Decarbonisation drive boosts lithium miners

Drilling for lithium at Lake Resources’ Kachi project in Argentina.

COP26 has reinforced the key role the global lithium mining sector will play in the decarbonisation efforts of the future. Anthony Fensom writes.

The global decarbonisation drive has picked up speed, with the COP26 conference highlighting the need for the transportation industry to curb emissions.

With battery metals such as lithium key to the electric vehicle (EV) and battery revolution, lithium miners worldwide are eyeing another wave of demand growth amid record high prices and limited supply.

Transportation accounts for 23 per cent of global emissions, giving the lithiumion battery sector a crucial role to play in achieving COP26 targets of global net zero by 2050.

Consultancy Benchmark Mineral Intelligence (BMI) forecasts battery demand from the auto sector alone will rise by 40 times between 2020 and the 2040s, as EVs become mainstream.

Another forecaster, Wood Mackenzie also sees decarbonisation sparking “unprecedented” demand growth for battery metals such as lithium, cobalt and nickel. It projects the world will need “an aggressive uptake in EV sales in all regions” to limit global warming.

“The lithium market would require 20 new mines the size of Greenbushes – currently the largest in the world – in operation by 2030,” the consultancy explains in its October 13 report.

The demand surge together with lagging supply have led to forecasts of a structural lithium supply deficit widening from 2022 and potentially a “perpetual deficit” through to 2030.

“COP26 has highlighted the importance of industry stepping up to contribute to the global decarbonisation drive. Lithium has a crucial role to play and our projects will make a major contribution to electrifying transport in North America,” Sayona managing director Brett Lynch says.

The Brisbane-based company has rapidly grown its international footprint in 2021, developing in the Canadian province of Quebec a lithium resource base which it describes as the largest in North America.

In June 2021, Sayona announced with its bidding partner Piedmont Lithium the

successful acquisition of North American Lithium (NAL).

The lithium mine had been through three previous owners and had some $C400 million ($436 million) invested, including a spodumene concentrator and downstream refinery, but had failed due to the mine’s poor grades.

By blending spodumene (lithium) ore from Sayona’s nearby Authier lithium project with ore from NAL, studies indicated it could become profitable.

Lynch describes the acquisition as a “pivotal point,” not only for Sayona but also for Quebec. Sayona intends to build a “lithium hub” in Abitibi, Quebec, based on NAL, Authier and its emerging Tansim project.

The successful integration of Authier and NAL would position Sayona in 2023 to become the first and largest North American producer of spodumene concentrate.

The dust had barely settled on the NAL deal when Sayona announced on September 30 it was acquiring a 60 per cent stake in the Moblan lithium project in northern Quebec.

“There is a huge opportunity for Sayona to develop a new lithium asset base in northern Quebec, adding to our Abitibi lithium hub,” Lynch said.

Lynch points to Quebec’s advantages, including its low cost, renewable hydropower and proximity to North American battery markets.

The provincial government has banned the sale of new petrol cars from 2035 and flagged billions of dollars of investment in a domestic lithium-ion battery chain, as it strives to curb greenhouse gas emissions.

The Canadian auto centre of Ontario has attracted billion-dollar EV investments from U.S. automakers such as Ford, General Motors (GM) and Chrysler parent Stellantis. The automakers have pledged to reach a goal of 40 to 50 per cent U.S. EV sales by 2030, committing more than $US100 billion ($137 billion) to electrifying their line-ups.

LITHIUM TRIANGLE

Another Australian lithium miner is also eyeing international demand, with its projects based in South America’s ‘Lithium Triangle.’

Lake Resources sees direct lithium extraction (DLE) technology as key to developing its “clean lithium” projects in Argentina, focussed on its flagship Kachi project.

Developed by its partner Lilac Solutions, DLE has the potential to produce a batterygrade concentrate within just a few hours compared to the traditional one to two-year period of conventional brine projects.

It also achieves higher recovery rates and reinjects water back into the aquifer, facilitating the sustainable supply chain sought by EV makers.

The company is advancing a definitive feasibility study for Kachi together with an expansion study, having already secured undertakings for up to 70 per cent of project finance from the British and Canadian export credit agencies.

Its Cauchari and Olaroz projects offer added potential for expansion, with scoping studies and drilling planned over the next year.

The region has attracted intensifying competition for resources, with a bidding war erupting for Canadian miner Millennial Lithium, following the earlier acquisition by China’s Zijin Mining of Canada’s Neo Lithium.

Other Australian companies active in the Lithium Triangle include Orocobre and Galaxy Resources, which completed a $4 billion merger in August.

“Lithium assets in the Lithium Triangle have great potential to fill part of the global supply deficit in coming years given the region’s attractiveness with large, proven brine assets. Lake is well positioned as a low cost, reliable source of lithium supply across a number of projects,” Lake managing director Steve Promnitz says.

“With one of the world’s highest purity lithium products and a sustainable extraction process that provides significant ESG benefits, Lake aims to advance our clean lithium development and become an independent new producer of this key battery metal.”

Lithium prices have tripled in 2021 to hit new record highs, with BMI predicting lithium carbonate prices could soar above $US40,000 per tonne in 2022 amid a growing structural shortage. In November, battery-grade lithium carbonate topped $US30,000 a tonne, after having dropped to just $US6100 a year earlier.

Sayona has expanded in Quebec with the North American Lithium deal.

REST OF THE WORLD

Australian lithium miners are active worldwide, including in the United States, with Piedmont Lithium’s North Carolina project and Arizona Lithium’s Lordsburg project in New Mexico.

In Europe, projects include European Lithium’s Wolfsberg project in Austria; Vulcan Energy’s “Zero Carbon Lithium” project in Germany; and European Metals’ Cinovec lithium/tin project in the Czech Republic.

With the world’s net zero drive accelerating, there is no sign of a slowdown anytime soon for Australia’s next wave of lithium miners.