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Lithium Special 2: The lithium battle is moving into the era of direct investment by OEMs (Part 2)

Previous article: Lithium Special 1: The lithium battle is entering the era of direct investment by OEMs (Part 1)

 

The last source to be mentioned is clay. Clay here literally means very fine-grained clay, such as that used in cosmetic foundations. Projects that have been launched include Nevada, USA, and Sonora, Mexico.

 

The Thacker Pass project at Lithium America, which GM has announced it will fund this time, is the most promising of these projects, as it is the closest to production and has the largest reserves of lithium in North America. The readers familiar with lithium may have heard of Ioneer, which Prime Planet Energy & Solutions, a joint venture between Toyota and Panasonic, signed a lithium offtake agreement with at the end of July last year, and is also a prominent company developing a clay-lithium project in Nevada. Tesla likewise has a project in Nevada, and even has a flowsheet patent to recover lithium from clay in a process using 'salt'.

 

Now, let me explain why the author said in the introduction to this paper (1) that in the GM and Lithium America projects, 'they plan to produce'. 

 

Firstly, Lithium America is under dispute due to opposition from residents, mainly Native Americans. A court hearing was held at the beginning of January and the judge has said that the case will be concluded in the next two months, so a ruling is expected at the beginning of March. A ruling in favour of the residents would further delay the project. It should be noted that the residents actually living near the project are in favour of it. The residents who will be directly affected by the mine's development are not the parties suing in the case, although they oppose.

 

The author was an employee of Western Lithium, which acquired Lithium America (Western Lithium changed its name to Lithium America after the acquisition), so he has actually visited the site and seen for himself that there are no restrictions on mine development near the proposed project site. There is a town called Winnemucca with a population of about 8,000 people nearby, but it is basically an empty place with a thin layer of grass. If the Thacker Pass project, which has all the ABCs necessary for mine development - hydro, power, roads and railways - is not developed in Nevada, a state that has long been mining-friendly, it may affect other new mine developments in the USA in the future. 

 

https://www.usgs.gov/media/images/winnemucca-nevada-grassland

 

Secondly, there are technical issues: the Thacker Pass project is owned by Chevron, one of the old oil supermajors, which has developed and patented its own method of refining lithium. Initially, the Thacker Pass project was considering a process similar to Chevron's, but has now changed to a method of dissolving lithium with sulphuric acid. This is largely due to the technical support of Ganfeng Lihitum of China, a shareholder in Lithium America and developing partner in the company's Cauchari-Olaroz project in Argentina, but there has never been any commercial production of lithium from clay. Of course, a pilot plant has been successfully purified and the press release claims that battery-grade lithium can be produced, but it remains to be seen whether the pilot plant can be scaled up to commercial production scale and whether battery-grade lithium carbonate can actually be produced.

 

For these two reasons, the author said at the beginning of this report that they 'plan to produce' lithium carbonate, but despite some twists and turns, I believe that battery-grade refining will be successful in the near future. It must succeed again.

As is well known, the Biden administration has enacted the IRA, commonly known as the Inflation Restraint Act, which means that in order to sell EVs in the US, certain raw materials must be sourced from within the US or from western countries with close ties to the US.

Thacker Pass has to play a key role in supporting the US EV industry due to the size of its reserves.

 

Lithium is not a commodity of which reserves are a concern, as Elon Musk has stated, as it is found all over the world. However, as mentioned in this article, it is not easy to produce battery-grade lithium, which is more than 99.5% pure, with the remaining 0.5% free of impurities such as magnesium and other metals that can cause battery failure. In the case of Lithium America, 15 years have already passed since the project started. Of course, there was a period when the project was difficult to manage due to the lack of an EV market, but it is important to remember that mine development takes far longer than most people imagine.

 

OEMs are announcing the construction of new battery giga-factories one after another, but if it takes two years to build a giga-factory, where will the raw material lithium be sourced from? It is true that the high price of lithium has provided incentives for developers to launch lithium projects around the world, but it is unlikely that all projects will actually be launched without delay. There is a huge time gap between the start-up speed of gigafactories and that of mines.

 

GM's actions may be the result of a deeper understanding of this question among the OEMs, which has invested not only in Lithium America but also in Controlled Thermal Resources, a geothermally-derived lithium project in Salton Sea. In addition to lithium, GM also has strategic alliances with Queensland Pacific Metals in Australia for nickel and cobalt, Posco in South Korea for synthetic graphite, and MP Materials, which uses rare earths from its Mount Pass mine in California, for magnets. The mines are subject to a number of agreements, which allow them to secure quantities in the form of strategic alliances.

 

Mining is not an easy process, as there are many hurdles to overcome, starting with the mining licence, followed by mining, discovery, ore quantity, development plans, infrastructure (electric power, hydropower, transport), technical risks, consent from the local community, development permission from the relevant government, development financing and production. In fact, Rio Tinto had been developing a lithium project in Serbia for a long time but had to pull out due to opposition from the local population, and SQM will have to reduce the amount of water it currently uses for lithium refining by half in the near future. Understanding that resource development cannot be done at ease even when production has started, and taking into account that it takes at least 10 years from the start of a project to production, GM's investment in Lithium America may have been a natural step for the parties concerned. It is likely that the trend of OEMs securing raw materials through direct investment in the mining development side will accelerate in the future. Japanese companies such as Toyota Tsusho, Prime Planet Earth & Solutions and Hanwa Kogyo are doing their best, and we hope they keep up with the global competition. 

 

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This was the first time for the author to attend Battery Summit, and the venue was very well attended that there was standing room only. The conference was very interesting, with presentations on green procurement by Dr Yoshino, a Nobel Prize winner, by Mr Anno, a founding member of Northvolt, and a talk on expanding battery capacity by modifying the anode material by Dr Kanamura of Tokyo Metropolitan University. It would have been very interesting to hear about the raw material procurement policies of Japanese OEMs, the market outlook and project development of lithium majors such as SQM, Albemerle, Tianqi and Ganfeng in China, but it is very important for the industry in Japan to keep hosting these conferences in Japan, so I want to thank all the people involved for their cooperation. 

 

Japanese site is here

 

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Representative Director, Resource Play Co.

Supervisor, UMC Resources Inc.

  Chimura  (Iruniverse translated by Marcin)

 

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