Countries in the Americas are looking to bring new lithium projects online to capitalise on soaring demand growth for lithium-ion batteries as global decarbonisation efforts ramp up. In the Americas, AME estimates that 315,386t of lithium carbonate equivalent (LCE) production capacity will come online from new sites between 2022 and 2024.
In
2022, around 76ktpa of LCE production capacity is aiming to start up from new sites in Argentina
and Brazil. By 2023, an additional 114,455t of LCE capacity will come online in
Argentina, Mexico, and Canada. In 2024, another 124,931t LCE of capacity will come
to fruition in Argentina, Chile, and Canada.
Despite
the optimism of new sites coming online, these projects will take years to ramp
up to full production capacity, and global supply disruptions are resulting in
delays and overall constraints, in everything from equipment to labour.
There is significant production
capacity upside given the large array of projects in early development stages as
everyone from start-ups to major miners and automakers look to get into the
lithium game. It is important to note, however, that developing
industrial-scale mines still takes 10-15 years on average.
Given
that North America is looking to rapidly develop an electric vehicle supply
chain, lithium producers in the broader Americas region could stand to benefit
as countries and companies alike look to bring their supply chains closer to
home, while prioritising geopolitical considerations.
Looking
at lithium resources by country, Bolivia hosts about 21Mt, followed by
Argentina with 19Mt, Chile with 9.8Mt, the US with 9.1Mt, Canada with 2.9Mt and
Mexico with 1.7Mt, according to data from the United States Geological Survey
(USGS).
Emerging
Trends
In
North America, government intervention and resource nationalism has been on the
rise. In the US, both the current and previous administrations have pursued
policies to decrease the country’s reliance on trade with China.
This
month, Mexico President Andres Manuel López Obrador passed a bill to nationalise
the country’s lithium deposits as a strategic mineral. Just
last month, US President Biden invoked the Defence Production Act to increase
domestic production of battery metals, such as lithium and cobalt, to reduce
dependence on “unreliable foreign sources”.
Meanwhile,
under the new USMCA trade agreement, carmakers in the US, Canada and Mexico must
have at least 75% of their components produced in the region to qualify for
tariff-free trade. This is up from the 62.5% requirement under the 1994 North
American Free Trade Agreement (NAFTA).
While
most lithium batteries used for electric vehicles assembled in North America
are currently imported from South Korea, automakers are investing billions to
build up a domestic battery supply chain. The availability of lithium will be
key to realising these investments.
The
region’s auto industry supply chain is currently scatted across all three
countries. The US imports US$29.4bn of car parts from Mexico and exports US$5.9bn
of parts to Canada. The country exports US$11.7bn of completed vehicles to
Canada and US$67.5bn to Mexico.
Meanwhile,
high lithium prices have attracted major miners to jump into the battery metals
game. In the second half of 2021, South African precious metal miner agreed to
spend US$490m to acquire a 50% interest in Ioneer’s Rhyolite Ridge lithium
project in Nevada, US, followed by a US$72.2m private placement for a 7.12%
interest in Ioneer itself.
In
January of this year, China’s Zijin Mining acquired Toronto-listed Neo Lithium
Corp. and its 3Q lithium project in Argentina, for $765.3m in cash. In the same
month, Vancouver-based Lithium Americas acquired Millennial Lithium Corp and
its Pastos Grandes project in Argentina for US$390m.
Argentina
Zijin Mining (3Q)
Construction of the Tres Quebradas
(3Q) lithium brine project in Argentina has begun, China's Zijin Mining announced
on 29th March. Zijin will construct a US$380m lithium carbonate plant at the
project, which covers an area of 35k-ha in Catamarca province.
The plant is expected to produce 20ktpa
of lithium carbonate, with an aim to double that in the medium term. Plant
construction is slated to begin this year, with first production by 2023-end,
according to the Argentine government. The project will mark Zijin’s first
foray into lithium, with the company a major gold and copper producer.
Lithium Americas (Cauchari-Olaroz)
Lithium Americas expects to start
phase-one production at its 49%-owned Cauchari-Olaroz project
in Jujuy province in mid-2022. China’s Ganfeng Lithium owns the remaining 51%.

