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Lake Resources: Aligning Operations to Power North America’s EV Revolution
lAKe reSourceS
Aligning operAtionS to power north AmericA’S ev revolution
Lake Resources is advancing clean lithium production as the world’s electrification drive picks up speed. With the United States, Europe and other regions putting increasing focus on supply chain security, the ASX-listed company is realigning its operations to North America to support the accelerating electric vehicle (EV) industry.
On June 20, Lake stated its ambitions by announcing plans to establish a North American presence, becoming even closer to its key partners and markets.
“Lake’s aspirational target is to reach capacity of 100,000 tpa [tonnes per annum] by 2030, which will underpin Lake’s ambition to become a leading global producer of sustainable high purity lithium,” said Lake’s Executive Chairman, Stu Crow.
“We are now establishing a North American presence to serve our offtake customers, continue to work with our US-based technology partner, Lilac Solutions, and engage capital markets. We are aligning project delivery, extraction technology, and operations.”
The Australian company has flagged a six-month transition to its new North American headquarters, with Crow taking the reins as executive chairman to oversee the process.
Speaking from New York City, Crow said he was excited by the company’s new phase.
“We are interviewing candidates with exceptional experience for the CEO and Managing Director role, and also candidates for the board to reflect growth of the company in U.S. markets,” he said. “There is enormous interest in Lake and we have been delighted by the depth of talent available to us, as we take the next step in our journey towards becoming a leading global producer of sustainably produced, battery-grade lithium.”
Lake is currently developing four lithium projects in Argentina, led by its flagship Kachi project, with more than 150 people working across its portfolio. Significantly, the company has amassed one of the largest lithium lease holdings in the South American nation, amounting to more than 2,200 square kilometers (1,367 miles), with the majority owned 100 percent.
“Argentina is part of the ‘Lithium Triangle,’ home to the world’s lowest cost lithium production, and aims to become the region’s leading lithium producer. We
have received strong support from government and other local stakeholders and are proud to support its efforts in this key industry of the 21st century,” Crow said.
Top 200 coMpany
Lake’s growth under Stu’s leadership has been rapid. From a micro-cap company in January 2021, Lake was officially admitted to the ranks of Australia’s top 200 companies in June with a market capitalisation of around A$3 billion (U.S. $2 billion).
The announcement by S&P Dow Jones that Lake would join the S&P/ASX200 index on June 20 was a proud moment for Crow and his company.
However, this is only the start of the journey, Crow says.
“Joining the top 200 index recognises our enormous growth in market value and our status as one of Australia’s leading companies in the lithium sector,” he said.
“However, we have no plans to slow down and are aiming even higher.”
Lake’s promotion to the benchmark index is expected to see more institutional buying of the company from major investors such as superannuation funds and investment banks.
While global stock markets have been rocked in 2022 by rising inflation and interest rates and war in Ukraine, Lake continues to enhance its engagement with international capital markets.
On June 17, the company announced it had appointed two leading project finance institutions, Citi and J.P. Morgan, as joint coordinators for its Kachi project.
Lake said the appointment followed a tender panel that indicated bank appetite for the project was “in
Stu crow, executive chairman
excess of five times the required amount, reflecting the strong interest by international banks and support from export credit agencies.”
Citi and J.P. Morgan have been tasked with assembling the debt financing package for Kachi, with the support of GKB Ventures and SD Capital Advisory.
Importantly, Lake has also gained support from Britain’s official export credit agency, UK Export Finance (UKEF), to fund around 70 percent of Kachi’s requirements, subject to UKEF approval and to standard project finance conditions.
Canada’s export credit agency, Export Development of Canada, is expected to participate alongside UKEF, further strengthening the project’s finances and providing access to low-cost lending.
“We are pleased to partner with Citi and J.P. Morgan, who support Lake’s commitment to sustainable extraction and minimizing our environmental footprint,” Crow said.
“Backed by the strength and status of the export credit agencies of Britain and Canada, Lake has extremely strong financial backing for our flagship project, providing confidence to our investors and project partners.”
