Tesla CEO Elon Musk has announced plans to construct a $5-billion, 10-million-square-foot factory in Nevada which will build the batteries to power his annual target of 500,000 battery-powered cars by 2018. Key to production is a secure and large supply of lithium and cobalt to energize the batteries; this article looks at the potential of two Northwest Territories companies as Tesla seeks out lithium and cobalt sources.
One estimate is that Tesla will require 25,000 tonnes a year of lithium hydroxide to achieve the planned battery output. What with the cobalt requirement for the batteries it is obvious why these NWT companies look forward to success.
Adrian Lamoureux, president and CEO of 92 Resources, has acquired land around Hidden Lake north of Yellowknife. He asked and answered his own question, “Tesla needs supply. Now, do they want to be paying the sometimes $20,000/t that lithium is fetching over in Asia? No. They want something a little bit closer to home.”
When it comes to cobalt, there is the NICO project near Whati, NWT. Fortune Minerals has spent around 20 years working NICO. President and CEO Robin Goad has declared his respect for Elon Musk, describing his company as innovative and remarkable and Musk himself as an incredible salesman. All these factors will help Fortune Minerals’ ambitions regarding Tesla. Furthermore, one major producer of cobalt is the Democratic Republic of the Congo, long regarded as risky for mining companies.
The right time to invest?
Once again, while 92 Resources is in the early stages of involvement, Lamoureux is enthusiastic regarding a lithium mine near Hidden Lake.
”I wouldn’t rule out this decade. Within a few years is definitely possible,” he says, when asked to put a date on a potential mine. “The market doesn’t lie. This supply-and-demand issue is critical and I want 92 Resources and the NWT to be part of the Green Energy supply chain.”
92 Resources set for key role
The Hidden Lake Lithium Property, which 92 Resources wholly owns, comprises claims totalling approximately 1,100 hectares. Located just north of Highway 4, around 40 kilometres east of Yellowknife, Hidden Lake is regarded as highly prospective for spodumene-bearing lithium pegmatites.
More recently, 92 Resources sampled Hidden Lake’s LU12 pegmatite over an approximate 10 metre by 300 metre exposure. Seven samples from surface trenches contained between 1.37 per cent and 3.01 per cent Li2O, attributed to observed concentrations of coarse-grained spodumene, with crystals up to 36 inches long also noted.
“The two new claim acquisitions at Hidden Lake cover potential subsurface extensions to a historic lithium occurrence, and provide the company with additional lithium exploration opportunities near Hidden Lake,” explains Lamoureux. “Our goal is to identify as many lithium-bearing pegmatites within the area as possible and, given the discovery on the property of additional spodumene bearing pegmatites during the recent programme, the immediate area is that much more prospective. The region hosts several high-grade lithium pegmatites, but we will need to achieve a certain critical mass to be in the same conversation as advanced lithium pegmatite projects and operating mines worldwide such as Greenbushes in Australia and Nemaska in Quebec. Given the increasing political urgency which we find ourselves in with respect to Green Energy, we believe there is a window of opportunity for the NWT to play an important role in fulfilling that vision of a greener world.”
Field work began in late August and consists of simple surface rock sampling of the known lithium pegmatite(s) and exploration within the claims for new occurrences. On August 30, 2016, 92 Resources announced they had completed surface sampling the LU D12 Pegmatite and had identified three others that, after visual examination, look similar to the known mineralization at LU D12. This discovery has made for a very exciting week, but the company remains cautiously optimistic as the industry has seen many “visually exciting” discoveries that didn’t pan out so well, he states.
Regarding the processing of the spodumene pegmatites, Lamoureux points out the similarities with Greensuhes, the world’s largest lithium mine, in Australia which has been producing lithium for over 25 years. There, the pegmatite is mined, crushed and ground, with the spodumene liberated and concentrated by gravity methods and flotation. At Greenbushes, too, a concentrate is produced and sold, with the lithium extracted elsewhere.
Challenge from lithium brines?
Lithium occurs in many forms such as hard rock deposits (predominately pegmatites like Hidden Lake), brines (continental, geothermal, and oil field) and clays (such as hectorite). The world has vast lithium resources within each type of deposits, but the economics of extraction can vary.
Hidden Lake is a relatively simple project, but some brines such as the oil field type find lithium in solution with numerous other elements such as magnesium. In this example, the world may have vast resources of lithium but the presence of magnesium can make lithium extraction very difficult and prohibitively expensive.
