Andrew Bowering is the Director of American Lithium Corp (ALC), a leading lithium exploration and development company operating in Nevada in the US. Bowering has founded, funded, and managed mining companies for over 30 years as a venture capitalist involved in mineral exploration, development, and mining globally. Millennial Lithium, a brine operation in Argentina that Bowering founded five years ago, is currently operating its pilot plant while seeking a development partner. Frost & Sullivan’s Vishwas Shankar recently interviewed Bowering to get his take on the market.
Tell us more about your operations in Nevada and other lithium mining hubs globally. How is ALC partnering with stakeholders to grow EV offerings?
Nevada is a mining state, endowed with a large supply of low-grade sedimentary lithium in clays and claystones, some low-grade brines, and, possibly, higher-grade pegmatites. Lithium’s current market condition is similar to the gold market of the 1970s, characterized by rapidly rising demand and prices ($25,000/ton in 2018 from $1,500/ton in 2010), and large, low-grade surface deposits located in mining-friendly Nevada. The Nevada Department of Mines estimates that the state will produce about 25% of the world’s lithium in the future.
Two-thirds of lithium is located in South America’s lithium triangle of Chile, Argentina, and Bolivia, with the US importing 95% of its lithium from here. How is ALC planning to make the US self-sufficient and avoid supply crunches in the future?
The US federal government has already put lithium on a list of 35 minerals deemed strategic to the country’s national security. As a result, the US Department of Energy is allocating large grants for lithium processing and engineering, speeding up permissions, and providing other industry benefits.
South America is facing various challenges. The Bolivian government is very leery of foreign investment and has pushed away any large investment opportunities in lithium. Also, recent Chinese plans to invest in some of their larger resources have ended due to various reasons. While Bolivia has 50% of the world’s lithium in its salars (salt flats), it is very lowgrade and contains very high amounts of deleterious elements such as magnesium. As a result, no major companies or operations exist in Bolivia.
Argentina seems to be fashioning itself as the next Venezuela and has bounced between possible nationalization of resources, campaigning against mineral development, and a very unfriendly foreign investment environment. Besides, the brine operations of Argentina are yet to prove their worth, with most operations going over the budget and not producing on time or at planned rates. The chemistry of Argentine brines, while better than Bolivia, is not what SQM and Albemarle produce in the Atacama of Chile, the best lithium brines on the planet.
Chile has exercised government control over its lithium operations by effectively giving Albemarle and SQM complete control over the export of lithium. While the major salars of Chile have the highest-grade lithium and lowest-grade deleterious minerals on earth, exploration and development permits are very limited. Additionally, there is a major fight brewing between local communities, the copper mines, the lithium mines, and indigenous groups over the use of freshwater in the mining industry. It takes 500,000 liters of fresh water to produce 1 ton of lithium carbonate by solar evaporation. The Chilean government rejected a recent application by SQM to increase its production by 50% over a few years.
As a result of the problems in South America, future lithium production is going to come from North America and, possibly, Australian pegmatites, depending on costs and lithium pricing.
Hard rock is expensive to extract but quick to process. Brine, on the other hand, is way cheaper but takes 8-18 times longer to process. Which extraction is the current trend?
Hard rock costs are closer to $6,500 to $8,000 a ton for lithium carbonate. They are not economic at current lithium pricing and are somewhat shut-in. More effective processing may result in cheaper production costs in the future, but there is no immediate evidence that the hard rock industry is having success at reducing costs to be competitive with brine production.
Brine production is much cheaper because lithium is concentrated over a 2 to 2.5 years process using solar and wind evaporation. It’s true, good-grade brines can produce lithium at a cost of about $3,000 a ton, even less in the Atacama, where a significant potash credit is also captured in the process. The trouble with brines is that they use massive amounts of scarce water and can’t be rapidly upsized due to brine aquifer chemistry changes when the source is drawn for increased output.
The current trend is reflected in Gang Feng’s investment into Sonoran Lithium in Northern Mexico, Ioneer’s push to produce at Rhyolite Ridge in Nevada, and Lithium America’s BFS and permitting push for Thacker Pass in Nevada. Estimates for production from sedimentary deposits, clays, and claystones are estimated in the mid-3,000s, much closer to the brines.
There is also a big push to use processing technologies to process brines with in situ direct extraction technologies. All these technologies are being tested and determined at the lab scale presently.
