Lake Resources NL (ASX: LKE, OTCQB: LLKKF) is advancing its flagship Kachi project in Argentina toward production while expanding lithium resources at its other projects, including Cauchari and Olaroz, as demand for lithium increases threefold the speed of lithium supply.
Consultancy Benchmark Mineral Intelligence (BMI) predicts that demand for batteries from the automotive sector alone will increase 40 times between 2020 and 2040, as electric vehicles (EVs) become more widespread.
Signatories to the COP26 Glasgow Declaration, which included carmakers Ford, General Motors, Mercedes-Benz and Volvo, said they would work to ensure that all sales of new cars and vans are to zero emissions globally by 2040, and no later than 2035 in major markets, BMI noted in a Nov. 10 report.
BMI estimates that if all cars and vans sold in 2040 were electric, that would represent nearly 8,400 gigawatt hours (GWh) of lithium-ion battery demand.
The COP26 climate goals require the production of more than 7 million tonnes of lithium carbonate equivalent (LCE) per year, 17 times more than this year’s estimated production.
Yet investments in raw material supply are currently insufficient to meet battery demand in 2030, let alone 2040, said BMI CEO Simon Moores.
“Right now, lithium demand is growing at three times the speed of lithium supply,” he said. “It’s a big problem that needs to be solved.”
Direct extraction technology
Lake Resources is a clean lithium developer using clean, direct mining technology for the development of sustainable high-purity lithium from its flagship Kachi project, as well as three other lithium brine projects in Argentina.
The company’s four projects cover 2,200 square kilometers in a prime location within the lithium triangle, where 40% of the world’s lithium is produced.
Kachi covers 70,000 hectares on a salt lake south of the Livent lithium operation, with a significant indicated and inferred resource of 4.4 million tonnes LCE.
Lake’s technology partner, California-based Lilac Solutions Inc, has developed efficient and disruptive clean technology to produce sustainable high-purity lithium.
This direct extraction method offers a solution to two growing demands: high-purity battery materials to avoid performance issues, and more sustainable, responsibly sourced materials with a low carbon footprint and significant ESG benefits.
The method has a small environmental footprint, both physically and by returning nearly all brine to its source.
Lilac’s cost-competitive technology has been supported by the Bill Gates-led Breakthrough Energy Fund and MIT’s Engine Fund, among other leading sustainability investors.
Can lithium miners deliver?
While building a battery cell production plant can take two years, commissioning a new lithium mine can take five to ten years.
Can lithium miners provide the supply needed to meet global electrification goals? And above all, can they meet ESG requirements?
Lake chief executive Steve Promnitz said unified action across the industry would be crucial.
“Lithium companies will need to work closely with governments, investors, communities, employees and all other key stakeholders to facilitate the necessary increase in supply,” he said.
“It is important to note that battery-grade sourcing will be essential, but it must also be provided in an environmentally sustainable manner to ensure the supply chain meets its ESG requirements.
“It’s a huge challenge, but at Lake, we’re working to help provide a solution through our environmentally friendly Direct Lithium Extraction (DLE) process that can quickly produce battery-grade lithium while minimizing our impact on the environment.
High purity lithium
High-purity (99.9%) lithium carbonate samples with very low impurities were produced from lithium brines from the flagship Lake Project.
The growth of higher density batteries to power the latest electric vehicles has dramatically increased demand for a product of consistently high purity (battery quality) with low impurities, providing a premium price for Lake’s anticipated product.
A pre-feasibility study (PFS) on Kachi by a Tier 1 engineering company showed the potential for a large, low-cost, long-lived operation, with competitive production costs at the lower end of the spectrum. cost curve.
Sustainable ESG benefit
By using a benign water treatment process to produce lithium, Lake avoids all mining and returns virtually all water (brine) to its source without altering its chemistry (except for lithium removal) .
The environmental footprint is therefore much lower than conventional processes from brine evaporation ponds or hard rock mining, providing a better outcome for local communities and the environment.
Manufacturers of electric vehicles and Tier 1 batteries are looking for more sustainable and responsibly sourced materials in their supply chain, as stated by VW, Daimler (ETR: DAI), BMW, Tesla and the European Commission, which is driving demand for Lake’s product.
With analysts reporting a growing battery-grade lithium supply shortfall, Lake’s projects are in the right place at the right time and ready for development.
Supply chain challenges and opportunities
The recent global climate change conference COP26 put pressure on governments and industry to accelerate the energy transition.
Yet the supply chain challenge received little attention from policymakers at the Glasgow summit, according to analysts Wood Mackenzie.
“We view mining products as critical to a successful transition, but supply will be unlikely to meet the boosted demand without concerted efforts to invest in new resources,” said Julian Kettle, vice president of Wood. Mackenzie.
“The tone of the COP26 conference reinforced our view that world leaders have little understanding of the supply chain challenges that an accelerated transition could bring.”
With the power and transport sectors contributing over 55% of global energy-related emissions, the pressure is to replace hydrocarbons with ‘green electrons’ from renewables and ‘green molecules’ such as ‘hydrogen.
The electrification of transport requires the “complete transformation of the demand for battery raw materials such as nickel, cobalt, lithium and graphite”.
20 new Greenbushes-sized mines
Wood Mackenzie sees demand for lithium tripling by 2030 and demand for cobalt doubling, among other key metals for batteries needed for electrification.
“The lithium market would require 20 new mines the size of Greenbushes – currently the largest in the world – in operation by 2030 [to meet the demand]he said in an October 13 report. [In lithium brine terms, this would equate to 30 Atacama brine projects (SQM & Albemarle)].
Highlighting the challenge for miners, the consultancy said that “for most mined commodities, the biggest challenge will be ensuring sufficient supply so that the energy transition doesn’t stop the moment it begins.”
However, Wood Mackenzie noted that COP26 agreements on deforestation, methane and other ESG targets “will act to slow supply”.