Lithium Power International Ltd (fka LTHHF)

[Dr_Vonschellan]

Australia_spills the_beans on_how Chile_can become_a world-class
lithium exporter par excellence https://www.latercera.com/pulso/noticia/la-formula-que-convirtio-a-australia-en-el-principal-productor-de-litio-del-mundo/JKODUPMMORBSPKSXYJ5CBSBWOI/
or on MSN https://www.msn.com/es-cl/dinero/other/la-f%C3%B3rmula-que-convirti%C3%B3-a-australia-en-el-principal-productor-de-litio-del-mundo/ar-AA1avrBc
or see English translation below.

Dear Mommy's Boy Gabby Boric, you would be wise to read this instructional piece... and next replace Marcela Hernando with Dr Willy Kracht before you really get your ass torched completely off.

The Doctor

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The formula that made Australia the world's leading lithium producer
by Sandra Burgos

The absence of barriers to the exploration and exploitation of lithium, a royalty with significantly lower rates, and mining legislation that provides facilities for activities to develop quickly and environmentally sustainable, are the main ingredients of the growth that has taken place. Australia in this area.

In 2012 Australia passed Chile for the first time in the world ranking of lithium production. That year, its production reached 67,600 tons of lithium carbonate (LCE), compared to 65,610 Chilean tons. The following year, Chile narrowly regained leadership, which it lost definitively in 2014. That year, Australia produced 65,870 tons, versus Chile's 57,670, becoming from then on the world's leading lithium producer.

And it hasn't stopped. From that moment on, the distance only increased, registering the great leap in 2018, when its production reached 303,410 thousand tons. Last year it produced 324,700 tons and its projections are to continue growing.

According to the latest government resource and energy report -Resources and Energy Quarterly, December 2022- published quarterly by the Australian government, Australia's lithium production will grow from 335,000 tons of lithium carbonate equivalent in 2021-2022, to 399,000 tons in 2022. -2023 and 470,000 tons of LCE in 2023-2024.

“By 2022-2023, Australia's export earnings are forecast to more than triple - from A$4.9 billion ($3.2 billion) in 2021-2022 to A$16.1 billion ($10,664 million), and A$17 billion (US$11.260 billion) in 2023-2024,” the report states.

Cameron Perks, principal lithium analyst at Australian firm Benchmark Mineral Intelligence, says Australia's 2022 production will double by 2025 or 2026, with most of this increase coming from expansions at existing mines.

How it was done.

Lithium has become the sixth most important raw material -by volume- in the Oceanian country's exports, surpassing oil and placing itself behind gold, which it could surpass in the near future.

What was it that allowed Australia to make this leap? Gavin Mudd, Associate Professor in the Department of Engineering at Australia's RMIT University, Ph.D. in environmental engineering, he explains that the expansion of the industry occurred because mining companies decided to expand exploration due to the growing demand for lithium. “Certainly I would say that Australia did not actively promote lithium in any particular way, but miners saw their opportunity, sought and obtained approvals, built new mines and went into production. Around 2015, Australia had one lithium mine in operation (Greenbushes) and two in a state of maintenance (non-operational), but by 2019 we had reopened the two closed mines and built several more, with others in the planning”, he details.

Cameron Perks adds that it was important for this development that the first spodumene mines (a mineral that is extracted in Australia and that contains lithium) were already gold and tantalum mines, so they already had permits and a good geological understanding. of these deposits.

To this is added that, unlike Chile, in Australia lithium is not a strategic mineral, it can be exploited, which has been key to its development. Juan Ignacio Guzmán, general manager of GEM Consulting, graphs it like this: "Australia has taken very good advantage of the growth in lithium demand worldwide, given that it has a very open economy, in which lithium shares with copper, the iron and other minerals, the characteristic of being concessionable, that is, the State, which owns the resources, grants concessions to private parties to exploit them and obviously obtains in exchange the payment of a royalty and the taxes corresponding to the profits that are generated from that exploitation”.

Daniel Jiménez -partner at iLiMarkets, a consultant in the world of lithium-, former commercial vice president of SQM and lithium consultant for national and foreign companies, adds that another of Australia's advantages is its position towards mining. “It is a mining country, in which there is mining legislation that provides the facilities for activities to be carried out quickly and environmentally sustainable. The project approval processes are technical and not political”, he maintains.

Likewise, Australia has a very powerful “mining culture”, with an appropriate ecosystem: financing, processes, engineering, etc. On the Australian Stock Exchange (ASX) there is a highly developed capital market for junior companies that access financing for exploration and project development.

Jiménez adds another important element: “Australia has never been limited by the issue of added value, with all the technological development they have. They have never put this before, so much so that, until very recently, they exclusively produced concentrates, not chemicals, which for Chile would be equivalent to producing concentrated brine versus producing lithium carbonate and lithium hydroxide. Australia is only now starting to produce lithium hydroxide and there is interest in producing batteries, but none of that is limiting mining activity."

The treatment of the royalty has also had a lot to do with this virtuous cycle of production. “The royalties paid by lithium in Australia are significantly lower rates than what is paid in Chile to Corfo, and range from 7.5% for mineral (unprocessed), 5% for concentrates and 2.5% for chemicals. . In other words, it is encouraged that the more value you add to your product, the less royalty you pay, which is an incentive”, says Jiménez.

The rock versus the brine.

Unlike Chile, in Australia lithium is not extracted from brine, but from rocks, from which spodumene is obtained. “The mines here only produce a spodumene (lithium silicate) concentrate which is typically 5-6% lithium oxide (Li2O), which means only a few times the original ore grade of about 1-2% lithium. Li2O. This means that the most important step of converting lithium silicate into refined lithium hydroxide moves to refineries, most of which are in China and some of which are in Japan and Korea, etc.,” says Mudd. China is the main destination for Australia's lithium exports (96% in 2021-2022), followed by Belgium (2.3%), South Korea (0.9%) and the United States (0.7%).

