Lake Resources NL (ASX: LKE, OTCQB: LLKKF) pushes its flagship Kachi project in Argentina towards production while increasing the lithium resources of its other projects, notably Cauchari and Olaroz, as demand for lithium grows three times more faster than lithium supply.
Consultancy Benchmark Mineral Intelligence (BMI) predicts that demand for batteries from the automotive sector alone will increase 40-fold between 2020 and 2040, as electric vehicles (EVs) become more widespread.
Signatories to the COP26 Glasgow Declaration, which included automakers Ford, General Motors, Mercedes-Benz and Volvo, said they would work to ensure all sales of new cars and vans are zero-emission in the world 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 objectives require the production of more than 7 million tonnes of lithium carbonate equivalent (LCE) per year, 17 times more than the production estimated this year.
Yet investments in raw material supply are currently insufficient to meet the demand for batteries in 2030, let alone 2040, said Simon Moores, CEO of BMI.
“Currently, the demand for lithium is growing three times faster than the supply for lithium,” he said. “This is a big problem that needs to be solved.”
Direct extraction technology
Lake Resources is a clean lithium developer using direct, clean 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 in 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 mine, with a significant indicated and inferred resource of 4.4 million tonnes of LCE.
Lake’s technology partner, California-based Lilac Solutions Inc, has developed efficient and disruptive clean technology to produce durable, high-purity lithium.
This direct extraction method offers a solution to two growing demands: high purity battery materials to avoid performance issues, and more durable and responsible materials with a low carbon footprint and significant ESG benefits.
The method has a small environmental footprint, both physically and by returning almost all of the brine to its source.
Lilac’s economy technology was backed by the Breakthrough Energy Fund led by Bill Gates and the MIT Engine Fund, among other leading sustainability investors.
Can lithium miners deliver?
While it can take two years to build a battery cell production facility, bringing a new lithium mine online can take five to 10 years.
Can lithium miners provide the supply needed to meet the world’s electrification goals? And above all, can they meet ESG requirements?
Lake chief executive Steve Promnitz said unified action across the industry will be crucial.
“Lithium companies will need to work closely with governments, investors, communities, employees and all other key stakeholders to facilitate the increased supply needed,” he said.
“It is important to note that battery grade supply will be essential, but it must also be delivered in a manner that is environmentally sustainable to ensure that the supply chain meets its ESG requirements.
“It’s a huge challenge, but at Lake we are working to help provide a solution through our environmentally friendly Direct Lithium Extraction (DLE) process that can quickly produce high quality 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 Lake flagship project.
The growth of higher density batteries for driving the latest electric vehicles has dramatically increased the demand for a consistently high purity (battery grade) product with low impurities, providing a premium price for Lake’s intended product.
A Pre-Feasibility Study (PFS) on Kachi by a Tier 1 engineering company showed the potential for a large, low-cost, long-lasting operation, with competitive production costs at the lower end of the cost curve .
Sustainable ESG benefit
By using a benign water treatment process to produce lithium, Lake avoids mining and returns virtually all of the water (brine) to its source without changing its chemistry (with the exception of the removal of lithium) .
The environmental footprint is therefore much smaller than that of conventional brine evaporation pond processes or hard rock mining, providing better results for local communities and the environment.
Manufacturers of EVs and Tier 1 batteries are looking for more sustainable and responsible materials in their supply chain, as stated by VW, Daimler (ETR: DAI), BMW, Tesla and the European Commission, which stimulates demand for Lake’s product.
With analysts pointing to a growing supply shortage of battery-grade lithium, the Lake projects are in the right place at the right time and ready for development.
Supply chain challenges and opportunities
The recent COP26 global climate change conference 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, analysts Wood Mackenzie said.
“We see mining commodities as essential to a successful transition, but supply will be unlikely to meet supercharged demand without concerted efforts to invest in new resources,” said Wood Mackenzie vice president , Julian Kettle.
“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 electricity and transport sectors contributing more than 55% of global energy-related emissions, the pressure is to replace hydrocarbons with “green electrons” from renewable energies and “green molecules” such as oil. ‘hydrogen.
The electrification of transport requires the “complete transformation of the demand for raw materials for batteries such as nickel, cobalt, lithium and graphite”.
20 new mines the size of Greenbushes
Wood Mackenzie sees demand for lithium triple by 2030 and demand for cobalt double, among other key battery metals 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 the miners, the consultancy said that “for most of the raw materials extracted, the biggest challenge will be to ensure sufficient supply so that the energy transition does not end when it starts.” .
However, Wood Mackenzie noted that the COP26 agreements regarding deforestation, methane and other ESG goals “will act to slow down the supply.”