ForD, Hanwa MoU’S
Lake’s production targets have received backing from both the United States and Asia, following this year’s signing of two significant agreements. In March 2022, Lake announced a non-binding memorandum of understanding (MOU) with Japanese trading house Hanwa Co. Under the agreement, Lake could provide up to 25,000 tpa of lithium carbonate over 10 years, with a minimum of 15,000 tpa LCE, priced at average quarterly benchmark prices.
The MOU also allows for Hanwa to provide financial support, such as equity investment, a potential prepayment on offtake, and trade finance facilities to secure a long-term agreement with Lake.
“The market for lithium-ion batteries for EV is unstoppably expanding, and we are handling raw materials for those sophisticated products and increasing our involvement in all aspects of the supply chain,” Hanwa’s J. Tomono said.
“We have been seeking the right products, at scale, with the right partner, to advance development of the latest technology in batteries and its cathodes.”
Lake’s Crow said the MOU and finalization of a binding offtake agreement with Hanwa would “allow Lake to stay an independent supplier into global lithium supply chains and ensure security of supply to the market and potential customers.”
“Increasing customer and consumer scrutiny around the environmental credentials of lithium production, and concerns about security of supply has given us the confidence to enter into this partnership with Hanwa,” he added.
Less than a month after the Hanwa announcement, Lake followed up with another non-binding MOU, this time with leading global automaker Ford Motor Company.
On April 11, Lake announced plans for offtake of around 25,000 tpa from the Kachi project with Ford, supporting Ford’s EV drive and the development of a “clean lithium supply chain.”
“As we’ve shared, Ford is sourcing deeper into the battery supply chain,” said Lisa Drake, Ford’s vice president, EV Industrialization.
“This is one of several agreements we’re exploring to help us secure raw materials to support our aggressive EV acceleration,” she said.
“Both Lake and Ford see this as an opportunity for a potential long-term agreement, with the ability to scale up environmentally responsible production and participate in Lake’s other projects to ensure high-quality lithium products are available to Ford,” Lake said.
The Ford tie-up followed the U.S. automaker’s April launch of an electric F-150 Lighting pickup, a move it described as “the Model T moment for the 21st century.”
The first mainstream, full-size electric pickup launched on the U.S. market, the new vehicle has a starting price of below US$40,000 and an estimated range of up to 320 miles.
Built at Ford’s historic Rouge Complex in Michigan, the vehicle is part of the Ford F-Series, America’s best-selling truck for 45 years straight, second only to the iPhone in revenue among U.S. consumer products.
Ford said it had seen “unprecedented” demand for the new F-150 Lightning, with some 200,000 orders already received. It plans to ramp up production to 150,000 vehicles per annum from 2023, following a US$950 million investment in its Rouge Electric Vehicle Center.
“America’s real transition to electric vehicles [EVs] starts now,” Ford President and CEO Jim Farley said in an April 26 statement.
LMC Automotive projects the U.S. electric pickup truck market will increase from around 25,000 vehicles in 2022 to more than 1 million by the end of the decade. The current five electric pickup models are seen rising to more than 20 by 2030.
needs, supplied by its own iron ore and coking coal mines in Michigan and Kentucky.
Now, amid soaring prices and declining supply of key battery metals such as lithium, Ford plans to take control of its supply chains “all the way back to the mines,” Farley said.
Industry analysts Benchmark Mineral Intelligence have flagged a continued structural deficit in the lithium market through 2025.
And with the EV revolution entering the mainstream, lithium resources such as Lake’s are in strong demand, particularly those capable of meeting the high-quality battery grades and exacting sustainability requirements of European Union and U.S. automakers.
www.lakeresources.com.au
The company paid consideration to SNN or its affiliates for this article.
Ford aims to deliver more than 2 million EVs annually by 2026, equal to one-third of its global volume, targeting 50 per cent by 2030. The increase to 2 million EVs would make Ford second only to Tesla, although General Motors aims to surpass Tesla in domestic EV sales by 2025.
Ford is also following its founding principle of self-sufficiency in reviving vertical integration. During World War One, Ford’s River Rouge complex produced iron and steel for its vehicle manufacturing
