13/07/26
Rock Tech advances transatlantic battery supply
Rock Tech advances transatlantic battery supply
Houston, 13 July (Argus) — Canadian-German lithium developer Rock Tech Lithium
is stepping up its upstream investment in Ontario while applying an
infrastructure-style financing model to its planned lithium hydroxide
converters, chief executive Mirco Wojnarowicz told Argus in an interview. Rock
Tech began as a spodumene explorer in Ontario but has spent recent years focused
on downstream conversion, with its planned Guben converter in Germany and a
second plant planned at Red Rock, Ontario. The mining side is now back in focus,
however. "We have not done a lot of work on that in the last two years. Now we
are focusing on it again," Wojnarowicz said. "We are even acquiring new
exploration projects so that we increase our resource base." Georgia Lake
anchors integrated Canadian chain Rock Tech's flagship mining asset is the
Georgia Lake project, about 160km northeast of Thunder Bay, Ontario. The project
is a modest deposit of roughly 14mn-15mn metric tonnes (t) grading around 0.9pc
Li₂O, planned as an open-pit and underground operation over a nine-year mine
life. A pre-feasibility study outlines production of about 100,000 t/yr of SC6
spodumene concentrate, from which the company intends to supply around 40pc of
feed for the Red Rock converter. The project sits on ground first explored in
the 1950s, with direct access to the Trans-Canada Highway and a power line
running into the mine site. "Because of all that, permitting is very well
advanced, and we see Georgia Lake positioned to be first to market in Ontario,"
Wojnarowicz said, noting the claims-to-lease process is complete with final
environmental assessment steps under way. On 22 June, the company announced an
option to acquire the Victory project, a 9,875-hectare exploration property
between Dryden and Kenora, also in Ontario, hosting two spodumene-bearing
pegmatite occurrences. "It's early stage, but the grade is what's very
interesting," Wojnarowicz said. The more-advanced Last Resort pegmatite is about
30m wide with grab samples of up to 5.1pc Li₂O, while the Bounty occurrence, a
60m wide pegmatite, has returned samples up to 3.5pc Li₂O. Georgia Lake is 100pc
owned, while Victory is held under option to acquire a 100pc interest, with no
mining-level partners. GP/LP structure unlocks infrastructure capital Rock Tech
is applying a general partner/limited partner (GP/LP) structure — common in real
estate and investment funds but rare for industrial plants — to its Red Rock
converter, after transferring the design of the Guben plant to Canada to build
an integrated model with its Ontario mines. "One of the challenges we had in
Germany is that infrastructure investors are not happy to invest into a chemical
refinery, because they don't want to be part of the operation," Wojnarowicz
said. "They want a kind of separation." Rock Tech has secured a C$200mn ($147mn)
anchor commitment from Canadian industrial infrastructure firm BMI Group as lead
limited partner. "We definitely take the majority in the general partnership, so
we maintain operational control," Wojnarowicz said. "As the general partner, we
receive management fees and royalties because we bring in the IP. We also
maintain a stake in the limited partnership — there it is not necessary to
maintain a majority — and for that stake we receive dividends." The model also
accelerates returns, he said. "It gives us first cash flows for the project when
we start construction, which is much better than waiting two years until you
ramp up," he said. Back-to-back index pricing protects margins The 24,000 t/yr
Guben converter has a binding offtake with Mercedes-Benz for 10,000 t/yr of
battery-grade lithium hydroxide — about 40pc of nameplate capacity — with
spodumene feedstock contracted through trading firm C&D Logistics. Under the
offtake, Mercedes-Benz carries the payment obligation but directs delivery
destinations within its battery supply chain. Contract pricing details are not
public, but the structure is index-based, with feedstock purchases referenced to
the same index as hydroxide sales. "Both prices are discovered the same way and
they float together, which gives us a relatively secure margin," Wojnarowicz
said. "Of course, in low-priced environments the absolute margin is less, but
the relative margin stays sustained." Hedging options remain limited,
Wojnarowicz said, with spodumene futures liquidity "very low", although CME
lithium hydroxide volumes are better. China's Guangzhou Futures Exchange is more
liquid and is opening access to non-Chinese participants. RTT Lithium, Rock
Tech's 50:50 Geneva-based joint venture with trading house Transamine, handles
paper hedging. The Guben plant is designed to blend spodumene from up to two
sources at a time — Canadian, Australian or African — using an on-site blending
facility, while Rock Tech's Red Rock lithium converter facility in Ontario would
take Georgia Lake concentrate at an internal transfer price. On product choice,
Wojnarowicz dismissed calls for Western carbonate capacity. "The reality is
there is no real industrial-scale producer in the Western world — that knowledge
is basically sitting in China," he said. "In Europe, hydroxide is still okay. In
Canada, we will finalize it during the definitive feasibility study. I think
both products make sense." Storage demand outshines EVs Wojnarowicz is currently
more excited about battery energy storage than electric vehicles (EVs), he says.
"We are not talking about consumers anymore, we are talking about
infrastructure, so the growth rates are much more interesting," he said,
estimating that EVs account for about 60pc of lithium demand, with energy
storage at 30pc and the remainder including defense. "I see quite reasonable
growth in demand. The question is what the supply response will be," he said.
Beyond automotive, Rock Tech has a cooperation with cathode producer Ronbay
Technology, whose plant in Konin, Poland, sits about 300km from Guben. "For us,
a cathode producer is the more natural offtake partner, given its position
further downstream in the battery materials value chain," Wojnarowicz said,
describing the Mercedes-Benz deal as a strategic move by the automaker. "But we
will only secure these additional contracts once our projects are more
advanced." By Carol Luk Send comments and request more information at
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