https://www.theaustralian.com.au/business/mining-energy/aussie-nick-wakim-is-behind-americas-potentially-biggest-30bn-lithium-project/news-story/f4c2ec2c20b2799a056f94a50b496634

Looks like no sale though. Raising money and Phoenix is going to execute the project?

If he’s right, thisis Australia’s next biggest billionaire

Little-known Melbourne entrepreneur Nick Wakim says he’s on theverge of clinching funding for his $14.2bn dream to build one of the biggestlithium plants in the world.

By JOHN STENSHOLT

Meet the little-known Australian entrepreneur on the verge ofclinching funding that he says will fulfil an initial $US9bn ($14.2bn) dream tobuild North America’s largest source of lithium.

Nick Wakim, 57, is the founder and majority owner of theprivately-held Phoenix Lithium, which has employed Macquarie Capital to find apartner and capital to build a $US2bn processing plant in southern Californiathat he says will be extracting and recovering about 64,000 tonnes of batterygrade lithium carbonate annually from 2030 onwards.

The entire project is worth a lot more, Wakim claims.

Phoenix’s East Brawley is the world’s fourth or fifth-biggestlithium resource, Wakim says, and worth billions of dollars right now – andpotentially tens of billions when it is at full-scale production.

Few people are even aware of it, its sheer scale and the factthat a small private Australian company with only nine employees is behind it.

That is all about to change.

In his first major interview, Melbourne-born Wakim reveals hisand Phoenix’s big plans for East Brawley, how he found it – after a previousattempt to build a water desalination technology business and before then acareer in merchant banking in the Middle East – and the intense competitionfrom big companies around the world to partner with his company on East Brawleyor even potentially buy it out.

“When we’re talking to groups now, they’re quite shocked becausethey look at the size of this resource, and they’re like, where did this comefrom?,” Wakim tells The Weekend Australian in an exclusive interview.

“People are shocked and surprised and then [say]: ‘is this forreal?’”

Wakim insists it is.

“Our NPV (net present value) on the project is $US9bn. But at full scale production it’d be $US15bn or $US20bn business.”

If he is right, it all means Wakim, who has already madeheadlines this year by buying two Toorak mansions in Melbourne for a combined$73m and a rural Victorian property for $30m, could already be Australia’slatest billionaire.

And East Brawley would be one of the biggest private projectsundertaken by an Australian company, at home or overseas.

In Australian dollars, Wakim’s projection is for East Brawley topotentially be worth $24bn to $31bn.

Phoenix says East Brawley has 12.4m tonnes total mineralresource of lithium carbonate equivalent found on 23,000 acres of surface andmineral rights leases, and its average grade sits at 437 milligrams of thecommodity per litre.

The project has an initial mine life of 27 years and there areplans for a water neutral process with no open-pit mining or evaporation pondsand powered by renewable energy and steam.

That total resource is, Phoenix says, on a global scale behindonly Chile’s SQM and its Salar de Atacama project, Lithium Americas’Caucharí-Olaroz project in Argentina and ASX-listed Allkem’s own Olaroz projectnearby, and Canadian firm’s E3 Lithium’s Clearwater in Alberta.

Those other projects are owned by stockmarket-listed companies,whereas Phoenix is privately owned.

Clearwater is the only other project of significant scale inNorth America, and Phoenix claims East Brawley is, for example, bigger than RioTinto’s Rincon project in Argentina that it paid $1.2bn to acquire in late2021.

Rio is building a 3000-tonne a year lithium starter plant atRincon, which has a 11.8 million tonne total mineral resource of lithiumcarbonate equivalent and reserves of almost 2 million tonnes of containedlithium carbonate equivalent (LCE), sufficient for a 40-year mine life.

Wakim says Phoenix has reserves of almost 1.9 million tonnes ofLCE. Phoenix’s grading of 437mg per litre is also higher than Rincon’s 325mgper litre.

Lithium has emerged as a hot commodity in recent years given itsimportance in the energy transition taking place around the world. It helps tostore energy in modern batteries that power consumer electronics and, ofparticularly growing importance, electric vehicles (EVs).

