Diggers and Dealers: Car makers cut out China in race to secure lithium, says Galaxy
Stuart McKinnon
Tuesday, 8 August 2017 1:00PM
The miner says it has been in direct contact with major US and European car makers.Picture: AP
Galaxy Resources chief financial officer Alan Rule says the lithium miner has been in direct contact with major US and European car manufacturers looking to lock in a secure supply of lithium for batteries that will power their electric vehicle models in the years ahead.
“They have told us that they have done due diligence on 200 aspiring lithium miners in the world and believe only 10 of them will survive,” he said.
“Not all deposits are of the right quality. They need battery-grade lithium and they want to deal directly with miners because they don’t want to be beholden to Chinese suppliers.”
Mr Rule also noted it was difficult for aspiring miners with greenfields lithium projects to secure finance, citing the examples of Pilbara Minerals and Altura Mining being forced to go to the high-interest bond market for project financing.
“So supply going forward is the problem,” he said.
Mr Rule said the strong demand for lithium and the company’s existing cash flow from its Mt Cattlin spodumene project near Ravensthorpe put Galaxy in a strong position to secure finance, equity partners and offtake agreements for the company’s Sal de Vida lithium brine project in Argentina and its James Bay spodumene project in Canada.
Galaxy would spend $5 million on each project this year.
Meanwhile at the company’s Mt Cattlin project, Mr Rule said the company was working on lowering costs and improving recovery rates.
He said the project was operating at a 170,000tpa run rate and the company was aiming to boost recoveries from 61 per cent to 70-75 per cent and lower costs to below $US300/t. He gave cost guidance of $US325-$US350/t in the year ahead.
Low operating costs and strong prices for its spodumene concentrate product ($US770/t) meant Galaxy was generating $US70-$US75 million in free cashflow a year from Mt Cattlin, Mr Rule noted.
Galaxy shares were down 2.5¢, or 1.25 per cent, at $1.975 at 10.55am.
