LTR IS TARGETING TO PRODUCE ITS LITHIUM AS GREEN AS POSSIBLE (maybe the greenest in market) BY HAVING BEST-IN-CLASS ESG CREDENTIALS
The path to net-zero emissions undeniably includes lithium. However, despite serving a positive environmental outcome, lithium production also has sufficient carbon footprint to have already raised red flags among automakers. As the pressure on commodity producers around ESG (Environmental, Social and Governance) issues continues to rise, the lithium sector is recognizing that playing a key role in the energy transition is not enough to escape scrutiny.
The Europeans are quite serious about ESG credentials while China does not care about it much yet.
The European “battery passport” scheme, proposed by the EU, will place ESG regulations on batteries produced in and imported into EU markets, incorporating a supply chain audit approach to determine the ESG impact of a battery. The scheme is currently expected to introduce CO2 regulations by 1 July, 2024. The "battery passport" scheme requires responsible mineral sourcing along the electric vehicle battery supply chain and it is expected to trigger more off-takes with miners around the world.
LITHIUM BRINE IS NOT GREEN AT ALL
As we all know brine operations can not be considered as green as they cause evaporation of huge amount of water which is one the most important credentials (after CO2 emissions) of ESG . Especially the Atacama desert in Chile where over 80% of lithium carbonate produced from brine at is one of the driest areas on Earth, but both SQM and Albemarle brutally pump the brine water from the depth and pumps it to evaporation ponds then get it evaporated. This is enviromental breaching of ESG regulations.
LITHIUM BRINE PRODUCED BY SQM & ALBEMARLE FROM ATACAMA DESERT IS NOT SOCIALY SUSTAINABLE
You will see (some of you already know I am sure) when you read the "S" Social criteria of the ESG which examines how that criteria manages the communities where it operates as well as others. The indigenous people of Atacama desert say that water belongs to them, but the constitution of Chile says the brine is a not water but it's a commodity. That constitution was written in fascist Pinochet times (between 1970-1990) when his son-in-low got the lion's share in SQM and SQM got the mining rights in that region of Atacama. Same for Albemarle, the US company, they got the other lion's share at Atacama because the US was backing up the fascist Pinochet regime. Now Chileans made a referandum and that fascist constitution is going to be re-written soon. SQM and Albemarle's mining rights are in danger.
Every miner should understand that ESG is not only being as green as possible, it's about being socially responsible and sustainable.
WHY IS LTR TARGETING BEST-IN-CLASS ESG CREDENTIALS?
Before talking about LTR's green lithium production targets (best-in-class ESG credentials) let's have a look at why we need to make the things greener, and then how LTR can make it greener, even maybe the greenest.
Then we can understand that by targeting BEST-IN-CLASS ESG CREDENTIALS, LTR will attract much more investors and large funds from all around the world day by day, and its stock price will not cease increasing up to a deserved level. It will be exposed to constant rerating over the time.
LTR said on page 3 of LTR's preso on May 17 202; "Liontown aims to be a world-class battery materials producer". And added; "With strong ESG credentials and sustainable returns".
I now strongly believe that they have very strong chance to achieve that because they have the capacity, knowledge, ambition and opportunities to that.
We are very lucky with LTR; by the resource, by the management, by the right time, and everything. Even having an underground mine was looked as a disadvantage but now it's clearly an advantage. Good luck again.
GLOBAL WARMING AND PARIS AGREEMENT
We all know what Global Warming is and how dangerous it is for our blue planet and our next generations. We have to stop the warming on Earth by reducing the carbon emissions.
Under the 2015 Paris Agreement, 195 countries pledged to limit global warming to well below 2.0°C, and ideally not more than 1.5°C above preindustrial levels.
To achieve that target all industries will be required to participate to the decarbonization process.
That will create major shifts in commodity supply/demand because the majority of raw materials are coming from mines. The mining sector will also face pressure from governments, investors, and society to reduce emissions.
Mining is currently responsible for 4 to 7 percent of greenhouse-gas (GHG) emissions globally.
Scope 1 and Scope 2 CO2 emissions from the sector (those incurred through mining operations and power consumption, respectively) amount to 1 percent, and fugitive-methane emissions from coal mining are estimated at 3 to 6 percent.
A significant share of global emissions—28 percent—would be considered Scope 3 (indirect) emissions, including the combustion of coal.
LTR is targeting to be BEST-IN-CLASS FOR REDUCES SCOPE-1 AND SCOPE-2 EMMISIONS
LTR said this on page 17 of its preso on May 17 2021 that U/G mining strengthens its ESG position and maximises mine life.
LTR was stating that it's project will be enabled by underground approach. They are also looking to electrify the whole U/G operations (by all means; EVs, E-Trucks and E-Machines, etc.), Hence the "meaningful" engagement with traditional owners (social part of ESG), and of course reduced land disturbance.
By this way, the a little bit higher cost of U/G mining operation of KV projects has been converted to a very important advantage in ESG terms.