Lithium prices have fallen about 70 per cent this year though,albeit from record highs, mostly driven by a slowing in the growth of demand inChina for fully electric vehicles.

Analysts have described the price fall from huge rallies in mid2021 through to the end of 2022 as a case of “irrational” exuberance for battery-relatedmetals, though Rio Tinto said this week that longer-term market fundamentalsfor lithium remain strong as “[EV] adoption continues to rise on supportivegovernment policies and supply shortfalls”.

Meanwhile, Boston Consulting Group has estimated US demand forlithium batteries to increase by nearly six times and be worth $US52bn by 2030.

Investor appetite for and interest in the commodity generallyremains high, and lithium stocks have been surging on the ASX.

This week alone saw the battle for Liontown Resources, which has a lithium project planned in Western Australia’s Kathleen Valley, peak when New York-listed Albemarle withdrew a $6.6bn takeover bid after billionaire Gina Rinehart built a 19.9 per cent stake in Liontown.

Albermarle is the world’s biggest lithium producer and its shareprice fell 15 per cent this week amid analyst concerns that lithium supplycould exceed demand next year and 2025, putting pressure on profit margins forall lithium suppliers.

Wakim claims his company has far bigger potential than the ASX-listedlithium plays and can ride out commodity price falls.

“If you look at other companies, if you look at Liontown, we’remuch larger. With respect, our project dwarfs all these projects here. We’re alittle earlier stage, but the size of the project, the position of the project,the clean and green nature of it, when you couple all these things togetherit‘s probably the only project in the world that has all those elements,” heclaims.

“And as you can imagine, there‘s going to be a lot of groupsthat are very interested to either partner with us or provide capital.

“The position now is to look at the right partner to take theproject and commercialise the project.”

Phoenix has engaged Macquarie Capital to conduct a global searchfor a strategic partner.

While Wakim is reluctant to comment on the process, he saysthere has been strong interest.

It has also been previously reported that parties looking at theproject are from across the lithium supply chain, including offtake, marketingand capital providers, as well as big companies in North America with midstreamoperational experience.

“We are JORC (the professional code of practice in Australasiathat sets minimum standards for the reporting of mineral exploration results)compliant,” says Wakim.

“So once we basically validated the resource we have done allthe things that a major company would do,” he adds, before listing off thegeophysical surveying, permitting, well field engineering, well assessment andresource defining that Phoenix has undertaken over the last two-and-a-halfyears.

“Even though we‘re a small company, we’re attacking this like atier-one global major. So this has been done in exactly the right way that youwould want to deliver a multibillion dollar project,” Wakim says.

Phoenix plans a two-phase rollout, with its first commercialproduction of lithium coming in three years time via a scaled-down version ofits full plant that will initially produce 1400 metric tonnes of battery gradelithium carbonate annually.

“That will create some revenue for our shareholders and give usa very good model from which to go into full-scale production, which will comeonline in 2030,” Wakim says.

That time frame, he claims, should alleviate concerns aboutgoing into full production at a time when both demand for and the price oflithium could be subdued.

“We come into production right at the time when the majordeficit in the lithium supply is projected,” Wakim says. “So we think we arecoming online at the right time and companies are going to be looking at thisfrom a strategic position.”

The Phoenix founder also points to the increasing demand forlithium in the US driven in part by tax incentives from President Joe Biden’sInflation Reduction Act, which has also helped with the push to onshore processingand refining of lithium for local EV and battery factories.

It all makes a project like East Brawley a case of “right place,right time,” Wakim claims.

Situated about two hours’ drive east of San Diego inCalifornia’s Imperial Valley, where a quarter of the rural population farmlucerne (alfalfa), lettuce, carrots and other food crops, East Brawley and itssurrounds are part of a region dotted with geothermal electricity plants.

California is also the home of, or at least close proximity tofactories or plants for car manufacturers like Tesla and Ford, and other firmsthat are part of the manufacturing supply chain.

