Current state of Play
Brine - Using evaporation (18 months), then leaching. Costs are about USD 2,000/tonne of LCE. Slow process time, low (40-50%) lithium extraction rate, high start up costs.
Spodumene - Using crushing, roasting, leaching. Costs about USD 4,500/tonne of LCE, plus extra costs of around USD 3,000 to convert to higher battery grade lithium. Quick process time, lower start up costs.(GXY Mount Catlin production costs US$2,800/tonne of LCE).
Direct Lithium Extraction (DLE) Tech
POSCO has developed their own secretive lithium extraction technique, since 2010, possibly using leaching. It is reported to have an 80-90% lithium recovery rate when using it on brine, and taking just 8 hours. POSCO have had several failed attempts at partnering up with a lithium project - initially in Bolivia, then Chile, then with Lithium Americas in Argentina.
Tenova has developed a lithium "solvent extraction" technology they call "LiSX".
LiSX technology achieved spectacular results at bench scale with 100% Lithium extraction at robust purity, lithium chloride solution (>99.9%), in just 1 day.
"Brine is pumped from underground and filtered to remove magnesium and calcium. It's then mixed with a proprietary solvent that selectively removes only the lithium. The lithium in the brine combines with the solvent, even at low concentrations (as low as 20ppm). The solvent is then moved into settling tanks where it is collected. The lithium is removed from the solvent, and processed into high purity battery materials such as lithium hydroxide. Now that the solvent has no remaining lithium in it, it's available to be recycled and used again. The process is continuous, takes less than a day, and the lithium free brine would be re-injected back into the ground, providing a uniquely sustainable low energy intensive, and truly green solution." *cough SQM/ALB cough*
https://seekingalpha.com/article/3988497-lithium-extraction-techniques-look-latest-technologies-companies-involved
Lilac’s projects will run at full capacity from year one of commissioning and maintain that output regardless of weather or brine chemistry. We have done benchtop testing in other brines andwe saw recoveries over 95% in less than 2 hours versus 9-24 months in evaporation ponds,” the company’s CEO, Dave Snydacker
According to Snydacker, this technology can economically access brines with
low lithium concentrations and high concentrations of other salts, such as magnesium. “With conventional lithium processing, very large quantities of lime and sodium carbonate need to be trucked in to remove magnesium and calcium from the brine.Lilac dramatically decreases the volumes of reagentsthat need to be trucked in, so we can unlock resources in remote locations. On top of this,our technology is modularso the physical footprint of our facilities is approximately 1,000 times smaller than conventional lithium brine projects using evaporation ponds,” he said.
- First of all this tech works.
- The reduction in the need of reagents to reduce the magnesium and calcium will reduce OPEX of the project, therefore, further improving the viability of the SDV project. Although GXY SDV project is low in both of these impurities, it is still a huge benefit.
- A reduction in the need for evaporation ponds in the process, saving massively on CAPEX and again on OPEX.
- Galaxy have the pilot plants commissioned and ponds earthworks finalised. LILAC’s direct extraction tech does not require ponds, so my guess is that galaxy are going to utilise a combination of multiple direct extraction technologies. POSCO JV?
- The fact that the tech is modular is critical to Galaxy and essentially is what will catch the shorter of this company napping. Their thesis is build on the foundations that at some point galaxy (in the absence of a JV partner to add funding) will require a cap raising resulting in a dilution of shares or at a minimum a combination of both debt and equity. The ability to progressively stage the build and essentially bolt on each component as we go is game changing. We can ramp up production at our own pace, demonstrating significant free cash flows at each stage (despite the low price environment). The board has told us they have the ability to go it alone at SDV and with this tech (or similar) its clear to see the feasibility of such a plan.
- The second component that will catch the shorts off guard IMO, is the fact that the tech greatly reduces the CAPEX requirements. So not only can the company progressively expand at its own pace, but it will no longer require the US$450m CAPEX upfront. The company has openly expressed the fact they are exploring ways to reduce this number and expect to be successful in their endeavours.
- POSCO synergies to further reduce OPEX and CAPEX. Again JV? it would make an awful amount of sense.
- The outcome is near pure battery grade chemical.
- It appears that LILAC and Tenova's tech are similar in the fact they both require - settling tanks that solvent is moved into. Its frozen over at SDV but I recall seeing these tanks on a satellite image. The site has two separate test plants with 3 of these settling tanks at each site.
- Simon made a point of specifically saying that GXY recently gained approval for an extension on the permit it holds in Argentina, which will allow GXY to begin production immediately. I think this was a dead give away as to what we can expect from the upcoming strategy day ont he 21st of Nov.
- As you can see above, there are profit margins on offer for all stages the conversion of Mount Catlin Spod to battery grade chemical. Break even approx $5,800 per tonne of battery grade LCE.
- GXY took a strategic equity holding in Lepidico (LPD) who has successfully produced 99.99% battery grade carbonate from mica tailings. GXY have 1.2m tonnes of (already expensed) ore stockpiled in Ravensthorpe. This is planned to be feed back through the optical sorter, which will allow the company to produce on spec spod whilst greatly reducing the OPEX of the operation.
- GXY may well secure part or all of A40 assets which would immediately give GXY access to an additional 60k tonne of stockpiled spod plus an unknown amount of Ore. GXY will be able to feed this through the optical sorter at MC to further reduce OPEX. Again, LPD ability to further produce 99.99% carbonate from tailings to further reduce the OPEX of the operation. THE SYNERGIES HERE ARE HUGE.
Conclusion:
My gut feel is that any lithium producer that does not hold a brine asset within its portfolio combined with direct extraction technology will struggle to reduce OPEX to a competitive level, without tech that will squeeze every last gram of lithium out of the ore. The ability to recover unto 95% of lithium from brine within a 2 hr period from brine is a game changer. Furthermore, the ability to extract lithium from our ore tailings will enable the hard rock productions to remain economically viable. It will reduce costs on all fronts and in reality is the only way that the impending demand tsunami that is fast approaching can be satisfied (I doubt this demand will ever be meet in in the next decade). I think there will be a place for Hard rock, but it just won’t be as viable as it is at this point in the cycle when compared with brine.
I also feel, that POSCO purchased SDV north for a reason and Galaxy sold it for a reason (other than a plot of land/cash exchange). They need each other in more ways than one. POSCO for access to the larger 2/3rds of SDV (south) and galaxy for POSCOs tech and synergies + chemical processing at General Guemes. However, my gut tells Galaxy will look to utilise two versions of the tech not only as a hedge but also to generate the maximum output for minimal OPEX and CAPEX. The next phase for the sector is all about tech and the companies that can utilise first will gain a significant absolute advantage on all fronts. Its imperative that Galaxy choose the right tech and this is evident in their patient approach to the testing phase (highly secretive to shareholders frustrations). The wait and outcome will be well worth it IMO. I trust the board with my hard earned money and the secretive approach will be justified on the 21st of November.
Not advice and my opinions. Good luck.
