This stuff is so soft you can
scoop this out with your hands cash flow is all I see,
commented one potential investor while examining the green,
sticky clay that could become key in the worlds battle to
wean itself off oil.
Hectorite is an unknown quantity
when it comes to commercial exploitation on a large scale.
The clays swelling
characteristics enable its use as a paint thickener and in
cosmetics, but it is its lithium content is attracting a lot of
attention in the wake of a global supply race driven by a
pending demand from the electric vehicle (EV) market.
At least, this is what Western
Lithium Corp. is hoping and this is what drove potential
investors, competitors and independents to attend a site visit
on the back of IMs Lithium Supply &
Markets 2010 (LSM10) end of January in Las Vegas, USA.
Kings Valley hectorite has a lithium concentration
From its Kings Valley project in Nevada, Western Lithium Corp.
is aiming to become the worlds first company to mine and
process hectorite into lithium carbonate, a key component of
lithium-ion auto batteries the chosen technology to power
the worlds next generation of vehicles.
With the downturn of the
global automotive industry, it now seems clear that there is an
imperative to come up with a new business model that will last
the next 100 years based on the electrification of the
car, explained Western Lithiums president, Jay
Chmelauskas to IM.
More significantly, the company is
looking to become North Americas biggest lithium producer
with a projected 27,700 tpa of battery grade lithium carbonate
production, a title presently held by Chemetall Footes
small brine operation in the south of Nevada, USA.
Western Lithium has chosen the
north of the state to set up its camp on land previously
drilled by Chevron Resources in the 1970s and subsequently
picked up by Western Uranium in 2005.
Western Lithiums Kings Valley deposit is a short
flight from Lithium Supply & Markets host city of Las
Welcome to the future of
lithium mining in the USA, declared Western
Lithiums senior vice president of development, Dennis
Bryan, as the delegation descended on the Kings Valley project
area nestled in the McDermott Caldera.
The caldera a collapsed volcano
that has subsequently filled with water gave rise to
economic quantities of minerals in the area which in addition
to lithium includes gallium, uranium, and gold.
Created 15m. years ago, the caldera
was a result of significant volcanic activity 700km north-east
at Yellowstone National Park in Wyoming.
Volcanic fluids from Yellowstone
leached the lithium, along with other minerals, out of ash beds
and washed into the crater. As the closed system filled, the
lithium concentration became higher and the water was
eventually absorbed into the clay.
Clear evidence of this was seen
first hand at by the delegation Western Lithiums core
shack. Row after row of drilling core samples displayed the
hectorite the company was targeting, a green/grey soft sediment
containing an average of 3,300-3,500 ppm Li.
The 220ft (67 metre) core showed
the layer of flaky white ash rock closer to the surface
gradually becoming layered with hectorite. The highest
concentration of lithium was 7,680 ppm with the lowest 1,870
Drilling for lithium is like
playing battleships, explained one of the companys
geologists, aptly describing the nature of the job.
Turning hectorite into lithium
Western Lithiums hectorite to lithium carbonate process
is the key to
success at Kings Valley.
There are plans to mine the
hectorite from two open pits on the east and west areas of the
deposit using the simple truck and shovel method commonly seen
with coal mining and oil sands.
The 18 year mine life will see 32m.
tonnes of raw material enter the processing plant via a
overland conveyor spanning the site, and 78m. tonnes go to
waste using a lithium content cut off 0.27%.
We anticipate the two pits
will eventually become one, explained Peter Critikos,
manager for the project.
Each pit will be mined in a series
of eight to nine benches each 12 metres high this could see a
pit over 100 metres deep.
But the project is still some way off this stage yet, still
testing samples at laboratory scale with a present recovery
rate of 89%.
And there is still the issue of
mineral rights which at the time was unresolved. The company
explained that it was being looked at by our legal
department but they expect it to become a leasable
mineral product like oil.
As the delegation made its way back
into the off-road vehicles (petrol powered at the moment), the
size of the deposit compared with the close proximity to roads,
water, and electricity links became abundantly clear.
I was expecting the site to
be much more remote than it is, said Seth Fletcher, an
editor at US magazine Popular Science, who is writing a book on
the lithium-ion battery boom.
The mining itself looked
surprisingly easy. I heard someone describe it as
gardening. Whether the project makes commercial
sense is for the market analysts to tell you. I did ask one
analyst on the trip what he thought and he said it was
certainly a project of merit, but that he
hadnt run the numbers yet, he added.
You see some mines that look
like you have had to move the whole world to get what they
want, said the same delegate earlier commenting on the
softness of hectorite.
It is a fair point that extraction
will not be one of Western Lithiums worries, nor will
access to power and amenities or road and rail access. And
being based in a mining friendly state such as Nevada will no
doubt come in use at some point in the future.
