Someone posted this on the Orocobre forum. It's part of an interview with a company President whose operations include lithium spodumene:
LIN: A common misconception amongst resource investors is that brine deposits are far more economical than hard-rock deposits, but I’ve heard you say otherwise. Can you explain to our investor audience the upside of spodumene over brine?
GB: At first glance, someone might think that because of the natural evaporation process it’s obviously cheaper to obtain lithium from brine; however, natural evaporation is a long process that can take between two and four years to go from deciding you want to produce one tonne of additional material to being able to sell that additional tonne to your client. So, the brines cannot react rapidly to emerging markets or unexpected increases in demand. To give you an example, last year FMC (NYSE:FMC)) missed its target production by over 52 percent because of inclement weather and technical problems. They don’t know how generous nature has been until the end of the year when they do their harvesting.
When you look at the statistics, between 2009 and 2011, brine producers together had over 70 percent of the overall supply of lithium compound. In two years, they lost 15 percent of their market share to spodumene deposits because they were not ready to increase their capacity of supply. So they forever lost that market share because the hard-rock operations, mainly the Greenbushes operation expansion, were able to rapidly react to the global increase in lithium demand. Obviously a hard-rock mine is not affected by temperature, and at a mine you can rapidly increase production by adding some loaders and crushers, so within, say, six months, you can answer additional demand from your client.
A brine deposit is a live thing, so it’s not as easy as it may seem to harvest the lithium unit. The concentration of lithium in a specific salar varies laterally and in depth, and it moves with the water that flows into the salar. With a spodumene deposit, when you’ve done your drilling, you know it’s not going to move. If the grade is 1.4 percent, it’s going to be 1.4 percent when you extract it, and the contaminants are no different from one meter to another, so it’s a lot easier to do your planning.
All the brines have different chemistries and it’s a very long production process. If you are addressing added demand for battery-grade lithium, then you have to add polishing steps to your production process. So the initial costs associated with getting lithium out of the brine might be lower, but when you need to improve the quality and remove the impurities, then you’re nearing the same price as a spodumene deposit.
If it is that much easier and cost effective to obtain lithium from brines over hard rock, why would Rockwood Lithium (NYSE:ROC), the second-largest supplier of lithium compound from brine, make an offer to purchase a spodumene deposit from Talison Lithium (TSX:TLH)? The takeover bid unveiled their understanding of the lithium world: if you want to be a leading supplier, you need to secure a supply that is easy to control, easy to increase and has a constant, known quality of the product.
LIN: What are the differences between lithium hydroxide and lithium carbonate in terms of applications and market demand?
GB: Talking with potential clients, mainly cathode manufacturers, we learned that they prefer to use lithium hydroxide. The new chemistry commercialized in the past years is evolving towards lithium-iron-phosphate (LFP) cathode material, which has a higher density and a longer life cycle for the same amount of lithium used. I would say the best way of explaining it is if you look through a microscope, the lithium ion obtained in hydroxide is a sphere and the lithium ion in the form of carbonate is a flake with sharp angles. So hydroxide is more suitable for rechargeable batteries because the lithium ions as spheres can more easily move from the cathode to the anode when discharged, and back to the cathode when recharged. The sharp angles of the carbonate tend to break when in motion, shortening the life cycle of the battery. Using lithium in the form of hydroxide increases the life cycle of the battery. Secondly, when you compress all of these ions in a specific volume, it’s easier to fill the gaps between the ions when they are circular than it is when they are sharp, angled plates; that means you have higher density with hydroxide versus carbonate. So the new LFP cathode requires hydroxide and the manufacturers of other cathode chemistries would prefer to use hydroxide if available at the same price as carbonate, which we will be able to provide because we have a lower cost of production.
