Australia: The land of lithium?

By IM Staff
Published: Wednesday, 24 February 2016

Australia was the biggest producer of lithium in 2015, according to the USGS, but its place in the market has often been overshadowed by the brine suppliers of South America. Cameron Perks, IM Correspondent, gives an overview of the Australian lithium mining sector and looks at where this industry could go, if projected the growth in demand for Li-ion batteries materialises.

Australia’s significance as a source of lithium is generally acknowledged, but arguably not fully appreciated.

According to the US Geological Survey (USGS), Australia was the world’s largest lithium producer in 2015, at 13,000 tonnes, with Chile second, at 11,700 tonnes. Chile and Australia are in a league of their own when it comes to lithium production. Argentina, the third biggest supplier of lithium, produced less than a third of Australia’s total volumes in 2015, at 3,800 tonnes. 

Two brine operations in Chile and a spodumene operation in Australia accounted for the majority of world production.

Australian lithium comes entirely from the mineral spodumene (Li2O.Al2O3.4SiO2), a lithium-bearing aluminium-silicate mineral mined from a pegmatite dyke swarm. Lithium is also sourced around the world from petalite and salts (such as brines as in Chile), and to a lesser extent, eucryptite, lepidolite, amblygonite and clays. 

The Greenbushes mine in Western Australia (WA) currently accounts for 100% of Australian production. The mine is operated by Talison Lithium Ltd and owned by China’s Sichuan Tianqi Lithium Industries Inc. (51%) and US-based Abermarle Corp. (49%). 

Lithium1 

The Greenbushes lithium mine, WA (source: Catherine and Simon Gidzinski). 

Table 1: Total Australian spodumene 
shipments (*data includes production
from Galaxy Resources’ Mount Cattlin
Mine, prior to its closure in 2013). 

Year

Spodumene shipments (tonnes)

2015

482 755

2014

344 200

2013

420 925

2012*

396 928

2011*

387 204 

2010*

248 051

2009*

204 844

Source: Bunbury Port Authority 

The history of Greenbushes

A WA Government survey identified spodumene at Greenbushes from a specimen collected in 1928. A 1970s exploration programme to investigate tin and tantalum detected substantial spodumene-rich zones and in May 1982, further drilling was carried out to test for near-surface high-grade spodumene that could be exploited via an open pit. By August 1983, the initial shipment of 7% lithium oxide (Li2O) concentrate was made, and by late 1985, a large high-grade zone was identified within the total orebody and this became the basis of the modern operation. 

In the same year, a 30,000 tpa capacity spodumene concentrator was commissioned. This was expanded to 100,000 tpa in 1993-94 and again to 150,000 tpa in 1996-97. In 1996, output was almost 140,000 tpa and the company began building a 5,000 tpa lithium carbonate plant. The start-up of Sociedad Quimica y Minera’s (SQM) lithium from brine operations in Chile depressed prices and spodumene production at Greenbushes dropped to less than half of its previous level. Production recovered gradually, taking off in 2003 and reaching a record level of 222,101 tonnes in 2006. 

Considerable consolidation has taken place in the spodumene sector in the last decade. Notably, the acquisition of Talison Lithium by Tianqi in March 2013 for C$848m ($855.4m, at the time). Then, in May 2014, with Rockwood Lithium, part of US-based Rockwood Holdings Inc., obtained a 49% interest in Greenbushes for $475m. Finally, in January 2015, Rockwood was acquired by Albemarle as part of a $6.2bn takeover. 

Greenbushes spodumene is recovered through conventional open pit mining methods and beneficiated via conventional gravity techniques, where the ore is typically concentrated from 1-2% Li2O to a grade of around 6% Li2O. The Greenbushes lithium operation has two processing plants in WA, however most processing occurs within China, turning the ore into lithium carbonate or lithium hydroxide.

Figure 2: Total Australian spodumene shipments (*data includes production from
Galaxy Resources Ltd’s Mount Cattlin Mine, prior to its closure in 2013).

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Source: Bunbury Port Authority

Figure 4: 2014 global lithium carbonate (LCE) production by operation (ex-China).

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Source: Galaxy Resources/Canaccord Research


Spodumene prices 

During the fourth quarter of 2015, about 171,000 tonnes spodumene were shipped from WA. The main destination of these shipments was China, which accounted for about 80% of the total volume. 

