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Sustainable lithium would be 'game over' for gas cars – Sigma Lithium co-CEO


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Sustainable lithium would be 'game over' for gas cars – Sigma Lithium co-CEO

Lithium producers can meet the surge in demand for the white metal used in electric vehicle batteries if they keep costs low and prioritize sustainability, according to Ana Cabral Gardner, co-chairperson and co-CEO of lithium producer Sigma Lithium Corp..

➤ "We see ourselves as a key player in providing stability to the supply chain," Gardner said in an interview. "Sigma Lithium wants to provide confidence to the supply chain that there's going to be a lot of lithium and a lot of sustainable lithium."

If electric vehicles reach cost parity with conventional cars, it's "game over" for internal combustion engines, Gardner said. To make that happen, lithium producers must leverage sustainable technology to produce high-quality, low-cost lithium and keep battery costs down.

SNL Image

Sigma Lithium Corp.
co-Chairperson and co-CEO Ana Cabral Gardner.
Source: Sigma Lithium Corp.

Vancouver, British Columbia-based company Sigma Lithium is developing its wholly owned Grota do Cirilo lithium project in Brazil to produce what it has called a low-carbon, high-purity lithium product at a competitive price. On Oct. 4, the company announced that it reached a six-year binding off-take term sheet with South Korean battery-maker LG Energy Solution. Ltd. to supply lithium from its hard-rock mining operations starting in 2022. The developer commenced trading on the Nasdaq Stock Market on Sept. 13 and aims to reach net-zero carbon emission targets by 2024. S&P Global Market Intelligence spoke with Sigma Lithium co-CEO Ana Cabral Gardner on Oct. 13 to learn why sustainability is a core principle of the company and what it will take for lithium producers to scale up and meet soaring demand. The following conversation has been lightly edited for clarity and length.

S&P Global Market Intelligence: Do you think lithium producers are prepared to meet the surge in lithium demand expected this decade?

Ana Cabral Gardner: I think we are. I mean, lithium is everywhere and available. But there are four challenges: scale, quality, environmental sustainability and keeping costs down. First, we have to scale up rapidly and significantly. Second, we have to engineer the high-purity and high-quality lithium required by the cathodes that go into batteries. Then, we must achieve environmental and social sustainability, while keeping the cost down. Costs are key. The costs have to be low because ultimately, electric vehicles need to cost the same as cars with internal combustion engines. And it's on us, the industry, to ensure this is the case. That is the main challenge here.

So, the industry is ready, and I'm optimistic. I think there's enough brainpower in this industry from car to mine to solve this. I do. And if you look at the incumbents, there's scale. There's chemical prowess. There's environmental expertise. Look at what we've done with this existing technology. I believe that it completely can be done.

Are you seeing sufficient investment going toward lithium mining projects?

I think there is. The capital is more discretionary now though because the previous cycle wasn't entirely successful to investors. There were hits and misses. As a result, investors are battle-scarred and are very discretionary in how they allocate their funding. We have been extremely fortunate because Sigma Lithium received very solid backing from leading investors early on. It's almost a luxury we've had. The bedrock of my investor base gave us the license to develop this asset today and have sustainability as a core variable. So, when you think about environmental, social and governance, or ESG, it actually starts on the "G." You need the governance, the investor base, to give management the license, the authority and the power to actually deliver the "E" and "S."

Are you concerned that other lithium producers won't uphold high sustainability standards and consequently make it difficult for companies focused on sustainable extraction to compete?

I don't know. I think it's up to them. I can't speak for them. What I can say is: Where is the funding? The funding is going to innovation and green technologies. We've been very fortunate because we secured that funding. And here's the thing, technology can be our holy grail here. It can also be our death, but it can be our holy grail. It's up to us, the industry, to deploy technology in our favor. We are deploying green technologies. The one paramount reason why we are sustainable and low cost is because we deployed green technologies.

So, when you ask me, do I think lithium can rise to the challenge? Of course we can. Let's all rise to the challenge of making the whole industry sustainable. It would be game over for the combustion industry. I mean, game over. These electric cars are better than cars with combustion engines. Simple as that. And it's a decision based on cost. Is it cheaper? Is it better? Yes, of course, I'll buy it.

How has the recent rise in lithium prices and overall volatility in markets influenced your business?

I do not believe the price fluctuations, the volatility is benign. We know why it happened. What happened was the demand uptake in Europe, in particular, was completely unexpected. By year-end 2020, the levels of EV demand coming out of Europe surprised the entire industry. So, the whole industry had to gear up this year, 2021, to deliver these larger volumes. But remember, we came from an environment that was oversupplied. So, it was a big burden to place on the industry to go from an industry in oversupply with retrenching investments to a scenario where all of a sudden, there's not enough lithium. Everyone is trying to gear up for more. There is more. There's a lot of it. But as I said, the challenge now is producing more sustainable and cheap lithium. It has to be low cost. That's the point. If it's not low cost, we'll kill the goose that laid the golden egg.

Because Sigma is at such a large scale, we see ourselves as a key player in providing stability to the supply chain. We want to provide confidence to the supply chain that there's going to be a lot of lithium and a lot of sustainable lithium. So, we're integrating with our customers, battery-makers, directly. We jumped two steps into the supply chain. The battery-makers come to us, and we meet there, and we all win. We win, they win, it is a win-win partnership because we then gain what we call sustainability of cash flows. Our prices are floating. And on the other hand, the battery-makers gain a steady, large supply of batteries.

Sigma Lithium's project is located in the Minas Gerais state of Brazil, a location you have called "mining-friendly." Can you say more?

There are two great mining jurisdictions in the world today that deliver and supply materials to the world — what we call the workhorses of the materials industry. These regions are Western Australia and the Mina Gerais state in Brazil. If you take other products like iron ore and the lot, most of them today are produced in these regions, which are centuries-old mining jurisdictions. All the infrastructure is there. It has roads, water, transmission lines and power, and in our case, renewable power. We have a hydroelectric plant a short distance from us. The port is nearby, just like in Western Australia. Old infrastructure is there, and it's mining-friendly because it already delivers most of the world's minerals.

You are a co-CEO. Can you talk about your role in the company and how you share leadership duties?

[Co-CEO Calvyn Gardner] and I run totally different parts of the business. We have skillsets that are fairly complementary. That's how we work super well together, and that's the unique part. My co-CEO lives at the project site [in Brazil], which is also very unique. You don't usually find CEOs of these companies living at the project. He's the founder of the company. He's there literally on the factory floor and is the boots-on-the-ground person. On the other hand, we have the Nasdaq to attend to and all the challenges that come with it. So that's my role.

As Sigma grew bigger, it was very important for our investors, the ESG investors and the greentech investors, that we went to the Nasdaq, and we adhered to a high standard of governance in the U.S. market, which is the golden standard of governance and capital market transparency globally. As the complexity increased, I was elevated to co-CEO because the challenge is now larger. We have to keep up with what's necessary to be successful in the U.S. capital markets.

This article was amended on Oct. 15, 2021 to clarify a quote describing European EV demand.