PDAC 2015: Battery minerals an oasis in the mining desert

By James Sean Dickson
Published: Friday, 20 March 2015

Battery mineral companies happier than most as short term demand sources disputed.

Graphite and lithium booths at the Prospectors and Developers Association of Canada (PDAC) 2015 conference in Toronto, Canada this year were party to a different atmosphere than the broadly depressed sentiment expressed by many other exhibitors.

The level of interest in battery mineral projects, compared with properties in both the industrial minerals and wider metallic mineral commodity markets, was noticeably higher, with a more positive feel for development, financing and pricing.

Referring to struggling companies in other commodities which are circling the bankruptcy drain, one developer told IM that graphite and lithium companies are in far better shape, and are unlikely to experience the woes of the wider mining industry.

While lithium and graphite have struggled in the financing downturn, the two minerals have received extra interest owing to their consumption in the growing battery market.

This excitement was supercharged by Tesla Motors Inc.’s announcement during 2014’s PDAC that it would build a Gigafactory in Nevada US, tasked with producing large volumes of lithium-ion (Li-ion) batteries.

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The PDAC 2015 conference in Toronto, Canada.
Commerce Resources Corp. 

Grid storage vs EVs

For lithium, the debate at the conference was not about supply or financing, but rather where the extra demand would come from.

Stria Lithium Inc.’s chief operating officer, Julien Davy, told IM that the biggest short term demand would come from the "unglamorous" grid storage industry, while Pure Energy Minerals Ltd director Jeremy Poirier and TSX-V-listed Nemaska Lithium’s CEO, Guy Bourassa said that the primary growth driver would be electric vehicles (EVs).

Poirier and Bourassa focused on the excitement and the expected automotive industry shift, with Poirer noting the recent launch of General Motors Inc.’s new Volt model.

Davy, however, said that despite not receiving comparable media attention, real growth was already being seen in grid storage batteries, where industrial clients are driven by cost cutting and business requirements. He contrasted this against an as-yet unconvinced general public, which must make an active decision on purchasing an EV over petrol and diesel powered cars.

Davy’s conservatism on EV growth is due to the perceived sentiment of the consumer market – which is personal, not business related. "If EVs can take off, manufacturers need to prove that long distance use is possible, and that battery power is a viable alternative to using conventional fuels, to vehicle customers," he told IM.

"Tesla will need to make an announcement this year," he said, adding that what the amount of battery mineral consumption on the table from Tesla will be, and from where this will be sourced are important investor questions.

The energy grid storage solution end market is also hard to quantify in terms of demand, he told IM

"The power industry is generally run by big, multi-billion dollar capex companies, which are relatively private about their demand projections," Davy said.

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Mining and mining services companies set out their stalls at PDAC 2015.

Purity and processing are key

Davy told IM that his company’s value lies in its processing technology, which allows for low cost production of lithium (Li) using a chlorination process from spodumene. This lithium metal can be transported in mineral oil, Davy confirmed, or converted via simple reactions to lithium carbonate or hydroxide.

The process can take spodumene ore material and create "four nines", or 99.99% pure lithium, which increases in value by almost double, to $15,500/tonne from "three nines" pure lithium metal, at 99.9% Li.

"Purity is key – the processing is where the value is," Davy told IM. "The higher the purity of battery mineral ingredients, the higher the performance, longevity and efficiency of the end product battery." 

"We will also simplify our business model by offering the processing technology to others under a licensing agreement; we may also purchase this material post-production and find the customers ourselves," Davy added.

Focus Graphite Inc’s vice president of project development, Jeff Hussey, told IM that similar demands of purity are being demanded in the battery-destined graphite industry.

"Heading straight for a 98% C graphite product from all flake sizes is advantageous," he said.

It can be less difficult to produce high purity graphite products from higher flake sizes but the distribution of the impurities in the Lac Knife resource in Quebec and the lack of need for specific processing items mean that Focus can produce the higher grade material from all mesh sizes, Hussey said.

Further to this, the company is able to produce "five nines", or 99.999% C spherical graphite for the battery market, with a higher performance than is achievable with synthetic graphite. "We can prove that irreversible capacity loss at first charge is lower with our material," he told IM