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LITHIUM | Orocobre
OROC
speaks to the lithium triangle’
Resource Global Network
OBRE
’s first new brine producer in 20 years
LITHIUM | Orocobre
Orocobre is the newest brinebased global lithium carbonate producer in over twenty years and is positioning itself to become a top global supplier of battery grade lithium ahead of the forthcoming EV boom. However, the company is not operating exclusively in the lithium space and is building a substantial industrial chemicals company with lithium, potash and boron assets based in Argentina – home to a major portion of the fabled ‘lithium triangle’. Orocobre operates under three separate entities in Argentina, with its flagship operation Salar de Olaroz set to receive a major boost to its production capacity after Japanese firm Toyota Tsusho purchased a 15% stake in the business and agreed to invest in expanding the facility. RGN’s editor interviews Orocobre’s managing director and CEO Richard P. Seville.
Our flagship operation, Salar de Olaroz, in the Jujuy province of Northern Argentina has been developed over this period and is the newest brine-based lithium carbonate supplier to emerge in over 20 years. It would not have been possible to develop this worldclass resource without the strength of our strategic partnerships. The Olaroz Lithium Facility began as a joint venture project built in partnership with Japanese trading giant Toyota Tsusho Corporation (TTC) and the mining investment company owned by the provincial government of Jujuy, Jujuy Energia y Mineria Sociedad del Estado (JEMSE). The Olaroz Lithium Project Joint Venture is operated through Orocobre’s Argentine subsidiary, Sales de Jujuy S.A. (SDJ), the ownership of which is held in a Singaporean company, Sales de Jujuy Pte Ltd, that is the joint venture company with partner TTC and JEMSE. The effective Olaroz project equity interest will be Orocobre 66.5%, TTC 25.0% and JEMSE 8.5%. JAW: Orocobre is currently engaged with several developments in all three of its
Jacob Ambrose Willson: Explain Orocobre’s
operations – How does the company ensure
company strategy with regards to entering
progress is consistent across all three
into partnerships to advance lithium, boron
partnerships?
and potash assets in Argentina? RS: Orocobre has been operating for Richard P. Seville: Orocobre has been
more than a decade. We are not a new
operating in Argentina for over 10 years.
company and as such, we have carefully
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WE HAVE CAREFULLY AND METHODICALLY DEVELOPED A CORPORATE STRATEGY AND COMMENSURATE STRUCTURE OVER THIS TIME THAT ENABLES US TO DEVELOP THE WORLDCLASS LITHIUM RESOURCES AT OLAROZ AND BORON CHEMICALS AT BORAX ARGENTINA” RICHARD P. SEVILLE, MANAGING DIRECTOR AND CEO
LITHIUM | Orocobre
Richard P. Seville, CEO
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and methodically developed a corporate
structure is critical to ensure that our
strategy and commensurate structure over
resources maintain their focus on creating
this time that enables us to develop the
value from these projects.
world-class lithium resources at Olaroz and boron chemicals at Borax Argentina. These
JAW: How important is it for Orocobre to
are established operations that are both in
expand its Olaroz project so that it endures
production and expanding.
the mass demand growth expected from the lithium-ion battery market over the coming
In addition, our strategy and structure enable
decades?
us to also maintain an ‘exploration’ profile through our 35% interest in Advantage
RS: In January this year, we announced a
Lithium.
significant strategic initiative to accelerate our expansion plans at Olaroz through a larger
In November 2016 Orocobre entered into
Phase 2 expansion of the lithium facility. This
a joint venture agreement with Advantage
strategic initiative involved a 15% placement
Lithium on its Cauchari Project and a number
to TTC, priced at a 17% premium to 30-day
of exploration projects.
VWAP.
Having a well-established strategy and
LITHIUM | Orocobre
This initiative fully funds Orocobre’s
Fukushima, Japan with expected operating
expansion plans to bring Olaroz to a total
costs of US$1,500/tonne. This will further
annual production capacity of 42,500 tonnes
develop our ability to deliver high purity
lithium carbonate production.
battery grade product to the growing global lithium market.