The conventional brine project is
expected to produce 40ktpa of lithium carbonate over 40 years. Annual average
EBITDA is estimated at US$308m, using assumed long-term pricing at US$12k/t. Operating
costs have been estimated at US$3,579/t.
Total capital costs have been revised
16% higher to US$741m, partly fuelled by inflationary pressures. In March, Lithium
Americas said construction works were 85% complete. Offtake agreements are in
place for over 80% of stage-one production at market prices. The phase-two
expansion, which would boost output by 20ktpa, is expected to start
construction after phase-one is commissioned, and then come online in 2025.
Lithium Americas (Pastos
Grandes)
Meanwhile, 100km from Caucharí-Olaroz,
Lithium Americas has recently acquired the Pastos Grandes project in Salta
province. It has a Resource of 4.1Mt of LCE at 427 ppm lithium.
Former owner Millennial Lithium
completed a feasibility study in 2019, based on 24ktpa of lithium carbonate
production over a 40-year mine life. Millennial invested C$40m (US$31.6m) in
exploration and development work for the project. The Environmental Impact
Assessment (EIA) for construction and operation permit were both approved in
mid-2020. The project is expected to enter production in 2024.
Argosy Minerals (Rincon)
ASX-listed Argosy Minerals expects
first production of lithium carbonate from its 2ktpa LCE Rincon project in
Argentina’s Salta province in mid-2022. In 2021, capex was estimated at US$20m.
An Environmental Impact Assessment (EIA) approval is also in progress to develop
an additional 10ktpa LCE operation.
A Preliminary Economic Assessment
(PEA) in 2018 outlined a 16.5-year mine life at 10ktpa LCE production (which was lowered to 2ktpa) and an
operating cost of US$4,645/t. Annual average life of mine pre-tax free cash
flow is estimated at US$74m, using assumed pricing of US$13k/t. It has an internal
rate of return (IRR) of 53%, a pre-tax net present value (NPV) of US$399m and a
payback period of 2.1 years.
Lake Resources (Kachi)
ASX-listed Lake Resources’ plans to
produce 25,500tpa of lithium carbonate using direct extraction technology at
its flagship Kachi project in Catamarca province. In January 2022, Lake said that
production will be increased from 25,500tpa to 50ktpa LCE in the Definitive
Feasibility Study (DFS), set to be released in mid-2022.
A 2018 Pre-Feasibility Study (PFS) at 25,500tpa
outlined a US$1.6bn pre-tax NPV and annual EBITDA of US$260m from
2024, using pricing of US$15,500/t lithium carbonate. It has a maiden JORC
Resource of 4.4Mt of contained LCE. The project’s capital cost is estimated at
US$544m. Construction is expected to take two years.
The project plans to use the direct
extraction technique, which promises a higher lithium recovery (70-99%),
compared to ~40% with the conventional evaporation process. The method has a much
smaller environmental footprint as there is no need for huge evaporation ponds.
However, the technology has not been tested at scale or over a significant time
period.
Lake has been testing direct
extraction in partnership with Lilac Solutions, with a pilot plant module in
California showing 80-90% recoveries. Lilac, backed by Bill Gates-led
Breakthrough Energy Ventures, currently owns 10% of the Kachi Project, and may earn-in
up to a 25% stake.
Allkem (Sal De
Vida)
First production at Allkem’s
100%-owned Sal De Vida mine in Argentina has been delayed by nearly a year to
the second half of 2023, mainly because of the pandemic. The company is
targeting 15ktpa LCE in stage 1, moving to 30ktpa LCE in stage 2. Operating costs are
estimated at US$3,612/t.
Sal de Vida has an ore Reserve
estimate of 1.1Mt of retrievable LCE and 4.9Mt in Mineral Resources, supporting
a mine life of over 40-years. It has a pre-tax NPV of US$1.23bn, based on an expected
price of US$17,485/t, a pre-tax IRR of 50% and a payback period of 1.75 years.
Construction began in January 2022
and is expected to take six to nine months, the company said. The stage 1
project will be 30% powered by solar energy. Capital costs were estimated at
US$271m.

Chile
Lithium Power International (Maricunga)
Lithium Power International’s 51.6%-owned
Maricunga project has revised its scope to focus on a smaller scale operation,
producing 15,200tpa LCE over 20 years. The previous Definitive Feasibility Study (DFS) in 2019
outlined a 20ktpa operation.
The new DFS, released in January 2022, outlined an
after-tax NPV of US$1.425bn (8% discount),
providing an IRR of 39.6% and a two-year payback. Annual average EBITDA is
estimated at US$324m. Operating costs are estimated at US$3,718/t, not
including a credit from potassium chloride by-products.
Maricunga is currently the most
advanced project in Chile outside of the mine expansions by SQM and Albemarle.
A final investment decision (FID) is expected this year, with construction to
start immediately after.