How will the extraction trend change in the future, and why? How does ALC align itself in terms of extraction?
The extraction trend will head towards direct extraction as the technologies prove out. Lower-grade sedimentary deposits will also benefit as an investment in technology and extraction is made to bring these deposits into production.
American Lithium has one of the best sedimentary lithium deposits in the US. It sits at surface, five minutes from the mining center of Tonopah, away from any ranchland, with easy access to power, water, labor, and other infrastructure, with the Round Mountain mine just up the road. American Lithium has already purchased its process water and about 600 acres of private land to build its pilot plants.
Regarding the ore at Tonopah Lithium Claims (TLC), lab testing to date confirms it is one of the shortest resident times for leaching all the sedimentary deposits. Our competitors have leach times in the hours, and ALC ore leaches in minutes. TLC is located near a source of limestone and, potentially, soda ash, leaving only sulfur as a commodity needed in the recovery process that will have to be transported from out of state. More work on all these inputs is required and is currently being conducted by the University of Nevada, Reno.
How are US-China tensions expected to affect or risk future li-ion battery supply-versus-demand equations?
One of my good friends offers this: This is an opinion based on politics and not technical. I would say it will have a minimal impact as there is too much at stake. In all honesty, the US holds a poor hand, and I think [President Donald] Trump always buckles. China controls a large amount of raw material production. The worst the US could do is remove subsidies for electric vehicles (EVs); I do not know how much is federal and how much is state. Any weakening of subsidies on EVs will delay, but not terminate, the adoption of EVs. Also, other components in the electrical systems are highly dependent on Chinese parts like fuses and resistors, among others.
I think the US needs to develop its battery-making facilities, which includes cathode plants and other component processing. There isn’t much point in establishing a domestic source of lithium and other minerals if you don’t have domestic manufacturing. Someday, the US is going to have a massive fleet of EV transportation, including automobiles, trucks, trains, aircraft, boats, and ships, as well as many other uses for electrical power in stored systems. The US needs to have domestic production of li-Ion batteries, or it will become as dependent on this new energy source as it once was on foreign oil. The country was able to bring its hydrocarbon-based energy production and pricing under control, which resulted in great success. With the current efforts, the country would not be able to do the same with lithium, which implies they need to ramp up the efforts.
Could you share your insights on current and future lithium price and production indicators?
The lithium market is no surprise. Ten years ago, lithium was a thinly used commodity in pharmaceuticals, ceramics, lubricants, and some steel and alloy processing. It had a minimal price because of limited demand and was primarily a byproduct of other mineral processing or small-scale pegmatite mining.
The advent of the lithium-ion battery changed everything. Demand shot up and with that, so did its price. Lithium ran from $1,500 a ton12 years ago to a high of $25,000 a ton for the cash market lithium carbonate in early 2018. Long-term offtake agreements were being written at about $14,000 a ton at the time. That attracted producers to the market, resulting in oversupply. Then prices fell to a current low of $6,400 a ton for carbonates. The falling price has taken much of the hard rock miners and processors out of the market. Also, it has caused planned operations to get shelved.
The result of all this is that lithium demand is still growing and supply isn’t. Prices will increase again. Projects will come back on stream. Most analysts suggest that around 2023, the lithium market will be in disequilibrium again with demand exceeding supply. Goldman Sachs and Morgan Stanley both forecasted a drop in the lithium market in December 2019.
How much of an impact does lithium have on the price of an EV battery since the material is probably one of the cheapest, compared to cobalt and nickel?
I believe I have seen that lithium makes up 6% of the total price. Lithium raw material cost is only one part of the equation. The lithium is refined to lithium carbonate and then processed with the cobalt and nickel (or soon iron and manganese) to give the active positive electrode (cathode) material. So I think the raw material cost is reasonable compared to other components and processing costs.
One company seems unstoppable – Tesla. Could it exist without lithium? How is it dependent on you?
I do not believe Tesla can survive without lithium. A big statement, I know, but let’s start with the basics of chemistry. The key to lithium being the leader is that it is element #3 on the periodic table, which means it is small and light, and it gives up the electron easily, which means it offers high voltage. Battery engineers work with watt-hours (energy) and not amp-hours (capacity). Where lithium-ion excels is energy density (Wh/l) and specific energy (Wh/kg).