“There are many pros and cons to both brine and hard rock deposits,” explains Lamoureux. “However, we expect both to remain significant suppliers of lithium to the market for the foreseeable future. One large advantage that hard rock producers have over brine operations is the greater ability to quickly increase, or decrease, production to match market dynamics. This allows a greater flexibility to capture market upside as seen with recent LCE price increases.”
“92 Resources has a great opportunity to be part of the conversion to a green future and it is critical that we do so in a responsible manner, adds Lamoureux.
“Goldman Sachs has said lithium is the new gasoline and, even if that is partly true, then for many there will be lifelong opportunities to be part of a new and exciting future that sees the world transition from one form of energy to another,” he says. “The reasons for the transition are the same fundamental principles behind CSR. One must respect the land, the communities and its peoples, and the process of sustainable development, as this is the only path forward. We want to contribute to that green future in a green way, responsibly and respectfully of the lands and communities where our projects are located. We want to act in a way that affects the local population positively, and include them in these new opportunities brought by this green economic revolution.”
Fortune eyes up cobalt opportunities
Fortune Minerals wholly owns the NICO cobalt-gold-bismuth-copper project, having spent over $115 million in advancing it from an in-house discovery in the mid-1990s to a development asset with a positive feasibility study and environmental assessment approvals for the mine and its concentrator in the NWT, and for its refinery in Saskatchewan. NICO has also been test-mined and pilot-plant processed.
The principal use of cobalt is in the cathodes of high performance lithium-ion rechargeable batteries. Over the past few decades cobalt in batteries evolved from nickel-cadmium batteries, to nickel-metal hydride batteries containing more cobalt, to today’s lithium-ion batteries with up to 60 per cent cobalt by weight.
Cobalt-containing lithium-ion battery chemistries provide greater energy density and superior chargeability than batteries without cobalt and are therefore preferred in portable applications and electric vehicles. Lithium-ion batteries are expected to dominate the rechargeable battery industry for at least the next decade because of the long lead times required from the invention of new products through validation to acceptance with minimal liability risks.
Demand for cobalt in battery chemicals increased 12 per cent in 2015 and is expected to pressure the market with double-digit growth in the coming years; over the last two decades demand has grown at compounded annual growth of approximately six per cent. The market is now roughly 110,000 tonnes with batteries accounting for about 49 per cent, up from one per cent in the mid-1990s.
Automotive electrification and stationary storage cells to store electricity from intermittent wind and solar generation and off-peak charging from the electrical grid will also create growth. At least 12 battery mega factories including Tesla’s have been either announced or are under construction to meet expected demand.
“NICO’s proven and probable mineral reserves total over 33 Mt to support a 21-year mine life at a planned mill throughput rate of 4,650 t/d of ore. Economically attractive is a high concentration ratio with flotation reducing the ore to approximately 180 wet t/d of bulk concentrate containing the recoverable metals,” explains Troy Nazarewicz, investor relations manager at Fortune Minerals.
“The concentrate is planned to be shipped south to Fortune’s refinery in Saskatchewan for downstream processing to value-added metals and chemicals. Life of mine average annual production is projected to be 41,300 oz gold, 1,615 t bayyert-grade cobalt, 1,750 t bismuth contained in metal ingots and oxide powder, and 265 t of copper.”
He states increase in cobalt consumption and the fact that approximately 65 per cent of mine production is currently sourced from the politically unstable Democratic Republic of the Congo, have raised concerns about the future supply of cobalt. NICO is planned to be an important new Canadian producer with supply chain transparency and uninterrupted custody from ore right through to the production of battery chemicals.
“If purchased for use in North America there would be lower transportation costs and trade advantages under NAFTA associated with Fortune’s cobalt production. In addition, Chinese-produced cobalt chemicals are subject to Chinese VAT and excise duties in North America,” sates Nazarewicz.
However, Nazarewicz is realistic regarding NICO’s ability to supply Tesla’s demands, “market estimates are that Tesla will require 5,000 to 10,000 t/y of cobalt to meet its requirements for the first gigafactory in Nevada, whereas average annual production from NICO is 1,615 t. Consequently, three to six NICO-sized assets would be required to meet Tesla’s cobalt needs for the first gigafactory.”
Wherever it ends up coming from cobalt will be needed in abundance, he adds. “It is important to recognize that all major auto makers are working to build electric vehicles, plus new entrants such as Apple and Google and many proposed new manufacturers in China. At least 12 battery mega factories, including Tesla’s, have been either announced or are under construction to meet the expected increase in demand.”