Albermarle sells some of its share of spodumene under the Talison joint venture (JV) with Tianqi to a range of users in China, but is also building its own battery grade lithium conversion plant, due for completion in 2017. Once the facility is commissioned, the company will no longer have spodumene production for external sale. The majority of spodumene shipped to China was fetching $435-450/tonne CIF main China port in 2015, with a reported price hike of 15-20% coming in 2016. 

High volatility and a lack of spot prices for lithium and spodumene make actual transaction prices difficult to verify. Pilbara Minerals Ltd has stated that grades of 6.5% Li2O or higher (referred to as "technical grade" lithium concentrate) are selling at a $200/tonne premium, making this product worth up to $650-700/tonne, and anecdotally, up to $1,000/tonne, but there is no way to confirm this. In 2012, Talison stated that it was the sole supplier to this market. 

Higher grade spodumene concentrate of >7.5% Li2O is said to be fetching about $725-775/tonne CIF Asia, $772-854/tonne CIF US, and $740-790/tonne CIF Europe. For lower grade concentrate of 5% Li2O, prices are reaching $350-410/tonne CIF Asia, $463-496/tonne CIF US and $450-500/tonne CIF Europe. Meanwhile, internationally traded prices for lithium hydroxide (LiOH) have increased from less than $8/kg to around $22/kg in three months towards the end of 2015 and into 2016.

According to documentation from WA’s Bunbury Port Authority, total spodumene shipments out of Australia in 2015 amounted to 482,755 tonnes.

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Mount Cattlin site layout, looking east (source: General Mining Corp. Ltd).

Mount Cattlin

Mount Cattlin, another WA spodumene project, was put into care and maintenance in July 2013 due to low lithium prices, a high Australian dollar (A$), poor product quality and an uneconomic operating cost base. The project is 100% owned and operated by Galaxy Resources Ltd (subject to 50% earn in by General Mining Corp. Ltd) and is likely to be reopened in the March quarter of 2016, at a capex cost of A$7-15m ($5-10.7m*). Galaxy also owns the Sal de Vida lithium brine project in Argentina (100%) and the James Bay spodumene exploration project (subject to 50% earn in by General Mining) in Canada.

General Mining signed a sales and distribution Agreement with Mitsubishi Corp. in October 2015, covering spodumene concentrate production from Mount Cattlin. The agreement has a term of four years (plus an option for a one year extension, based on mutual agreement), and gives Mitsubishi the exclusive right to sell up to 100% of production into China, South Korea, Taiwan and Vietnam. Under the deal, Mitsubishi will be required to use "reasonable endeavours" to obtain the best selling-delivered price possible for the mine’s spodumene concentrate.

Lithium5 

Full of spark: Li-ion battery powered cars are providing the lithium market with huge exposure, with Deutsche Bank recently expressing the view that, "EVs will not be niche" in the near future and that we are at the dawn of a new automotive era with "unprecedented technological and  regulatory change" set to take place in the next five years (source: Steve Jurvetson).

WA lithium exploration

Spodumene ore is found throughout Australia, however the main focus for explorers remains the state of WA, with Neometals Ltd, Mineral Resources Ltd, Altura Mining Ltd, Pilbara Minerals Ltd, Lithium Australia NL, Metalicity Ltd, Dakota Minerals Ltd, Mining Projects Group and Zenith Minerals Ltd all focusing their lithium exploration efforts there.

Mount Marion, located near Kalogoorlie in central southern WA, contains 23.24m tonnes grading at an average of 1.39% Li2O, according to the project’s JORC compliant resource estimate. The deposit is jointly owned by Neometals Ltd (26.9%), Mineral Resources Ltd (operator, 30%) and Ganfeng Lithium Co. Ltd, China’s second largest lithium producer (43.1%). Ganfeng increased its stake from 25% on 3 February this year, taking shares from Neometals Ltd through an option agreement exercised early.

Mount Marion has an offtake agreement in place, with Ganfeng agreeing to purchase 100% of the 200,000 tpa spodumene production for the life of the mine, subject to certain conditions, with commissioning of the mine set to begin mid-2016. Neometals also has plans to build its own processing plant overseas with a JV partner within the next three years. The plan has garnered regular approaches from the Malaysian authorities, offering "the prospect of a 10-year tax holiday in front of battery related businesses to entice them to build their project in Malaysia", according to Simon Hicks, Neometals’ manager of stakeholder relations.

