The critical race for lithium production
In the years leading up to production, many lithium juniors will confess to have regularly dreamt of the fantastic offer from one of “the big three” waiting ‘just around the corner’. Those three companies were renowned for gobbling up juniors whenever they needed to scale up production, until one swallowed another at the beginning of 2015, leaving a rather lopsided duo.
Dr Steffen Haber, President of Critical Elements Corp. (TSXV:CRE | OTCQX:CRECF) (“Critical Elements”) since January 2017, joined the company after being CEO of Rockwood Holdings when it was sold to Albermarle for the princely sum of $6 billion. Rockwood were heavily involved in lithium projects, catalysts, bromine and surface treatments, and now Dr Haber’s experience is helping Critical Elements to more rapidly advance their expansive Rose lithium-tantalum project.
Get our daily investorintel update
Haber has homed in on the Rose deposit primarily as it represents the safest bet for hitting production quickly and cheaply out of their total of eleven resources. A Preliminary Economic Assessment (PEA) has already been completed and is due to be published shortly, but it, amongst other studies, reveals that the particular crystal structure found at the site is so easy to process that a concentrate grading of 6.6% should result without much effort. This would be an astonishing 20% higher concentration than competing lithium mines. In addition, impurity levels are low, meaning the time to market for this project is rather short indeed.
Critical Elements expects the project to be shipping its high-quality spodumene concentrate by 2020, but it could be as early as 2019. About one-third of the total output will be sold as technical grade spodumene required by the industrial glass and ceramics market, and the premium attached to technical grade spodumene is higher than even refined lithium carbonate.
But Haber doesn’t plan to stop there; he wants to be shipping battery-grade lithium carbonate by 2023, around 600,000 tonnes of which is widely expected to be required globally in 2025. Battery-powered products are going nowhere, are only becoming more culturally entrenched, and have led to the modern gold rush that we see today, as manufacturers rush to source the component parts of our most beloved technologies.
The target for Rose is over 26,000 tonnes per annum of lithium carbonate equivalent, much higher than many competitors, but perhaps the good doctor’s experience tells him to aim high. Unsurprisingly, offtake agreements are already appearing; HELM, for instance, are a German sales and distribution company with an equivalent turnover of around $11 billion and widely recognised in the lithium industry. They will provide not only offtake, but both global sales experience and the workforce with which to shift product, indeed an efficient value-addition.
Looking at Critical Elements, one gets the impression that the rev-counter is thrashing around in the red zone; the clear goal of efficiency-over-all, aside from being rather pleasing, is almost certainly aimed at placing the company in an imminent position to benefit from the current boom before it runs out of steam. Reaching production in the next few years is imperative for any lithium-based company if they are to catch the wave that is Tesla et al. Secure and trusting partnerships are emerging every day, and these will be much more difficult indeed to break apart in ten years time.
InvestorIntel is a trusted source of reliable information at the forefront of emerging markets that brings investment opportunities to discerning investors.