Source: Envirostream Australia Pty Ltd.
With the lithium market still in the doldrums and investors perplexed about Lithium Australia NL's many areas of interest, the company has flagged spinning off its battery recycling business and potentially its battery division.
After announcing a "rationalization program" on Oct. 14, the company announced Oct. 24 that it is eyeing a public float of Envirostream Australia Pty. Ltd., the Melbourne, Australia-based company in which Lithium Australia increased its stake to 23.9% on Oct. 16.
Lithium Australia Managing Director Adrian Griffin said increasing that stake was in preparation for merging Envirostream — the only company in Australia with the integrated capacity to collect, sort, shred and separate all the components of lithium-ion batteries, including the lithium — with the intellectual property his company has been developing for the refining of those battery materials.
The separated battery components, including plastic materials, steel copper and aluminum foil, go into standard scrap markets in Australia, and the end-product powder is exported to South Korea for refining. In preparation for building a domestic recycling business, Lithium Australia has successfully taken lithium out of that material and generated new batteries out of it.
Griffin told S&P Global Market Intelligence that all this is a "potentially very significant recycling industry in Australia," particularly given the increased legislative and community focus on environmental responsibility.
"There's a business that isn't directly linked to the lithium market and capable of a standalone, strong investor focus," he said. It is anticipated that the restructured Envirostream/Lithium Australia recycling business unit will be "investment ready" in the first half of 2020.
The move comes after Lithium Australia's shares halved from 8.8 Australian cents per share in May to 4.5 cents, which Griffin put down to a combination of low lithium prices and the company's own complex portfolio of battery recycling, lithium chemicals, cathode powder and battery manufacturing and testing, and raw materials.
The other business that Griffin said is close to commercialization is Lithium Australia's battery subsidiary VSPC Ltd.
VSPC has already created lithium-ferrophosphate, or LFP, cathode powders from mine waste and recycled batteries on a pilot scale in Brisbane, Australia. The produced LFP powders are being incorporated into commercial-format 18650 coin-cell lithium-ion batteries at joint venture partner DLG Battery Co. Ltd's plant in China.
Griffin is off to China in November to discuss potential partnerships that may utilize existing plants for the commercial production of LFP powders, which are currently being produced in VSPC's Brisbane pilot plant.
This potentially provides a low-capital entry and lower operating cost than can be achieved in Australia. The resulting product, subject to meeting the requirements of Lithium Australia’s agreement with DLG, would then be put into DLG's plant for the production of LFP cells.
Griffin said the production of higher-level cathode-active materials is Lithium Australia's biggest expense, yet "has nothing directly to do with the lithium market" and is therefore "ideal" for also spinning out.
This will leave Lithium Australia focusing on its lithium chemicals business, and has lodged patent applications for most of the technologies emanating from its research and development program.
These include SiLeach, for the recovery of lithium and other valuable by-products from mica; and LieNA, for the recovery of lithium from spodumene concentrates, particularly the fine spodumene and contaminated materials mostly relegated to tailings by Western Australian producers due to grade and recovery challenges.
Griffin said the LieNA approach to processing spodumene has "far-reaching implications," given between 30% and 50% of lithium from Western Australian mines is being discharged to tails, so Lithium Australia is in discussions with major producers in the state believing it can get most of the lithium out of their waste.
"It's all about sustainability, and we believe we have the process that fixes that problem," he said.
Perth, Australia-based financial advisory RM Research director Guy Le Page said in an interview that such "secondary sources" of lithium will become more important given he does not believe much new mine supply will come on stream in the next 24 months. Le Page also believes extracting lithium from tailings will attract investment as it is less capital intensive.
Le Page said that while the lithium market looks like it is in oversupply, it is debatable whether oversupply projections are real or overstated given existing producers are "hemorrhaging cash" and many of them are cash flow negative.
Lithium Australia has also developed technology for the recovery of lithium as lithium phosphate, and the refining of lithium phosphate to achieve an ultra-pure (greater than 99.9% lithium phosphate) substance.
The company is also revising the ore body model for its Sadisdorf lithium-tin deposit in Germany, and is in talks with third parties regarding their involvement in the exploration and assessment of a number of its Western Australian exploration assets.
Griffin said Lithium Australia has taken a position in most of the major lithium provinces around the world with "solid" exploration targets, "not with a view of mining them but to have them as insurance policies. If the tailings stream dries up, we'll mine our own."