Altura Mining Ltd owns a project in WA called Pilgangoora Lithium. Pilgangoora is located near Karratha and Port Hedland in northwest WA. The Pilgangoora region is an emerging lithium district and is fast becoming a hotspot for explorers. Altura is progressing to feasibility stage at Pilgangrooa, which has a 25.16m tonne at 1.23% Li2O JORC resource. 

Pilbara Minerals is also progressing to the feasiblity stage at Pilgangoora, with the second largest hard rock spodumene deposit in the world, after Greenbushes, which had a 120m tonne resource in December 2012. Pilbara’s deposit contains 80.2m tonnes spodumene at 1.26% Li2O as a JORC compliant resource, as well as 42.3m tonnes 0.02% tantalum pentoxide (Ta2O5). Considered to be the most advanced of all the Pilgangoora projects, Pilbara has already signed three memoranda of understanding (MoUs) for around 200,000 tpa Li2O concentrate, involving both Chinese and North American groups. Pilbara is targeting 350,000 tpa spodumene concentrate.

Lithium Australia NL (previously known as Cobre Montana NL) owns exploration licences around the Greenbushes mine, in the Cocanarup pegmatite field, southwest of Ravensthorpe, near Galaxy Resources’ Mount Cattlin mine. In January, the company announced that it would begin exploration here in Q1 2016. 

Lithium Australia also owns tenements near Kalgoorlie at Coolgardie (Lepidolite Hill), as well as in the Pilgangoora area, where the company is exploring for lithium in mica ore, rather than spodumene.

In January this year, Dakota Minerals was granted an exploration licence in the Pilgangoora region over a lithium-bearing pegmatite known as "Lynas Find". The company has already commenced exploration and expects to determine drill targets by the end of Q1 2016. Lithex Resources Ltd, which previously held the area, reported pegmatite grades of over 1% Li2O, including one at over 5% Li2O.

Mining Projects Group announced in late January that it had agreed to acquire a different lithium-bearing pegmatite in the "Lynas Find" project area from Tyranna Resources and Tribal Mining – an acquisition which signalled the company’s move away from its previous focus on nickel.

Metalicity is another recent entrant to the lithium exploration space in WA, applying for four new tenements across the state; two at Lake Cowan (near Kalgoorlie), one at Greenbushes and another at Pilgangoora, all of which are pegmatite spodumene deposits.

Lithium Power International Ltd is due to list on the Australian Stock Exchange with an initial public offering early this year. Information about this new company is limited, but it has tenement applications totalling 470km2 in the Greenbushes area, as well as the Pilgangoora region, adjacent to Pilbara Minerals and Altura Mining.

Elsewhere in Australia

While most spodumene explorers are focused within WA, others have looked elsewhere in Australia. Core Exploration Ltd has identified lithium rich pegmatites in the Northern Territory, in areas that have previously been explored for tin and tantalum. Core reported in February that, while little modern systematic exploration for lithium has been conducted on the new tenements, recent results and research indicates strong prospective lithium grades.

Finally, in Tasmania, Argosy Minerals Ltd has executed a heads of agreement with Geotech International Pty Ltd, granting Argosy to a two-year option period to purchase the Mount Paris lithium project in the state. Argosy is already targeting lithium on an exploration licence 60km northeast of Launceston, in northern Tasmania, in an extensive greisen swarm prospective for spodumene, lithium micas and lithium clays (hectorite). 

A report released by the company in February this year states that the Mount Paris project to has "analogous geological setting to the Cinovec project [owned by ASX-listed European Metals Holding Ltd] – Europe’s largest lithium deposit".

The lithium industry

The lithium industry is expanding quickly, with lithium-ion (Li-ion) batteries representing the largest and fastest growing segment of the market (see Figure 1 for lithium market end uses in 2015). Unlike commodities such as copper and iron ore, there is argued to be no link between lithium and the economic cycle, and the sector grew by about 6% in 2014, according to the USGS.

Figure 1: Total global lithium production end uses 2015, where ceramics and
glass have been combined.

Lithium6  

Source: USGS


Acknowledgements

Murray Lines, Stratum Resources