle, another company with operations in Salar de Atacama, recently asked the country's state development agency to raise its lithium production quota to 125,000 tonnes annually from the current limit of 80,000 tonnes per year. The company believes that its new technology could allow it to obtain more of the mineral without needing to extract more brine out of the Atacama salt flat.
The production quota was previously set when the company received approval in January from the agency to extend the terms of an existing agreement on its concessions by 27 years.
Earlier this year, Coldelco, the state-owned copper mining company began a tender process to seek partners to develop its Maricunga and Pedernales salt flats in the northern region of Atacama. It is reported that more than ten international and domestic companies are keen on working with Codelco, demonstrating a high level of global interest in the projects and the region itself. The company expects to make a decision in March 2018.
The company was granted the right — transferable to third parties — to produce 325,045 tonnes of lithium over 40 years. Recently, the Chilean government stated that it expects Codelco to produce its first lithium in the next six to seven years.
A Comparison of Lithium Brine Projects:
Bearing Lithium's Maricunga is the highest grade undeveloped lithium project in the world (1,160 mg/L). The project's development stage only trails Orocobre Ltd.'s Salar de Olaroz in Jujuy, Argentina, and Lithium Americas' Cauchari. In particular, the Salar de Olaroz, which has already begun production, hosts an NI 43-101 measured and indicated resource of 6.4 million tonnes of lithium carbonate equivalent, but with a much lower grade at 690 mg/L.
However, compared with the more advanced operations, Bearing Lithium's Maricunga has a higher grade and a free-carried interest.
The Future of Lithium Market Lies In Chile:
The government has full support for lithium mining. $975 million has been injected in funding to Codelco;
Lithium brine mining in Chile is more economical and efficient than in other jurisdictions;
Chile’s massive reserves with unrivaled lithium concentrations will play a key role in the booming EV and lithium markets;
Lithium supply is unable to keep up with demand in the near future, hence lithium prices will keep rising;
Chinese and Korean investors are also showing confidence in this market, with talks of building a $2 billion giga-factory to rival Tesla.
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