But just as importantly, it continues to strengthen our longstanding strategic and
JAW: The Olaroz facility has also been held
joint venture partnership with TTC.
up as one of the lowest cost producers of lithium carbonate in the world – What
Our partnership with TTC does not preclude
other factors, besides being a brine deposit,
Orocobre from selling our product to a wide
contribute to the low production costs?
range of customers in the global industrial, technical and battery markets, which already
RS: Orocobre’s cost of lithium chemical
number more than 70.
production is currently approximately $4,000 per tonne and we expect that to
Additionally, Orocobre and TTC are finalising
reduce further to $3,000 per tonne once our
plans to jointly develop a 10,000 tonnes per
expansion is complete.
annum lithium hydroxide treatment plant in
Resource Global Network
Hard rock sourced lithium spodumene
with dry, windy conditions enhances our
concentrate (not chemicals) is reportedly
brine-evaporation process. Olaroz is also
$800-900 per tonne of concentrate. The
serviced by gas pipelines, high voltage
concentrate must then be converted to
electricity, and paved highways.
lithium chemicals at a cost of $2,000 - $3,000 per tonne (which currently is almost all done
Three major seaports, Buenos Aires in
in China) before it is ready for sale.
Argentina and Antofagasta and Iquique in Chile are serviced by international carriers
It takes 8.5 tonnes of concentrate to produce
and are easily accessible by road and/or
just 1 tonne of lithium chemicals. Taking
rail, all this coupled with onsite treatment
the mid points, hard rock sourced lithium
facilities (that can produce up to 100%
costs around $10,000 per tonne {($850 *8.5)
battery grade lithium carbonate) help keep
+$2,500 + freight = approx. $10,000/tonne}.
our overall cost of production down.
Orocobre’s Olaroz Lithium Facility is
JAW: Orocobre posted half-year revenue of
supported by favourable conditions in terms
$63.1 million in Feb 2018 – How pleasing is
of both the operating environment and local
this financial performance and what is your
infrastructure. Very limited rainfall combined
grand vision for the company? Can Orocobre
LITHIUM | Orocobre
“OROCOBRE IS OBSERVING A VE LITHIUM CHEMICALS MARKET DRI ELECTRIFICATION OF TRANSPORT AND GRID-BASED S break into the land of the giants with regards
tight supply and attractive pricing dynamics.
to global lithium producers (i.e. the Latin American oligopoly)?
Orocobre is observing a very strong and sustainable lithium chemicals market driven
RS: Our financial performance for the half
by ongoing demand for electrification of
year to 31 December 2017 was solid and we
transport and implementation of home and
continue to consolidate our position as a
grid-based storage systems.
mainstream, profitable, low cost producer of lithium carbonate.
Orocobre and our strategic partner TTC are investing significantly in the world-class
The global market fundamentals for lithium
Olaroz Lithium Facility as it is a low cost, high
remain intact with strong demand growth,
margin operation with a very large resource
Resource Global Network
ERY STRONG AND SUSTAINABLE IVEN BY ONGOING DEMAND FOR T AND IMPLEMENTATION OF HOME STORAGE SYSTEMS� capable of sustaining multiple stages of
On the demand side, the end game is
expansion.
becoming clearer – for example:
We believe, and our research shows that
The UK and France have banned the sale of
the long term growth opportunities for
internal combustion engine vehicles by 2040,
lithium producers remain intact and in fact,
China is heading in the same direction, and
are continuing to strengthen. There remain
India plans to only sell EVs by 2030
significant headwinds for new production and supply additions we believe remain over-
Austria, China, Denmark, Germany, Ireland,
stated.
Japan, the Netherlands, Portugal, Korea and Spain have all set official targets for electric car sales.
LITHIUM | Orocobre
Resource Global Network
For example, 750,000 EVs were sold last year,
past 20 years. Just as importantly, we are
OPEC suggests that by 2040 the global vehicle
one of the lowest cost producers of lithium
fleet will include 266 million EVs, Bloomberg
chemicals in the world with a lithium
New Energy Finance suggests by 2040 there
production cost of $4,336 per tonne for
could be 530 million, or one third of all cars
the half year to Dec 31, 2017 and a gross
will be EVs
operating margin of 62%.
So, in terms of demand, the propensity to
We believe that maintaining a low cost
buy electric vehicles is rising, meaning lithium
production base will be a key competitive
prices will remain higher for longer.
advantage for any lithium producers going forward.
Orocobre is already competing in a global market against both established and emerging players. We are the first brinebased lithium producer to emerge in the
a jcr
Published by Anderson Murray Media Ltd
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