Supply not coming onstream from Africa, or been significantly delayed, in a manner previously assumed, and with brines production issues in Chile, all it means is that existing mines and those that can get into production soon will reap some huge benefits from prices remaining relatively high (compared to what is modelled in DFSs). Just look at PLS.
More mines are needed to entrench the transition to EVs and therein lies the risks - if new mines cannot get into production then the transition to EVs slows if production cannot be sustained at the required rate of growth. It is pretty simple - 5000 GWh, for instance which some use as forecasts for 2030 - see Lithium-ion battery demand forecast for 2030 | McKinsey , is the equivalence of a number of new mines depending on grade and recovery rates (noting brines equivalence has lower grades and lower recoveries as well), meaning you are going to need far more new mines as most will not have a 80% recovery rate (as assumed in the calcs below). From this post is this table - Post #:66633823
5000 GWh is the equivalence of EV demand (battery size 60kWh) of around 73 million EVs per year, noting some of the forecast is for uses outside EVs (but the predominant use of lithium in GWh forecasts is EVs..
I guess, if new mines can't come onstream fast enough, then the alternate solution would be to ensure the lithium content in batteries, through more R&D, can come down from the current 0.9 kg LCE per kWh to something less - again refer half way down Post #:66633823
And a key to new mines is not just grade, but deleterious elements because there are few reosurces I can see in the emerging plays that have high grade and low deleterious elements. I certainly am starting to see what is happening i Quebec as a new frpntier for lithium, and I think therein lies the risks for some of the African plays because if they don't get their acts together then what is happening in Canada will be ahead of Africa itself (and obviously Australia will continue to remain out in front).
To repeat a previous post on quality:
The key to spodumene concentrate is ensuring that your concentrate is to specs specifically in relation to the deleterious elements. If you are producing 5.5% Li20 concentrate it implies that is your sweet spot whilst meeting the deleterious elements in teh concentrate specs, because producing say 6% Li20 means your recovery rate falls further (whilst still meeting deleterious elements specifications) and results in you making less profit than if you sold 5.5% concentrate
LTR doesn't appear to have these issues, - because of its higher grade ore with low deleterious elements it can easily produce concentrate above 6% Li20 whilst meeting the deleterious element requirements.
Example 1: Li20 ore grade 1% - you will need to treat at 7.5 tonnes of ore, assuming an 80% recovery rate , to potentially get to 6% concentrate. But if say you have 1% Fe203 in the ore treated, which is a deleterious element, you also need to deal with the cumulative total of 7.5% F203 to get to a 0.8% F203 spec allowed in the spodumene chemical grade concentrate sold which comes at a cost and can impact your recovery rates.
Example 2: Li20 ore grade 1.5% - you will need 5 tonnes of ore at a 80% recovery rate to produce 6% grade spodumene concentrate. Now if say you have 0.5% Fe203 in the ore, you also need to deal with the cumulative total of 2.5% Fe203 to get to the allowable 0.8% F203 spec in chemical grade applications.
Clearly one is better off under example 2 than example 1 in terms of the ore they would like to have in their deposit. Moreso, the lower grade ore you have and higher deleterious elements means you might maximise your 'assumed profit' at possibly producing less than 6% grade spodumene concentrate as that is also where you can meet deleterious elements specs and have your best 'recovery' scenario.
LTR is in a unique position because of the high grade ore having low deleterious elements. Fe203 is only one of the deleterious elements btw, but just using this as an example.
Anyway need a VB, and all IMO
LTR Price at posting:
$2.87 Sentiment: None Disclosure: Held
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