Thishas also sparked a land rush for lithium operations powered by clean energynear California’s inland Salton Sea, where many companies are extractinglithium from the region’s geothermal brine.

Themineral-rich brine had already been brought to the surface by geothermalelectric plants, which have been in the region for the best part of 40 years,and then returned to the earth. Now, companies are extracting lithium from thebrine and the huge estimates of lithium at Salton Sea have generated excitementsome have compared to the gold rush of the 1840s.

Wakimsays Brawley East is about 15 to 20 minutes from Salton Sea “as the crowflies”, but has previously been ignored by other companies or not takenseriously enough by geothermal firms already in the area.

“There’s10 geothermal power plants at Salton Sea and every man and his dog has beengoing there,” says Wakim. “So there are all these geothermal power companiesgoing there and trying to tag on minerals development onto their coreexpertise.

“Butwe’re a pure-play lithium company and not geothermal, so we’re able to look atthings in a different lens. And I think these are the things that make or breakprojects, to not follow the crowd. You’ve got to have the vision.”

Wakimhas however pivoted from his original vision of Phoenix, which he formed after whathe says was the best past of three decades of merchant banking and deal-makingin the Middle East.

Bornin Melbourne to parents of Lebanese background, Wakim moved with his familyoverseas at a young age and grew up in Chicago and later Oxford, England.

Hisfather was an entrepreneur who ran businesses and did deals in the Middle East,including, Wakim says, helping set up the huge Al-Safi Dairy Farm with theSaudi Royal Family in the 1970s, the largest in the world.

Wakimfollowed in his father’s entrepreneurial footsteps, running a financialservices group, then advising on mergers and acquisitions, corporate advisorywork and other deals.

Hesays he helped the Saudi government strike a trade deal with the Keatinggovernment in Australia in the early to mid 1990s for live sheep exports andwould later advise companies, including Macquarie, who wanted to establishoperations in what would become flourishing Gulf States – often taking equitystakes in local joint ventures.

In2009, Wakim set up what was then called Phoenix Water – a company that aimed todevelop a proprietary water desalination technology spun out of an Australianstart-up and aimed at the Middle East where there were low freshwater suppliesbut the highest use of freshwater per capita in the world.

“Sowhilst we were taking this very salty saline water and creating distilledwater, it also creates a mineral,” Wakim explains. “That‘s where I started tothink, ‘well, hang on, we’re developing this to create water. Well, what if Ireverse that to see if I create minerals?”

Wakimresearched and became fixated on the future opportunities for lithium, sayinghe even knocked back a $20m revolving credit facility from the Clean EnergyFinance Corporation earmarked for the water strategy to pursue a lithium dream.

“Myboard did think I’d lost my marbles,” he admits.

By2012 he started investing in some lithium stocks and travelling the worldlooking at potential projects and investment opportunities.

“Wewent to Perth and we went to South America. We went to the Atacama [desert] andwe did the rounds around America and landed on there.”

Initially,Phoenix pursued a project in Nevada before moving south to California whereWakim first looked at the Salton Sea before heading to East Brawley, attracted byindustrial giant Berkshire Hathaway having operations there.

Phoenixhas been operating in East Brawley since 2015, raised about $10m in seedfunding from mostly Australian investors two years ago to undertake the initialscoping studies and preparatory work – Wakim says the company has only spentabout half of the funds so far – and has now reached the crucial stage ofraising capital.

“Itis a very important project. It’s globally relevant. It‘s a multibillion dollarproject, and it is a privately-financed company. So it’s a very uniquesituation that you have a resource of the size it’s not either listed oralready monetised commercially by a major [mining or production company],” hesays.

“Ourintention at this stage just is to stay private. But that‘ll be dependent onwhere we go in this next phase of capital. And it’s not about money. The moneywill come. It’s finding the right strategic partnership to really exploit thisto its best potential.”

JOHN STENSHOLT

EDITOR, THE LIST

John Stensholt joined The Australian in July 2018.He writes about Australia’s most successful and wealthy entrepreneurs, and thebusiness of sport. Previously John worked at The Australian Financial Reviewand ... Read more