I buy into the theme that
most of the green technologies in the world will take off and
more importantly the need back up systems to store power,
explained a US based potential investor, I think this is
one of the most promising markets for lithium that not many are
While the majority of the
delegation were converted to the idea of a promising lithium
future, the one thing which could trip up the glut of new
lithium explorers aiming to be the next big producer, is actual
New lithium entrants continue
staunchly fight the electric car corner (as they would be
expected to), but it has to be made clear that significant
demand is not here today, and while the signs looks promising,
it is far from guaranteed in the future.
Acknowledgments: IM would like to extend
its gratitude to Jay Chmelauskas and Dennis Bryan of Western
Lithium for hosting the LSM10 industry tour and providing
access to and commentary on its Kings Valley project, and James
Hayter, the companys marketing director, for organising
and coordinating the visit.
Comment: Western Lithium
Hurdles to overcome, persuading to do, but nevertheless
Nissans lithium-ion powered LEAF Courtesy
Western Lithium has a unique lithium source in hectorite
and one that, on paper, can almost compete with the cheapest
brine sources in South America.
On a cost base, the company
believes it can produce lithium carbonate for $1,967/tonne
after potash and clay by-product credits. Compared to the
industrys leading brines, Salar de Atacama, Chile, and
Salar de Hombre Muerto, Argentina this is favourable.
Production from the Atacama
averages $1,450-1,800/tonne while its Argentine counterpart,
Hombre Muerto, is higher at $2,100-1,400/tonne. Lithium
carbonate from mineral sources, namely spodumene, is much
higher and pushing the $5,000-6,000/tonne barrier (see
Western Lithiums proposed
cost includes an assumed income from sulphate of potash sales,
but is lower than Argentine brine production this may come
as a surprise to some.
Most of the attention is on the
potential of present production of all brine sources,
particularly in South America, China, Canada, and the spare
plots of land around Chemetall Foote in Nevada. There is an
assumption in the industry that: brine is the biggest,
brine is the cheapest, and therefore brine is the best.
Not necessarily so.
If a brine source has a high
magnesium to lithium ratio, producers will see significantly
higher costs. If the location of the source is in the middle of
nowhere, logistics will hit them hard. It is estimated that
over a third of the cost of lithium carbonate from Atacama is
for logistics, maintenance and labour.
It is the efficiency of the
operators, the favourable brine chemistry, and good evaporative
conditions that keep costs in the Atacama low.
Western Lithiums location
will play a big part in its success. It was described by one of
the delegates that the company had logistics on
tap, and in comparison to the South American salars it
does. Most salar projects are far from major towns and cities,
have to everything from the ground up, and face fresh water
The major challenges for the
company lie in its process to extract lithium carbonate. It has
to dispel any doubts over this brand new source.
Western Lithium is looking to take
advantage of a significant increase in demand from the EV
battery sector. It believes that with lithium carbonate being
the lowest cost component of the lithium-ion battery, that cost
difference is not the issue, but source security from a number
of different projects is.
This may be difficult for many
industry participants in the west to digest but this way of
thinking is starting to creep into Asias biggest
South Koreas biggest steel
producer, POSCO, told IM that its recent entry
into the lithium industry is about security first,
efficiency second. While this may be scoffed at by many,
it is an inherently Asian and typically Chinese way of thinking
(IM March 2010, p.16 : POSCO & Eramet up lithium
The French group Eramet the
raw material and processing side of a joint-venture with
Bollore which to produce EVs was also of a similar
Both companies were in the site
Investors of today and customers of
tomorrow will be more inclined to go with lithium from tried
and tested brine and hard rock sources. Much of Western
Lithiums work will be to prove that its battery grade
lithium carbonate has the quality, and, more importantly, the
consistency that is critical to long term contracts
and ultimate success.
Together with the increasingly active and impressive Galaxy
Resources Ltd and Rincon Lithium Ltd, Western Lithium is in the
industrys leading pack of developers. Should the company
surmount quality, consistency and processing challenges, other
key factors will play into its hands.
Production costs for a
tonne of lithium carbonate ($)
Note: these are estimated costs
with no profit margin
Profile: Western Lithium
shareholders: Western Uranium (24%)
Lithium carbonate (development)
business: Sulphate of potash (SOP), clay by product
(both in development)
The Kings Valley project
county, Nevada, USA
production: 27,700 tpa Lithium carbonate, 115,000 tpa
Start up date:
Indicated resource: 48.1m. tonnes
at 0.27% Li (688,000 tonnes LCE*)
42.5. tonnes at 0.27% Li (606,000 tonnes LCE)
Comment: Mineralisation is present in five
pods with the primary focus, the PCD lens, close to
*LCE lithium carbonate equivalent