If we consider watt-hours, lithium-ion is 3.6 V, lead acid 2.0 V, NiCad/nickel metal hydride 1.2 V. Hence, for a cell phone that runs at 3.6 V, you need one cell for lithium-ion, but if you go back to NiMHx, then you need three cells. You cannot get around the chemistry. For vehicles, the most important aspect is specific energy (Wh/kg) to be able to drive at good speeds with acceleration for long periods without recharging. If you have a heavy battery, then you burn up energy moving a heavy battery, which reduces range. I think it will be lithium-ion for some time. In fact, this might be the case during my lifetime. Tesla is not dependent on us, per se, but they are dependent on lithium production. Elon Musk has already said they will need to buy a lithium mine to handle his planned production of cars and other electric battery-powered products.
Can you please elaborate on your earlier comment that for transportation batteries like Tesla’s, it will be lithium-ion for a long time, most likely through your lifetime?
For portable electronics, perhaps zinc-based systems such as nickel-metal hydride will work as long as you can reduce power consumption. For phones, we don’t see this happening since the consumer wants more power, which brings us back to lithium-ion.
For stationary power, the usage of lithium-ion makes me curious. I think the major driver is the lifecycle, which is far better than lead acid. Some think that in the long term, lithium-ion will be replaced, and the industry is looking at zinc-based systems.
Another chemistry fact: lithium-ion is a one-electron process, Li –> Li+, whereas zinc is a two-electron process, Zn –> Zn2+, and aluminum is a three electron process, Al –> Al3+. That is why aluminum production is so electricity-dependent. Aluminum is made in British Columbia and Quebec due to cheap electricity. You mine aluminum oxide or Al3+ and have to add three electrons (electricity) to get to aluminum metal.
Long-term portable power and vehicle power will be lithium. There may be an attempt to use metallic lithium, but it’s highly doubtful. Stationary power might be powered by zinc.
Who will lead infrastructure development? Will it be private players/government/collaborative effort or something else?
There will be collaborative efforts. Private mining companies will continue to drive their projects forward, but the lithium industry is very new, and there’s no well-established market and accurate demand/supply projections. Nor are there any well-established futures markets, metal trading platforms, or other metal exchanges that absorb commodity shocks, so bankers have trouble laying off risk, which is what bankers need to do. As a result, it is difficult to get some of these new lithium mines built. If the EV market and the lithium-ion battery market develop like most believe it will, there’s going to be a demand push again, and it will take vertical integration with industry and collaboration with the major mining firms to fill the demand.
Twenty different ways are emerging beyond lithium-ion SSB, including several battery startups in Japan and other places. Will they ever replace lithium?
Battery design and chemistry could have different applications in certain broad groups: portable electronics (phones), traction or motive (cars), and stationary power.
For portable electronics, probably both Wh/l and Wh/kg, size and weight matter. For vehicles, the most important is Wh/kg; neither stationary power nor grid storage matter. But I would say Wh/l if there is a space limit, but Wh/kg does not matter since it doesn’t move after being installed. For portable electronics and vehicles, for stationary usage, lithium-ion is a waste of money since there is no reason to use a light battery if it does not move. There are grid-type storage systems that use multiple battery chemistries to reduce cost.
Coming to replacements, I don’t know enough about carbon ion.
When you consider zinc air and aluminum air, these are mechanically rechargeable. They are not batteries but fuel cells. Once the zinc or aluminum runs out, you have to remove the discharge product, zinc oxide, and aluminum oxide, and clean the system up and add zinc and aluminum. One fact that no one tells you is that during the discharge reaction, Zn or Al + O2 (air), the battery gets heavier. A fresh battery weighs less than a discharged battery. So when they talk about performance based on weight (Wh/kg), they always use the beginning-of-life weight, which is based upon a fib. [This is] one secret of air-based systems.
Coming to sodium ion, this technology had a great start about three years ago and then sort of fizzled out. It tried to use a similar technology as lithium-ion, but since Na is bigger than Li, it is difficult on a molecular level. You cannot change the size of an atom!
Generally,sodium-sulfur batteries need to operate at about 300°Celsius. That’s not going to work for all applications right now, so this is just technology that’s in the lab.
Several of the other technologies are charging technologies or energy storage devices that have very different practical applications or uses. They are not synonymous with the storage batteries that we are talking about for EVs and other big battery-demand industries.