Demand for basic materials and commodities that are crucial components in lithium-ion batteries have skyrocketed in recent years and will remain on an upward trajectory for the foreseeable future, based on numerous sweeping projections regarding the electrification of the global energy and automotive markets. However, the lithium industry is facing the prospect of a supply deficit, with many new producers scrambling to convert raw lithium into a usable end product for the battery manufacturing market. While conventional sources of lithium from brine sites in South America and spodumene hubs in Australia and Canada are currently well-poised to handle the predicted uptick in demand in the near-term, a bottleneck dynamic is emerging from a lag in downstream facilities coming online and in the longer-term substantial sources of new supply will be required to meet anticipated burgeoning demand.
Entering this bubbling cauldron is Lepidico, championing its patent registered L-Max® process technology that successfully treats previously overlooked lithium mica minerals into battery grade lithium chemical and a suite of valuable by-products.
L-Max® is designed to treat lithium-rich mica and phosphate mineral concentrates, using simple but highly effective leach and impurity removal processes. With only a handful of companies exploring for such unconventional sources of lithium, Lepidico’s L-Max® has the potential to be a disruptive force within the battery grade lithium production space, by bringing a new source of low cost lithium chemical to the market.
The main reagent used in the L-Max° process is sulphuric acid, a common waste product from base metal smelting operations that often needs to be transported significant distances to find a market. However, Lepidico’s technology is set to put this waste chemical to good use through L-Max®, which the Australian patent office, IP Australia, has identified as a novel, inventive and industry applicable process.
“From an environmental perspective the L-Max® process can be considered as a sulphuric acid sink that allows a hazardous waste product, when combined with the lithium mica feed source to be converted into a suite of valuable products,” says Lepidico’s managing director Joe Walsh.
“Crucially, it’s not just about lithium carbonate or lithium chemicals here,” he continues. “The other advantage with L-Max® is that it produces eco-friendly by-products and relatively modest quantities of benign waste.”
For instance, one of the by-products of the process is sodium silicate, which has a huge variety of manufacturing uses and could alone represent nearly half of overall potential revenue for Lepidico, according to Walsh.
This potential to make significant additional revenue from by-products is an important part of the processes economics and presents Lepidico with an exciting opportunity to offset operating costs associated with production, to the point where its process can be considered a zero-C1 cost method of producing lithium carbonate.
As outlined in the Phase 1 L-Max® plant pre-feasibility study completed last year, for a capex of US$40-45 million the 30,000 tonnes per annum (tpa) capacity plant will produce 2,500-3,000tpa of battery grade lithium carbonate equivalent (LCE), at an average cash cost of nil after by-products are taken into account.
“On a C1 cost basis, the pre-feasibility study identified that the by-products have the potential to offset all operating costs,” confirms Walsh.
The Phase 1 feasibility identified up to 50,000tpa of sodium silicate at $690 a tonne, along with other by-products that could include sulphate of potash (3,000-4,000tpa at $600 a tonne), as well as caesium and tantalite, the quantities of which vary depending on the feed source. Subsequently sodium sulphate has been identified as a further by-product, albeit of lower value.
“Our process is conducted at atmospheric pressure and at modest temperature. The maximum temperature employed is just over 100 Celsius. Furthermore, the process is not power intensive, and employs common use industrial reagents and equipment, which make for straightforward occupational health and safety requirements.”
This is where the strategic location of the Phase 1 plant, close to abundant, affordable sources of sulphuric acid, becomes important in terms of the low cost nature of the project and is why the company is looking at building its first plant in the longstanding mining town of Sudbury, in the Canadian province of Ontario.
There are two large nickel smelters in Sudbury which produce large quantities of sulphuric acid for export, with Lepidico almost certainly set to become the largest local consumer of that acid.
The case for Sudbury is strengthened by its well-established infrastructure networks, including power, water, gas and rail, experienced industrial workforce, and an abundance of mining related services. Sudbury is also close to active markets for its L-Max® by-products, with the wider Great Lakes region providing a depth of market for sodium silicate and potential new markets for this co-product.
Lepidico is looking to combine a fully-integrated business model with a downstream business that will see the company bring in third party feeds while building a global portfolio of quality lepidolite deposits.
However, owing to the rudimentary nature of lithium mica exploration and extraction, the company has found itself poring over several early stage lepidolite occurrences. Having said that, Lepidico has made a number of arrangements with the owners of lithium mica deposits, including one with private Portuguese firm Grupo Mota.
