Highway to the Western Lithium Zone
I’m guessing that proximity is becoming one of the three favorite words of Western Lithium’s (TSX:WLC | OTCQX:WLCDF) shareholders.
Much of the world’s lithium is produced by Albemarle (NYSE:ALB), Sociedad Quimica y Minera de Chile (NYSE:SQM) and FMC (NYSE:FMC) from Argentina, Chile, Bolivia, Australia and eastern China, and is shipped long distances to battery makers in Asia.
But Western Lithium holds the Kings Valley lithium deposit in Humboldt County, Nevada. Unlike most lithium sources, which are either hard rock or brine based, Kings Valley is a clay project. Western Lithium has a separate business aimed at commercializing hectorite clay products for use in oil and gas drilling.
Permitting and Environmental Studies for the Kings valley lithium project is ongoing with a lithium demonstration plant that commenced in fall 2014. The targeted production is 2018/2019.
Tesla (TSLA) should be the second favorite word of Western Lithium shareholders because Tesla’s Gigafactory is located in Sparks, Nevada, some 238 miles away from Humboldt County.
Tesla broke ground on the Gigafactory in June 2014 outside Sparks, Nevada, and expects to begin cell production in 2017. By 2020, the Gigafactory should reach full capacity and produce more lithium ion batteries annually than were produced worldwide in 2013.
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But Tesla is showing an unconventional approach to meet its needs for lithium feedstock. When Tesla chose Nevada for its Gigafactory, analysts speculated that the state’s significant lithium supply was one of the attractions. Last September Tesla announced it plans to buy lithium from Pure Energy Minerals (TSX:PE), some 200 miles away near Reno, Nevada.
One does not need to be a rocket surgeon to connect the dots: Western Lithium is ideally located to support Tesla’s Gigafactory.
A third favorite word of Western Lithium’s shareholders is that the company is currently negotiating with POSCO and expecting the completion of an agreement during the fourth quarter of 2015. At this time the parties have agreed that POSCO will contribute to the joint venture the right to use its proprietary lithium extraction technologies for the production of lithium carbonate and lithium hydroxide. Readers should note that the POSCO project pertains to a deposit that Western Lithium owns in Argentina.
Founded in 1968, POSCO is a multinational global leader from the Republic of South Korea, and based in Seoul. It operates in the energy, chemicals and materials sectors. Currently it is one of the largest steel manufacturers in the world, with over $60 B in annual revenues. But more importantly it invests in numerous global natural resources development projects, while also pursuing lithium projects globally.
On February 23rd, 2012 POSCO announced that it had developed technology, which could potentially change the lithium market. POSCO claims to have successfully demonstrated the technology at a pilot plant scale in Korea using resources from various third parties. Reportedly the technology directly extracts lithium from brines, while reducing the lithium processing times from the current average of one year or more down to a month. Further the technology has demonstrated yields of 80% lithium from brines, which is double the industry standard of 40%. Further the production cycle is 8 hours as opposed to the current average cycle of 12 months. According to reports the technology is not dependent on climatic conditions, self-contained and eliminates use of evaporation ponds.
Dr. Luc C. Duchesne is a Speaker and Author with a PhD in Biochemistry. With three decades of scientific and business experience, he has published ... <Read more about Dr. Luc Duchesne>