CleanTech Lithium seeks strategic partners, expects two-tier market pricing: CFO

Lithium mine developer CleanTech Lithium is seeking strategic partners for its two "green" projects in South America's so-called Lithium Triangle and expects to have firm news on this within six months, company chief financial officer Gordon Stein said in an interview.

Development of the two projects, both using direct lithium extraction technology, or DLE– said to be more environmentally friendly than traditional lithium extraction techniques – will coincide with the emergence of two-tier lithium pricing in Europe corresponding to products' environmental acceptability, Stein foresees.

The two projects planned by CleanTech Lithium have the potential to reach a combined production of up to 40,000 mt/year of battery-grade lithium products within three-four years, with a 25-year mine life at that production level.

The plan is to initially build up to 10,000 mt/year lithium carbonate production capacity at the company's Laguna Verde project in Chile's Andean region, near the border with Argentina, in 2025, with the potential to expand capacity to 20,000 mt/year. The second project, at Francisco Basin in the same region, would have a similar production potential and would follow up to 18 months later, Stein said. Francisco Basin's lithium grades will be announced within two weeks, he said.

Construction of a DLE pilot plant is scheduled to commence Q3 this year. Equipment is being supplied from China.

The AIM-listed company is already "in NDAs (non-disclosure arrangements) or early stage conversations (on a potential strategic partnership) with some household names, including OEMs, traders and batterymakers, including in North America, Europe, the Far East and China," Stein told S&P Global Commodity Insights on the sidelines of this week's Global Mining Finance conference in London.

Partnerships could be based on a "Japanese model" involving investment in a 10%-15% capital stake, plus options for offtake, the CFO said. It is hoped that a partner or partners may help to raise or supply some of the $200 million-$400 million needed for the projects' construction, he said.

A potential partnership with the Chilean government is also being discussed, he added.

Mining's footprint

It is now recognized that mining forms a substantial part of vehicles' carbon footprints, which has led to growing Environmental, Social and Governance (ESG) pressure on the lithium, copper, nickel and other battery metals mining communities in recent months.

"Lithium production from hard rock mines and evaporation pond operations generate high emissions: estimated at 5-15 [mt] CO2 per [mt] of lithium," Stein told delegates at the Global Mining Finance event.

Traditional lithium brine extraction has also been recognized as water-intensive and slow: this production route may also require two years to extract battery grade lithium via evaporation from salt flats.

By comparison, DLE can extract battery-grade lithium in just two days via pumping the brine to a processing unit, using a resin to extract only the lithium and reinjecting the spent brine into a reservoir, achieving "almost zero-carbon emissions," Stein claimed.

"There are no evaporation ponds, no aquifer depletion. DLE is a game-changer," he said, indicating that this technology may be the way to rapidly boosting global lithium supplies and warding off shortages in a scenario where lithium demand is expected to increase twentyfold this decade.

DLE processes have already been in existence for around 20 years and are used in China, Argentina and in Germany, but still account for only around 1% of global lithium production, he said in the interview. "DLE is just coming to the market."

Two-tier pricing

Tighter regulations being introduced in the European Union in regard to vehicle emissions and carbon footprints as well as on the lithium-ion battery supply chain will naturally lead to two-tier pricing in lithium in coming years, according to mining footprint, Stein believes.

"The market will force that process ... if we want to be net-zero by 2050," he said.

Lithium prices have more than doubled so far this year as demand has surged for supplies of the mineral used for lithium-ion batteries for electronics and electric vehicles in the energy transition drive.

Platts assessed lithium carbonate CIF North Asia at $73,600/mt June 10, with lithium hydroxide CIF North Asia at $76,100/mt, according to S&P Global Commodity Insights.

Prices could potentially be impacted by increased supplies coming on stream, Stein said.

CleanTech Lithium's DLE projects will produce a lower-grade brine product, but which is still suitable for battery grade applications and with a 80% to 90% recovery rate, he noted.

Traditional brine lithium production projects achieve only 40% recovery rates after evaporation processes after two years, he said.

"There is a supply gap for the lower grades," Stein said. "We're in the perfect position at the perfect time."

As the DLE process is more energy-intensive than the traditional production route its production cost is however also higher: some $5,000/mt compared to around $3,500/mt for traditional production of the higher-grade material.

Stein expects that CleanTech Lithium's projects will be powered by renewable energy, which supplies around 60% of regional energy requirements.