LTR was not bullshitting about Scope-1 and 2 emission targets. They gave the tables on the same preso on Appendix Page 39.
TARGETING BEST-IN-CLASS ESG CREDENTIALS Enabled by underground mining.
LTR said this on page 23 of its preso on May 17 2021;
It is actually all about INVESTING which is what we are doing in LTR and stock market.
But it's about SUSTAINABLE INVESTING and SOCIALLY RESPONSIBLE INVESTING (SRI). It is important if you care about it, otherwise you can go and invest in stocks which can't show any sign of ESG credentials.
Environmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. No single company may pass every test in every category, of course, so investors need to decide what's most important to them.
Environmental criteria; consider how a company performs as a steward of nature.
Social criteria; examine how it manages relationships with employees, suppliers, customers, and the communities where it operates.
Governance; deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.
Both Social and Governance criteria are already embedded in the DNA of LTR. I know very well that those two criteria have been the priorities for Tim Goyder from the start of LTR and his other vehicles -CHN & DEV).
Environmental criteria is our topic here, and it is what LTR is targeting to be the best-in-class of. It may include a company’s energy use, waste, pollution, natural resource conservation, and treatment of animals.
WHY ARE ESG CREDENTIALS SO IMPORTANT?
ESG credentials are an increasingly popular way for investors to evaluate companies in which they might want to invest.
Many mutual funds, brokerage firms, and robo-advisors now offer products that employ ESG criteria.
ESG criteria can also help investors avoid companies that might pose a greater financial risk due to their environmental or other practices.
In recent years, as younger investors, in particular, have shown an interest in putting their money where their values are, brokerage firms and mutual fund companies have begun to offer exchange-traded funds (ETFs) and other financial products that follow ESG criteria.
Robo-advisors such as Betterment and Wealthfront have also used them to appeal to these investors. According to the most recent report from US SIF Foundation, investors held $11.6 trillion in assets chosen according to ESG criteria at the beginning of 2018, up from $8.1 trillion just two years earlier.
More recently, however, some investors have come to believe that environmental, social, and governance criteria have a practical purpose beyond any ethical concerns.
By following ESG criteria they may be able to avoid companies whose practices could signal a risk factor—as evidenced by BP's 2010 oil spill and Volkswagen's emissions scandal, both of which rocked the companies' stock prices and resulted in billions of dollars in associated losses.
As ESG-minded business practices gain more traction, investment firms are increasingly tracking their performance. Financial services companies such as JPMorgan Chase, Wells Fargo, and Goldman Sachs have published annual reports that extensively review their ESG approaches and the bottom-line results.
"Global ESG-data driven assets hit $40.5 trillion" "The value of global assets applying environmental, social and governance data to drive investment decisions has almost doubled over four years, and more than tripled over eight years, to $40.5 trillion in 2020."
HOW LTR IS GOING TO BE BEST-IN-CLASS FOR ENVIROMENTEL CRITERIA (EC) OF ESG
ENERGY USAGE & CARBON FOOTPRINT
EC includes a company’s energy use, waste, pollution, natural resource conservation, and treatment of animals.
Because KV project will be mainly an underground mine its waste, pollution and land disturbance will be far less than the other lithium mines which nearly all of them re open pit mines.
The only criteria to be in competition with the other mines will be the energy use.
That is is all about carbon footprint of the end product which LTR is going to produce, which is lithium hydroxide.
Energy use in;
Mining of ore (All open pit, LTR only U/G)
Process plant; ore-to-spod concentrate conversion (next to mine)
Transportation of spod concentrate to the chemical refinery (by truck to around Perth or by truck+ship to overseas)
Chemical refinery; Spod concentrate-to-Lithium Hydroxide conversion
Again because LTR will have (mainly) an U/G mine, it will not dig out the over burden on top of the resource. It will directly reach to the ore and will cut it and move to the spod concentrate plant. Therefore it will use less energy to reach it and process it. LTR has a plan to use electric vehicles in the mine as well.
Total anticipated KV project's site wide online power demand including underground mine (and spod concentrate plant) is 13.5MW.
A 4.4MW solar farm located adjacent to the proposed accommodation village plus backup emergency power supply generator/s of 2MW has also been included within capital allowances. (see PFS update on Oct.9 2020).
I can imagine that it wouldn't be hard to increase the solar farm capacity to 15MW or 30MW (for supplying to chemical plant there as well) as there is a huge empty land at the area to set it up. Its cost wouldn't be too much but it may need a lots of battery storage for working during night (or they can use the grid electricity at that time).
CARBON FOOTPRINT INCREASES A LOT BY;
TRUCKING SPOD CONCENTRATE TO CHEMICAL REFINERY (TO PERTH)
TRUCKING TO PORT + SHIPING TO CHINA BY VESSELS
Exhaust gases from road transportation are responsible for about 16% of human-made carbon dioxide emissions, according to the Intergovernmental Panel on Climate Change.
