Infinite opportunity: Lithium in Spain

By IM Staff
Published: Friday, 30 August 2019

Australian exploration company Infinity Lithium explains why the rewards of developing lithium projects in the EU could be immeasurable, if the bloc acts on pledges to support the development of local battery supply chains.

Australian exploration company Infinity Lithium is something of an outlier in the lithium world.

Eschewing "hot" lithium jurisdictions such as Chile, Argentina and Australia, the company has opted to develop a zinnwaldite resource at Extremadura, in western Spain.

Strategically located within the EU, Infinity’s San Jose Project will be a fully integrated operation producing battery-grade lithium hydroxide onsite.

According to Infinity’s chief executive officer, Ryan Parkin, this will give the company a major advantage over most other lithium producers and juniors, which only sell lithium concentrate.

"Compared to non-integrated producers, San Jose does not incur costs for the transportation of a lithium concentrate offshore," Parkin said. "This sets us apart from spodumene concentrate producers, which have to move large volumes of material to China for conversion to battery-grade lithium chemicals. Our material is moved just a couple of kilometres to our onsite hydroxide conversion facility."

Once the San Jose concentrate has been converted, there will be no export duties payable on the products that Infinity will ship, because they will be consumed within the EU. The users will mostly be yet-to-constructed battery production facilities, regarded as necessary to supply Europe’s rapidly expanding electric vehicle (EV) industry.

In addition to the benefit of its proximity to large end-markets, Parkin noted that Extremadura holds other important advantages for Infinity.

San Jose is close to gas and water supplies, and to roads, all of which are key infrastructure for the project, and which Infinity would otherwise have to build.

Unlike other jurisdictions (including Chile and Argentina, both major lithium suppliers), Spain does not extract mining royalties and the country is demonstrably supportive of its mining sector.

"The San Jose net direct cash [C1] cost is at the lower end of the cost curve for hydroxide due to these factors," Parkin said.

"The environmental profile is also important for EU end-users, and we are lucky that all the reagents we need are available domestically. This means that we don’t need to import soda ash from North America, like in Chile or Argentina, or caustic soda from China, like in Australia," he added.

lI2  
Drone footage of Infinity’s San Jose lithium project in Extremadura.
Infinity Lithium 

Unmoved by market movements

Infinity is undeterred by the pullback in lithium prices this year – a development which, after a three-year bull market, has prompted some lithium companies to shelve their plans.

"The lithium market has seen increased supply - for example, from various spodumene concentrate producers - and prices have felt the effects of Chinese converter stockpiles and increased output from mining operations," Parkin said.

"We view this as a relatively short-term position in respect of supply/demand imbalance," he added. "By the time San Jose enters production and we start producing battery-grade chemicals, this oversupply situation will have dissipated."

Parkin admitted that the share prices of lithium exploration companies have been "affected by the general market sentiment toward lithium," which has cut off some investment capital.

But he believed that this will reinforce market fundamentals for projects such as San Jose in the future.

"The negative market sentiment is reducing or delaying investment in new lithium capacity," he said. "In the long term, demand is projected to surpass production, so cuts to investment now will trigger much higher price increases when the market becomes tight."

Recognizing lithium’s importance in Europe

The European Commission (EC) has indicated its concern about the EU’s exposure to Chinese lithium supply, with the bloc’s demand for lithium chemicals growing, driven by the rapid expansion in EV uptake.

According to Vincent Ledoux Pedailles, executive director at Infinity Lithium and a nominated expert adviser on lithium to the EC, "the commission readily acknowledges the strategic imperative to establish a self-sufficient lithium-ion battery market within Europe. This includes securing access to the five essential battery raw materials: lithium, nickel, cobalt, manganese and graphite."

The EU’s Horizon Europe programme includes a dedicated budget of €100 billion ($112 billion*) to support research and innovation, some of which is earmarked for battery materials and supply chain development.

The EC is also working with the European Investment Bank (EIB) to address identified gaps in the battery value chain.

Maroš Šefčovič, the EC’s vice president in charge of its Energy Union initiative, is a "strong advocate" for a fully integrated lithium-ion battery supply chain in Europe, Pedailles said.

On June 12, 2019, Šefčovič led a meeting between the EC and the EIB in which he called for the prioritisation of sectors that are strategic for Europe, and specifically for battery raw materials projects that focus on lithium extraction and conversion to chemicals.

He noted that the threat of trade wars and increasing competition from China, in areas such as the automotive sector, warrant affirmative action by EU policymakers and funding bodies, and called for wider and more definitive engagement in this area.

In addition, the EU’s Critical Raw Materials list is being revised this year by the EC. "Lithium is not currently listed as critical by the EU," Pedailles noted, "unlike cobalt, which is used in cathodes for lithium-ion batteries."

But the Commission will consider the merits of including lithium in an updated list for 2020, a move which should generate greater support for lithium projects like San Jose in Europe.

*Conversions made August 2019