To produce one ton of spodumene concentrate, a minimum operating cost of US$300/ton is incurred, that is, 7 to 8 tons of spodumene are needed to produce one ton of chemical. This is done in China, where the refineries are, although a couple have been installed in Australia in the last year. “Under normal circumstances, the cost of producing a ton of carbonate from brine is similar to that of spodumene, but when spodumene prices are this high, the cost of converting the feedstock in China is very high,” Perks adds.

Given the relatively simple processing to produce a spodumene concentrate, building new lithium mines is easy, the “hardest” is refining.

One advantage of Australia is that building new spodumene projects or mines is less capital intensive compared to the permitting and capital required to bring a new brine mine online.

Compared to Chile, the process is quite different. Cameron Perks explains that in terms of mining, Australia is the main producer, but not in terms of lithium chemical production. “It would be unfair to compare Australia with Chile, because Australia exports spodumene concentrate to China for conversion into chemicals, while Chile produces chemicals. Australia is home to several of the world's largest mining companies and service providers, with a long history in mining, so it naturally has an advantage in terms of available skills,” he says.

Juan Ignacio Guzmán points out that the geological resources that exist in Australia, in some cases are not rich as those that Chile has. “But Chile, having blocked that from the private to the industry and not having knowledge and experience on the part of state companies to be able to take advantage of the resource, basically has not been able to explore or exploit the other 17 salt flats that exist with the potential to produce lithium. and not only the Atacama salt flats”, he assures.

The owners of lithium in Australia.

These conditions have whetted the appetite of Australian and foreign investors. “All of our mines and projects are owned by mining companies listed on our Australian Stock Exchange (ASX). No projects are directly owned by the government. On the contrary, a figure like Codelco, which is 100% owned by the government, does not exist here. In fact, there is no national or state ownership interest in mining, excluding the coal sector, where there are still some government interests in some places, but not many,” emphasizes Mudd.

He adds that for companies, since they are publicly listed on the ASX, it is not an easy task to determine who their shareholders are. “Often the biggest investors are hedge funds, pension funds, retail investors and sometimes other mining companies. According to my observations, there is also Chinese capital and financing in some of them, ”he points out.

Indeed, the vast majority of mining projects dedicated to the extraction of spodumene are owned by companies whose shareholders include a skein of companies that contribute capital and associate themselves in certain projects. Many of these capitals are Australian, but they also come from China, Korea and the United States.

It could be said that the Greenbushes mine is today the jewel in the crown. Owned by Albemarle (49%) and Tianqi/IGO (51%), it will produce 43% of Australia's production by 2023, making this deposit the largest and most important.

Another of the mines in Australia is Mt Marion, owned by Mineral Resources (50%) and Ganfeng (50%). The two sealed an agreement last year for the Chinese firm to convert spodumene into lithium hydroxide in China.

There is also Wodgina, owned by Mineral Resources (40%) and Albemarle (60%), which is located in the Pilbara region, with an estimated useful life of more than 30 years.

Pilbara Minerals Limited is the leading ASX-listed lithium company, owning 100% of the world's largest stand-alone hard-rock lithium operation, called Pilgangoora. The operation has two processing plants that produce spodumene concentrate: the Pilgan plant and the Ngungaju plant. It owns 70% of the Mt Francisco project and is completing a joint venture for the development of a lithium chemical conversion facility of approximately 43,000 tonnes per year of lithium carbonate (LCE) in South Korea.

Its great appeal attracted a consortium of global partners that participate in its shareholding, they are: Ganfeng Lithium (5.7%), General Lithium, POSCO (2.7%), CATL (2%) and Yibin Tianyi.

Allkem is an Australian company (controlled by Galaxy Resources Limited) with operations in Argentina, Australia and Japan. It is listed on the Australian and Toronto Stock Exchanges. In Australia they own Mount Cattlin, an open pit mine that has a concentrator. The mine was built in 2010 but remained closed until 2016, producing high quality spodumene concentrate that is qualified in the lithium supply chain globally.

Core Lithium is an Australian company that owns the Finniss Lithium Project outside of Darwin in the Northern Territory. The first production of spodumene concentrate is planned for the first half of 2023.

Finally, the inactive Bald Hill mine remains in legal limbo.

SQM is also active in Australia. It was associated with the Mt Holland project located in Western Australia, in which it has a 50% stake in conjunction with the company Wesfarmers. This project seeks the development of a large-scale, long-lived, high-grade lithium hydroxide project. It will have an initial capacity of 45,000 tons of lithium per year, although it is estimated that when it starts operating -in mid-2024- it will be able to produce 100,000 tons.

In January this year, Australian mining exploration company Azure Minerals announced that SQM Australia will acquire a 19.99% stake in the company. Azure participates in the Andover Project (60% Azure and 40% Creasy Group), which seeks to become a world-class lithium mining and processing operation. On this subject, SQM did not wish to comment.

To all these companies that participate in the industry today, a series of interested parties are added to continue betting on this business through investment in the stock market or seeking an agreement with the operators, all attracted by the "Australian formula" and the high price of lithium.

“The Australian formula has enabled the country to triple its revenue from the lithium industry. It is something that as a country we should also try to emulate, and what Chile needs today is to grow in production, and any national lithium policy to be convenient for the country should ideally aspire for us to once again be the world's largest lithium producers , or at least keep us in second place. If we do nothing from here on out, in 2028 we are going to fall to fourth place in the world ranking, because Argentina is going to take advantage of our inactivity and the fact that we are frozen to be able to produce more”, states Juan Ignacio Guzmán.