Under the existing ore offtake agreement with Grupo Mota, lepidolite ore from the Alvarroes mine in Portugal is planned to be concentrated and shipped to Canada for processing by L-Max®. “We are working closely with Grupo Mota on furthering this arrangement and late last year we announced the first mineral resource estimate for that deposit,” says Walsh.
“While modest in size at about 1.5Mt, the key here is that we don’t need a lot of tonnes to support an L-Max® plant, with this resource sufficient to provide more than 10 years feed to our planned phase 1 plant in Sudbury.”
Elsewhere, Lepidico has entered into arrangements over various lepidolite projects in Canada and Western Australia, where drilling programmes have recently commenced on the latter projects.
Tailings retreatment represents another limb of the upstream model. Lepidico recently completed a successful test work programme on tailings samples from the Mt Cattlin mine in Western Australia, a spodumene operation owned by Galaxy Resources, a major producer in the lithium sector.
The results revealed that the L-Max® process was able to deliver attractive process recoveries of over 90% while producing lithium carbonate grading of 99.8% LCE from lepidolite contained in the Mt Cattlin tailings, an impressive result for the following reasons.
“This really demonstrates the flexibility of L-Max®. It has the capability to economically extract lithium chemicals from tailings containing relatively modest quantities of lithium-mica.
“Lepidico provides a significant value-add opportunity for existing spodumene operations that are processing ores that also contain lithium-mica and phosphate minerals.
“Furthermore, in the case of former operating mines there may be potential to reprocess tailings and waste dumps, which could provide an environmental remediation opportunity on such sites.”
Aside from the potential to open up new revenue streams from hard rock lithium sources, the deal with Galaxy provided further strong validation of Lepidico’s method and strategy from a major global player in the lithium space and one who’s current market capitalisation stands at around $1.4 billion.
“For any lithium development company, the backing of an incumbent industry participant provides a stamp of credibility and is a massive endorsement of the underlying business strategy” declares Walsh.
Changing supply and demand dynamics
Returning to the forces shaping the current dynamics in the global lithium space, demand for the light metal has been on a steady growth curve over the past decade, driven by increased portable technology usage and production of devices that require lithium-ion batteries.
In fact, between 2006 and 2016 lithium-ion battery demand went from 10GW to nearly 100GW, according to metals consultancy Roskill. But, only in the last five years have EVs emerged into the picture, with this disruptive industry set to propel lithium demand to new heights if current adoption projections are taken as gospel.
“EVs are coming off a low base, however growth in market share is significant. More importantly though, we are seeing – around the developed world and particularly in China – huge government incentives to encourage EV adoption.
“I think it’s going to be those initiatives that are really going to underpin broad based, rapid EV adoption. Particularly for urban usage, EVs are a very compelling mode of transport.”
Operating on the supply side of this major growth industry is where Lepidico hopes to thrive. At this stage, the Phase 1 plant is about proving commercial viability of L-Max®, after proving the technical capability of the process on a continuous basis at lab scale.
The Phase 1 plant has nominal capacity of around 3,000tpa LCE, but Lepidico expects to have additional installed capacity in the plant’s major capital equipment that could allow it to be efficiently expanded to 5,000-6,000tpa LCE, although this is still quite small given the overall market for lithium chemicals is currently around 200,000tpa.
However, a full-scale L-Max® plant, which will be evaluated to succeed the Phase 1 plant in the early 2020s, is expected to be considerably larger at around 20,000tpa LCE. This would make Lepidico a globally significant producer of battery grade lithium for an industry that could well grow to a size of 500,000tpa LCE by this time.
“The industry is going to need numerous projects of this size to be able to satisfy the current projections for demand growth,” predicts Walsh.
“What’s going to be most important however, is thanks to our substantial by-product credits and also to the relatively low cost reagents, Lepidico should sit in the lower part of the global cost curve, making it a robust producer throughout a price cycle.”
Lepidico’s short-term aim is to get the Phase 1 L-Max® plant into operation by 2020, with the securing of all relevant permits and approvals being the next hurdles to overcome. Walsh assures that the company has tremendous support from the province of Ontario and the city of Sudbury for its Phase 1 plant initiative.
In the long-term, Lepidico will look to fast-track the full-sale plant into operation during the early 2020s, at which point it would become a globally significant, vertically integrated lithium chemical producer. Beyond this horizon, the company is also looking to establish replica plants in other key markets such as Europe and Asia.