Brazil
Sigma Lithium
(Grota do Cirilo)
Sigma Lithium is on track to begin
production at its Grota do Cirilo lithium project in Minas Gerais in the
December quarter of 2022. Phase one is expected to produce 34ktpa of LCE (230ktpa
spodumene concentrate of 6% lithium) for a period of eight years.
An updated feasibility study,
released in April 2022, outlined a phase one capex of US$123.1m, slightly
higher than the previous estimate of US$113.6m in 2019. The study revealed an after-tax
NPV for phase 1 of US$1.6bn and an after-tax IRR of 424%.
A proposed second phase has the
potential for additional production of 33ktpa LCE (220ktpa spodumene
concentrate) before end of 2023.
Total mineral reserves are estimated
at 33.6Mt, including 25.3Mt of proven reserves at an average grade of 1.44% Li2O.
The project has a spodumene cash cost of US$342/t for phase one and US$360/t
for phase two.

Mexico
Banacora Lithium, Ganfeng Lithium
(Sonora)
Mexico doesn’t have any lithium mines
in production yet. The closest is the US$420m Sonora project, a joint venture
between Bacanora Lithium and Ganfeng Lithium, which is scheduled for first
production in the December quarter of 2023.
The project is looking to produce
35ktpa of battery-grade lithium at an average operating cost of US$4,000/t. A
feasibility study outlined a US$1.25bn NPV and 26% pre-tax IRR and a payback
period of four years. The deposit has 8.8Mt of LCE resources. The conventional
sulphate route process will be used. The project includes a 97,389-ha licence
area, located 190km north-east of Hermosillo in northern Mexico, consisting of
10 concessions. Lithium offtake deals are in place with partner Ganfeng and
Japan’s Hanwa.

Canada
Allkem (James
Bay)
Allkem’s 100%-owned James Bay hard-rock
lithium project is expected to start construction in the second half of 2022. Construction
is expected to take six to nine months,
The 2021 Feasibility Study outlined an average annual
production of 44,455t LCE (321ktpa of spodumene concentrate at 5.6% lithium). The expected 19-year
mine life is supported by a Mineral Resource Estimate of 40.3Mt at 1.4% Li2O
and Ore Reserve of 37.2Mt at 1.3% Li2O.
Operating
costs have been estimated at US$333/t of concentrate and capital cost
estimates of US$286m. The project has a pre-tax NPV of US$1.4bn (8% discount)
based on an expected spodumene price of US$1,000/t, a pre-tax IRR of 45.8% and
a payback period of 2.4 years. The spodumene pegmatite deposit supports a
life-of-mine strip ratio of 3.5:1 and an open cut operation using conventional
mining. The site will be 45% powered by hydro power.
Critical Elements Lithium
(Rose)
Critical Elements Lithium Corporation’s
Rose project, in northern Québec, is aiming to produce 186,327tpa of
chemical grade lithium concentrate over a 17-year mine life. Rose is also
aiming to produce 50,205tpa of technical grade lithium concentrate (used for
glass and ceramics) and 429tpa of tantalum concentrate (used primarily in
electronics). The mine will excavate a total of 26.8Mt ore grading an average
of 0.85% Li2O and 133 ppm Ta2O5.
An updated Feasibility Study (FS) for
the Rose mine and concentrator is expected to be released in the June quarter
of 2022. Meanwhile, an engineering study for a chemical plant, which would
produce 27ktpa of LCE, is also expected in the June quarter. These engineering
studies are expected to support a final investment decision (FID) this year, in
order to start production as previously envisioned, in 2024.
Critical Elements’ 100%-owned Rose
lithium project in Québec has a land portfolio of over 700km. It would be 93%
powered by hydroelectricity. A 2017 FS outlined an after-tax IRR of 34.9% and
an NPV of C$726m (US$574m) (8% discount) at an assumed price of US$750/t for
chemical grade. Average operating costs were estimated at US$66.56/t milled and
US$344/t of concentrate. The capital cost was estimated at C$341.2m (US$270m).
Nemaska Lithium (Whabouchi)
Nemaska
Lithium’s vertically integrated Whabouchi operation, in Quebec, comprises a mine,
concentrator and lithium hydroxide processing plant. Whabouchi aims to produce 33,231t LCE (215ktpa of
spodumene concentrate at 6.25% lithium) over a 33-year mine life.
Whabouchi will be mined using
conventional open pit mining for the first 26 years of operation, followed by seven
years of underground mining. All required authorisations have been received. A
detailed engineering study for its lithium hydroxide plant, in Bécancour, is
expected in the northern summer of this year. Construction is expected to begin
in 2023.
Nemaska emerged from creditor
protection in August 2020 under the joint ownership of Investissement Québec, Pallinghurst
Group and Orion Mine Finance.
