Eye on Lithium: Race to secure lithium supplies is heating up
All your ASX lithium news for Friday, February 17.
The scramble to secure critical minerals needed for the energy transition – as is highlighted by governmental action such as the US Inflation Reduction Act – is continuing apace.
Piedmont Lithium (ASX:PLL) has just landed a $75m investment from South Korean chemical giant LG Chem – the parent of the world’s second largest battery cell maker, which included a binding commitment for the offtake of 200,000t of spodumene concentrate from its jointly-owned North American Lithium project over four years from the third quarter of 2023.
This comes mere days after LG told Bloomberg that it was looking to secure its own raw material through potential partnerships and investments to establish a self-sufficient supply chain.
Meanwhile, LithiumAmericas (NYSE:LAC) has closed the initial US$320m tranche of its previously announced US$650m investment by automotive giant General Motors, which will be used to accelerate development of its Thacker Pass lithium project in Humboldt County, Nevada.
ARK Investment Management’s Sam Korus believes that others will seek to strike deals to secure lithium supplies while pointing out that global automakers have earmarked US$600bn for battery investments over the next 10 years.
3/Global automakers have earmarked ~$600 billion for battery investments over the next 10 years.
ARK’s work suggests it would only take around ~$30 billion in capex to bring the new mines online to meet our demand expectations. pic.twitter.com/1Rr8k6OAv4
— Sam Korus (@skorusARK) February 14, 2023
Li-Bridge – a US public-private alliance committed to accelerating the development of a robust and secure domestic supply chain for lithium-based batteries – also warned that the US would still depend on imports despite an expected increase in domestic lithium battery demand of up to six times by 2030.
However, it noted that the US could still capture some 60% of the economic value consumed by domestic demand for lithium batteries, generating US$33bn in revenues and creating 100,000 jobs.
What all this means is that we are likely to see further investments from battery and car manufacturers looking to lock in their supply chains and supportive government legislation such as the US Inflation Reduction Act are likely to play a key role in their decision making process.
Sayona Mining (ASX:SYA), which is incidentally the majority partner at North American Lithium, certainly seems to think that the move from companies such as LG Chem will be positive, telling fellow Stockhead reporter Jessica Cummins that its operations in Quebec will have a big role to play in closing some of the supply gap given its proximity to the US.
This is particularly true given that the Inflation Reduction Act provides tax credits to manufacturers with 40% or more (rising to 80% in 2027) of their raw materials coming from the US or nations with which it has free-trade agreements, which include both Australia and Canada.
Lithium stocks mirrored the weakness in the broader market with just 24 stocks were in the green while 65 were in the red sea, leaving 48 companies unchanged.
Besides LG Chem’s investment in Piedmont, here are the other ASX lithium plays with news out today.
The company has completed its third complementary acquisition of ground in the James Bay District in Quebec, Canada, since it first picked up the Pontax lithium project in July 2022.
It has now acquired an additional 9km of strike over the prospective Chambois Greenstone Belt, which hosts Pontax, giving it a continuous 20km strike length.
While the newly acquired ground has no previous lithium exploration, it is nonetheless prospective for lithium mineralisation given that it grants the company an additional 9km of strike (to a continuous 20km strike length) over the highly prospect Chambois Greenstone Belt, which hosts the Pontax project.
Assays from Cygnus’ first two holes have already intersected multiple high-grade lithium zones such as 16.5m at 1.1% Li2O from 239.8m and 4.3m at 1.8% Li2O from 227.6m as well as 13.3m at 1.3% Li2O from 300.2m and 5.7m at 1.4% Li2O from 194.3m.
Cygnus is poised to be joined by Megado, which is acquiring the large-scale Cyclone lithium project in James Bay where pegmatites have been recorded within the Aquilon Greenstone Belt.
The 130km2 package of contiguous claims also features geology and structural setting favourable for potential lithium recoveries.
It is also close to significant lithium discoveries such as Patriot Battery Metals’ Corvette project and the growing market for lithium in the US.
Meanwhile, Sayona Mining has noted that the restart of its North American Lithium project remains on budget and on track for March 2023.
Progress on the concentrator restart and construction has hit 96% as at the end of January, setting the stage for the company to become a leading producer of hard rock lithium in North America.
Work is now underway on the next intermediate milestone, the startup of process operations, which comprises the circulation of ore through the entire system, from crushing through sorting, grinding and separation.
Commissioning activities are anticipated to be completed this month, with several vendor representatives on‐site to assist with commissioning and start‐up activities.
NAL is expected to produce between 85,000t and 115,000t of spodumene concentrate during the first half of the 2024 financial year.
St George has entered into what it describes as a binding “Area of Influence” agreement with private company Cacique Resource, which grants it the right to potentially acquire the lithium and nickel rights of certain tenements within Western Australia’s Mt Holland region.
Not only does the Area of Influence host significant lithium occurences and deposits such as Covalent Lithium’s Earl Grey project, an interpreted 40om strike of the nickel sulphide-prospective Forrestania belt is interpreted to occur within its bounds.
This complements the company’s focus on building a portfolio of highly prospective lithium and nickel projects within the state.
Venus Metals’ partner IGO has started exploration at their Greenbushes East exploration project, which is immediately adjacent to the giant Greenbushes lithium mine.
This includes a geochemical survey targeting the collection of 1,350 soil samples to provide a project-wide framework for further targeting and supplement previous geochemical surveys in specific target areas.
A ground gravity survey will also be carried out to assist with delineating geological structures as well as higher and lower density bedrock for mafic-ultramafic intrusions and rare metal pegmatites.