Despite a present oversupply of lithium that took the price of the metal down this year, analysts say there’s still solid long-term demand that will pull the market back up. Backed by a boom in electric vehicles (EVs), components for lithium-ion batteries including lithium and cobalt, there’s still a scramble to secure supplies for consumers such as battery makers—leading to a cry for new mines to shore up future supplies.
“There is certainly no shortage of potential supply and there are already a huge number of projects out there,” said Alex Laugharne, principal consultant at research firm CRU to Reuters. For now, analysts at CRU expect the lithium market to be in surplus by 22,000 tonnes in 2018, with demand expected to reach 277,000 tonnes.
Where tomorrow’s lithium is going to come from, is still up for grabs. The lithium consumers will be looking towards the lithium sector itself to give hope for future supplies, with companies that include Albemarle Corporation (NYSE: ALB), FMC Corporation (NYSE: FMC), Neo Lithium Corp. (OTC: NTTHF) (TSX.V: NLC), Pilbara Minerals Limited (OTC: PILBF), and NRG Metals Inc. (OTC: NRGMF) (TSX.V: NGZ).
The lithium market is expected to continue to grow in the double-digits per year through 2025. However, stocks in lithium companies have taken a dip in 2018. According to estimates from the U.S. Energy Information Administration roughly 500,000 electric vehicles were sold globally in 2016, a figure that is expected to jump sevenfold by 2022.
With these figures being put out, analysts are predicting demand to come back up. Now all eyes are on where the next lithium mines are going to be developed.
There are plenty of developments to assess in the current lithium landscape. From upcoming projects such as the Hombre Muerto North Lithium project in Argentina being developed by NRG Metals Inc., to the possible buyout of FMC Lithium by competitor Albemarle, tomorrow’s lithium sector will indeed look different than what we’re currently seeing.
ONGOING LITHIUM DEVELOPMENTS
Albemarle Corporation (NYSE: ALB)
As part of a strategy to remain the lithium market’s top producer, Albemarle is investing millions of dollars to engineer specialised types of lithium for electric car batteries. With buyers such as Panasonic and Tesla increasing their demand for more purified versions of lithium, Albemarle is seeking to drastically increase its stake in the global lithium market. Among its ongoing developments, the lithium giant has hinted that it may make a play to buy out fellow lithium competitor FMC Corp.’s lithium division IPO spinoff, to be named Livent Corp.
FMC Corporation (NYSE: FMC)
Whether Albemarle buys up the shares on the market for the FMC Lithium spinoff, Livent Corp., FMC plans to test the market’s faith in the electric car revolution. The company currently produces lithium from its Fenix Mine in the province of Salta, within the prolific Hombre Muerto Salar, adjacent to NRG Metals’ Hombre Muerto North Project, and near Galaxy Resources’ Sal de Vida development stage project, which recently had the northern tenements sold to POSCO. With the Livent IPO, FMC is aiming to raise $100 million to help it become a dominant supplier for EVs. Livent is targeting production of lithium hydroxide, a higher-demand form of the metal, sought after by carmakers looking to shift next-generation batteries into a new gear of energy density.
Neo Lithium Corp. (OTC: NTTHF) (TSX.V: NLC)
Neo Lithium is in the process of negotiating a $490 million deal to finance development of a mine on the project. The company is coming off the recent release of its 43-101 resource report on its Tres Quebradas (“3Q”) lithium brine project in Catamarca Province, Argentina. Now with over two and a half years of drilling experience since discovery, Neo’s 3Q project has become an extremely significant lithium brine discovery. Its grades are very high, averaging 614 mg/L are impressive, with a Measured and Indicated Resource estimate of over 4 million tonnes of lithium carbonate equivalent.
Pilbara Minerals Limited (OTC: PILBF)
Australian lithium producer Pilbara Minerals recently confirmed its first shipment of spodumene concentrate from the Pilgangoora project to leave Port Hedland by the end of September. Unlike brine-based lithium companies such as Albemarle, FMC, Neo Lithium, and NRG Metals, Pilbara is producing its lithium through hard-rock mined spodumene ore. Pilbara recently also released a definitive feasibility study for the second stage of the project’s development back in August. Pilbara is aiming for an eventual target of 800,000 to 850,000 tonnes per year of spodumene production.
NRG Metals Inc. (OTC: NRGMD) (TSX.V: NGZ)
NRG Metals has been diligently developing its Hombre Muerto North Lithium project’s near the land package POSCO recently acquired from Galaxy Resources for $280 million, and also near FMC’s producing Fenix Mine. Along with strategic partners Chengdu Chemphys Chemical Industry Co., Ltd (“Chemphys”), a Chinese high-purity lithium manufacturer, NRG has hit several milestones, including a recent update on its second phase of drilling, and excellent pumping well test results on the project.
THE LITHIUM TRIANGLE AS THE FOCAL POINT FOR NEW MINES
The potential in the Hombre Muerto salt flats in Argentina for new lithium mines is ideal. While FMC has been in the region since 1997, and is currently producing from its Fenix Mine, they’re about to get some new neighbors.
South Korean lithium processors POSCO recently made headlines by securing a future supply of the white metal from Australian miners, Galaxy Resources for a whopping $280 million. Now the question is being asked, what project is next in the Hombre Muerto?
NRG Metals Inc. (OTC: NRGMD) (TSX.V: NGZ) made major strides on its own Hombre Muerto project, when it formed a strategic alliance with Chinese high-purity lithium manufacturers Chengdu Chemphys Chemical Industry Co., Ltd (“Chemphys”). While not an outright sale like the POSCO deal, NRG and Chemphys formed an alliance on the Hombre Muerto North Lithium project to see it through each stage of development together.
Today, Chemphys has representation on the NRG Board of Directors, and is optimistic of where the project is heading—and with good reason.
Earlier in August, the partnership reported pumping test results for the first 10” diameter pumping well on the project. The well is located on the Tramo Claim portion of the project grouping.
The pumping well was drilled immediately adjacent to the first exploration diamond core hole following the excellent results from the recent sampling that provided assay results of 401 meters of 900 mg/L lithium with very good chemistry. Data from the pumping test will be paired with information from the diamond core drilling program, and used to calculate resources and reserves for the project. If warranted, the pumping well could end up being used for production as part of the fast-track development of the project.
Later in August, NRG updated the results from the project’s second round of drilling. Additional assays returned a range from 779 to 507 mg/L lithium. Prior to this update, brine samples collected from the depths of 100 to 300 meters showed high-grade values very similar to the previous assays for the samples from surface to a depth of 100 meters.
Overall, the latest drilling returned an arithmetic average of 888 mg/L lithium, with the added bonus of a very low magnesium to lithium ratio—which projects a lower cost of production. Earlier this year, further sampling on the project from yielded very high lithium values, including multiple sites returning values over 1000 mg/L Li.
NRG also is developing other Argentinean projects outside of the Chemphys alliance. The company previously reported similarly high values on its Salar Escondido Lithium Project.
With each milestone being hit by NRG, it appears the company and its partners Chemphys are setting up for near perfect timing with the anticipated demand increases in the lithium sector. As the company accrues more data, and racks up the high-grade lithium results, the strategic alliance will be setting its sights upon the possibility of being yet another new mine in the Hombre Muerto, just in time for a market that will be thirsty for even more lithium.
http://lithium-news.com/2019/04/29/rethinking-mining-strategies-among-the-top-10-global-trends-to-shape-2019/
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