Carbon footprint of large (truck) vehicles is enormous. 1 liter of diesel will produce about 2.7 kg of CO2.
Trucking the spod concentrate from mine to the chemical refinery for production of lithium hydroxide (LiOH) there for hundreds of kms creates huge amount of CO2 emissions.
8 tonnes of spod concentrate can be converted only to 1 tonne of LiOH in chemical refinery.
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For example Tianqi has to truck 400,000 tonnes of spod concentrate from Greenbushes mine to its Kwinana chemical refinery plant for making 50,000 tonnes of LiOH per annum. The distance is about 250km.
Same for Covent Lithium WES-SQM (50-50%) Earl Grey project. They have to truck 500 kms from Mt Holland to Kwinana plant in Perth.
ALB is constructing a 4 train of LiOH plant in Kemerton. Some Spod concentrate will be supplied from Greenbushes mine but some will be supplied from Wodgina mine at Pilbara region. I think Albemarle will not truck its spod concentrate from Wodgina to Kemerton close to Perth as it is more than 1,600 km. I believe they will truck to Port headland then send it by ships to Kemerton for conversion to LiOH. A very very long way, a huge carbon footprint.
However when we consider that at the moment most of the hard rock resources in Australia are being shipped to China as spod concentrate, and they are being converted to LiOH there. That is even worse in terms of carbon footprint.
That means Pilbara Minerals, Greenbushes JV and MIN/Ganfeng JV are all have very big carbon footprints. Because they would have sent 1 ship of LiOH instead of sending 8 ship of spod concentrate.
LTR WILL NOT TRUCK ANY SPOD CONCENTRATE TO ANYWHERE FOR CHEMICAL CONVERSION AS ITS LITHIUM HYDROXIDE PLANT IS NEXT TO ITS MINE & SPOD CONCENTRATE PLANT.
LTR will send only one truck of LiOH to the port in Perth instead of sending 8 trucks of spod concentrate.
As you can see on the KV project proposed integrated mine site layout map, the LiOH conversion plant (Downstream Refinery) is next to the spod concentrate plant.
As far as I know there is no other project which will have the chemical refinery LiOH plant next to mine and concentrate plant.
That is being one of the most attractive sides of KV project in terms of ESG credentials as well as cost effectiveness.
NORTVOLT IN SWEDEN IS GOING TO PRODUCE THE GREENST BATERIES ON EARTH.
As a last word on this issue, I will talk about Northvolt.
I want to highlight one point before everything. See what Nortvolt said "Bringing lithium hydroxide from thousands of kilometers away will inevitably incur a carbon penalty. But the distance between the mine and the refinery is actually more important". That is exactly what LTR is doing. (That gives me the idea that LTR's KV project could be a perfect match for Nortvolt).
Northvolt was founded by 2 ex-Tesla executives. Northvolt has already built a battery gigafactory which is the largest in Europe. The company also promises that they will make the world’s greenest lithium-ion batteries. So Northvolt is very strict about ESG credentials. (starting production soon in this year). Northvolt’s batteries will be the latest generation of 8:1:1 ratio of nickel to manganese to cobalt.
It has a JV with VW (VW invested in it), big orders from BMW (about $2b) and many more.
"Although electric vehicles could help dramatically reduce that climate burden, the batteries that will power them also come with an environmental cost. Refining ores to produce essential battery materials generates sulfur dioxide and nitrogen oxides, causing problems like acid rain and smog. Energy-intensive manufacturing processes cause copious CO2 emissions".
"Northvolt aims to reduce these impacts at every step. The gigafactory will run on hydroelectricity, the firm says, and many of its raw materials will be refined close to where they are mined, rather than shipped halfway around the world, to limit the batteries’ carbon footprint".
"Northvolt is bringing most of this long and complex supply chain in-house. It will deal directly with mining companies and refiners to buy raw materials"
"Northvolt’s lithium will come from spodumene ore mined in Australia and Canada, and it will be processed and refined into lithium hydroxide at plants located near these mines. Bringing lithium hydroxide from thousands of kilometers away will inevitably incur a carbon penalty. But the distance between the mine and the refinery is actually more important,”
"Most of Australia’s spodumene is currently sent to China for refining, for example, but the ore contains just a few percent lithium by mass—so most of the associated transportation emissions come from shipping unwanted atoms. By colocating mining and refining operations, Northvolt can avoid transporting the vast majority of the ore’s mass, ... and make this stage of battery production much more energy efficient".
Btw, Nortvolt made two LiOH offtake agreements; One with Tianqi (from kwinana plant) and another one with Nemeska Lithium which is rhe Canadian exlorer was bankrupted last year and is being taken over by Livent now.
So, Nortvolt hasn't announced its new lithium supply partner as far as I know. They may have a relation with LTR me thinks.
Cheers and more good luck.
LTR Price at posting:
79.5¢ Sentiment: Hold Disclosure: Held
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