Q&A: World needs more investment in battery minerals

Lithium has become a key element as the world seeks to transition to more electrification, but more investment is needed — particularly outside of China — to ensure that there is sufficient supply, American Lithium chief executive Simon Clarke told Argus. Other minerals and metals that are critical to the development of lithium ion batteries, like sulphur and graphite, are also experiencing a supply squeeze as global refining declines.

Edited highlights from the interview follow.

Can you tell us a little bit about American Lithium?

American Lithium was founded in the first real cycle on lithium around the 2015 timeframe. As you probably know, there's a lot of lithium around the world, it's just extremely hard to extract it. And it's extremely hard to extract it economically.

In 2020, as the market started to show signs of recovering in lithium, American Lithium came out with some good early metallurgical work that showed that the claystones in this area are very susceptible to acid and you can extract lithium very quickly. It had also refined its assets down to one, which is what we call the TLC project near Tonopah, Nevada. It seems to be an ideal location to actually discover, develop and ultimately build a mine.

In late 2020, as the lithium market itself started to come back across the board, the company began to question, should we add some other assets? We looked at a number of hardrock opportunities in Canada and the US and other areas and kept coming back to Plateau Energy in Peru, which had very large, high-quality project called Falchani. Plateau brought with it a team that had discovered Falchani and taken it through to a very robust preliminary economic assessment (PEA), really almost to feasibility level, where they'd proved the ability to precipitate battery-grade lithium carbonate through the main flow sheets, so no need, as most projects in the world, for further refining elsewhere.

The way Falchani is set up, it would be phased where you would produce roughly 30,000 t/yr of [lithium carbonate equivalent (LCE)] in phase one, and then we would consider bringing on another couple of phases that would ultimately take production to north of 80,000 t/yr. And that would put it as one of the bigger mines on the planet for sure.

We're looking at a preliminary economic assessment being published within the next two or three months here for TLC. And in Peru, we're looking to launch the next major phase of drilling there.

In terms of the downstream demand for lithium, do you have an estimate of how much battery production is in the works globally?

Even the most conservative analyst reports I've seen, they're talking about at least a three- or four-times uptick from where we are today by the end of the decade, and most analysts are talking a lot more than that.

We do not just need gigafactories, we need cathode plants. We certainly need some of those in California. We need them on the east coast as well.

How does current lithium production growth compare with EV battery production growth?

I think what you're seeing right now, obviously, is the growth in EVs has been accelerating anyway. And then you factor the issues right now with the cost of gasoline and supply issues around the world.

You can't buy an electric vehicle in Vancouver right now that can be delivered within a year. The supply is really tight, the demand has really gone up. And obviously, with that the demand for the underlying commodities that make up those vehicles has gone up.

And there hasn't been much new supply come on. There are a lot of explorers and developers out there, but there's actually not that much physical production right now. Most of it comes from Australia on the hardrock side, which then gets refined in China. Or from the South American brines. But in order to meet any of the forecasts we absolutely have to bring on more supply of lithium across the globe. And critically in the US. I mean, we just are staring down the barrel if we don't bring on additional lithium supply and other critical minerals, because right now, China dominates. And I think the conflict in Ukraine is really driving home the issues when we rely on what some people would term non-friendly states to control the supply of all these critical minerals.

You tend to see commodities always shoot too high when supply gets squeezed, and then too low on the other side, which then means there isn't enough investment, which is what we've seen with lithium. There haven't been enough projects permitted or built over recent years.

I think with China, they have a plan. They play the long game. They control a lot of the best cobalt assets on the planet. The Australians, because they haven't built their own refining or conversion capacity in Australia, their model is they mine the hardrock, they concentrate it and they ship it to China. And China does all the refining, takes all that margin out of the equation, and then controls the supply of refined products to the west and elsewhere. And it's why you're starting to see the automakers and other industrial players in the US start to get very concerned about where future supply of lithium is going to come from.

One challenge I've heard is that the lithium extraction process uses sulphuric acid — and sulphur, which is a byproduct of refining, was already in rather short supply. Refining is on the decline, in part because of the expected global shift to EVs, but this has the unintended consequence of less sulphur production and less production of other byproducts like petroleum coke, which is used to make the graphite anode of the battery. What are some of the strategies that battery producers are considering to ensure sufficient supply of sulphur and petroleum coke feedstocks as the world moves away from refining?

It's a highly topical question. Acid leach is far and away the most predominant way of extracting minerals and sulphur would be the most common of that. So the increase in sulphur prices have definitely had a major impact on the costs of processing lithium and other metals.

There's one thing I would point out — I don't think we're yet at peak oil. I know everyone talks about this shift; it's coming. In the real short term, I think there's plenty of refining still going on. The question is, what type of oil are they refining? Because I think you tend to find that a lot of the sulphur comes out of the heavier oil, and there's less of that, which is helping drive up sulphur prices right now. But certainly as we transition to the new economy and there's less and less refining done, we're going to have to either find different supplies of sulphur, or we're going to have to switch.

There are other processes we're considering that wouldn't rely on sulphur, and they may make the most sense anyway. But there's no doubt that as we move forward, and the price of sulphur rises, and it potentially gets more scarce, that we will have to look at other types of processing. And you're absolutely right, it will be a direct consequence of the move away from hydrocarbons and refining and that whole side of things. That is the main source of sulphur.

Is needle coke going to continue to be used, or are people going to switch to natural graphite? Or is there a chance that as the industry develops, it decides to go in another direction to something that doesn't need graphite at all?

No, I think all lithium ion chemistries right now, certainly on the hydroxide side, they have graphite, they have cobalt and all of these other metals in them. It is a key element.

I don't really see a better alternative to lithium. And if you consider it's taken 38-40 years for lithium ion to become the incumbent, it just shows you the development time that's needed. And then you have all of the end users, all of the testing of it and all the supply chains, it's just not something that's easy to disrupt. So I do see lithium ion as the incumbent, certainly for transportation, for cell phones, vacuum cleaners, lawn mowers, whatever.

I would say that if something happens, it's going to be some amazing new advancement in technology that we haven't seen yet, maybe something on the fission side, maybe some other technology that we just haven't thought of. But I don't see the need for battery chemistries to change for the devices where lithium ion makes so much sense.

When you look at something like graphite, I don't see why that would be replaced, at least in the short to medium term.

By Lauren Masterson

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