@PoohbearI completely agree that PA and JZ should have some real metrics to go by. In my view, they likely have a solid understanding of their probable CAPEX and OPEX figures. The fact that they haven’t been transparent about these numbers is concerning, especially since the 2023 half-year report stated that an updated feasibility study was expected by the end of that year—now more than a year overdue:
Assessing scale efficiency improvements over the past few years has been challenging due to rampant inflation, which has offset some of these efficiency gains. The last OPEX figure I recall for Allkem (before merging into Arcadium) was around US$6,600 per tonne, although less than half of their production was battery-grade, with the rest being tech-grade. Given that this number is at least a year or two old, factoring in approximately 10% for inflation puts my current estimate at around US$7,250 per tonne. Adding refining costs of about US$750 per tonne brings the total OPEX for all-BG lithium production from Olaroz to approximately US$8,000 per tonne. This estimate seems reasonable and is not dissimilar to Exar/LAAC’s US$8,043 per tonne (post refinement).
It’s also worth noting that both Cauchari-Olaroz (Exar) and Olaroz (Arcadium) have significantly higher-grade resources (2–3 times higher) and much larger-scale operations (each roughly four times larger) than AGY’s planned Stage 3). Given these factors, I find it unlikely that AGY’s OPEX could be as low as the figure quoted in their April 2024 Dynamic Modelling Results, which may explain why they later added the disclaimer below.
Their US$7,500 per tonne assumption above is simply the PEA OPEX figure with inflation factored in. However, the PEA’s original OPEX estimate had a ±35% accuracy range:
AGY’s original estimate was US$4,645 per tonne, but they revised it to US$7,500 in April, indicating a 61% cost increase. If we adjust the 2018 OPEX rate upwards by the reported 35% accuracy factor, it could have actually been US$6,270 per tonne back in 2018. Applying the 61% escalation factor to that number results in a potential current OPEX of ~US$10,095 per tonne. This seems far more realistic and is about 25% higher than comparable larger-scale operations, which makes sense.
Additionally, AGY’s production process, equipment, and chemistry weren’t disclosed to Primero, who reviewed the PEA. Their review relied on comparisons to much larger projects with higher grades (like Cauchari-Olaroz) and possibly different process flowsheets and reagent requirements.
Considering all this, I find it highly unlikely that AGY can achieve an OPEX rate below US$10,000 per tonne. Given the four-year development timeline for Stage 3, inflation could potentially further increase costs by around 20%.
Overall, my estimate is an OPEX rate of
US$10-12k per tonne, which would be unprofitable in the current market, and assumes they can actually secure funding and complete construction before 2030. Delays beyond that would require additional adjustments for inflation.
(20min delay)