Lithium

Rio Tinto’s silent surge in western Australia’s lithium frontier​

By Peter Milios

In a strategic move aimed at securing its foothold in the booming battery minerals market, global mining giant Rio Tinto (ASX:RIO) has been quietly amassing exploration tenements in Western Australia, covering a staggering 145,000 hectares. The company's latest foray into the lithium land grab highlights its ambition to play a significant role in the global decarbonisation effort and ensure a sustainable future in the rapidly evolving energy storage sector.

Rio Tinto's extensive claims include over 61,000 hectares in close proximity to the Kathleen Valley lithium project, which is currently being developed by Liontown Resources, a takeover target valued at $6.6 billion. Additionally, Rio Tinto is in the process of securing approximately 46,000 hectares of exploration ground situated north and southeast of the Mt Ida lithium project, jointly owned by industry heavyweights Gina Rinehart and Chris Ellison-backed Delta Lithium.

These exploration endeavors, most of which are pending approval by Western Australian authorities, position Rio Tinto in direct competition with established players like New York-listed Albemarle and Chile's SQM in the race to secure vital lithium assets required for battery production.
Dubbed the lithium "corridor of power," Western Australia has become a hotbed for lithium mining and battery materials due to its rich mineral resources. The region is already home to Rio Tinto's vast iron ore operations, providing a strategic advantage for the mining behemoth in its quest for lithium dominance.

While Rio Tinto's CEO Jakob Stausholm had previously expressed reservations about engaging in mergers and acquisitions due to high valuations in the lithium market, the company's recent actions suggest a different strategy. Mrs. Gina Rinehart, a prominent figure in the sector, recently acquired a 7.2 percent stake in Liontown Resources, which is itself the target of a $3-a-share takeover bid by Albemarle. Rio Tinto, however, has remained tight-lipped about its intentions as a potential consolidator and its growing exploration footprint.
One of Rio Tinto's tenement packages, covering about 40,000 hectares near Sandstone, is strategically located close to its existing partnership with ASX-listed lithium hopeful Everest Metals. The mining giant initiated the tenement application process in August of the previous year and has since expanded its land holdings with additional applications this year.

In addition to its stake in Delta Lithium, Gina Rinehart's Hancock Prospecting is also actively exploring for lithium near Mt Ida in partnership with the Indian government-backed Legacy Iron and Hawthorn Resources. The region's significance dates back to 1869 when Sir John Forrest, the great-great uncle of Andrew Forrest, famously named Mt Ida, sparking a gold rush in the 1890s.
Juno Minerals, led by CEO Greg Durack, has observed heightened activity centered around a geographical phenomenon known as the Mt Ida fault. Hancock is a major shareholder in Juno, a junior exploration company with land adjacent to the fault, underscoring the growing interest in the lithium-rich region.

With ASX nickel and lithium producer IGO also holding a substantial presence in the area through various joint ventures and exploration tenements, the Western Australian lithium sector continues to attract significant attention. IGO, keen to expand its lithium portfolio, particularly in conjunction with its stake in the Greenbushes mine, has faced challenges in this endeavor.
Greg Durack noted that Juno Minerals only began focusing on the lithium potential of its tenements a little over a year ago. Prior to that, the company's primary focus was on its hematite iron ore project linked to Esperance port and a substantial magnetite iron ore deposit.

The remarkable surge in Western Australia's lithium industry since Greg Durack's days with Pilbara Minerals underscores the sector's transformation, attracting both established mining giants like Rio Tinto and junior exploration companies seeking their own piece of the lithium-rich pie.

Lithium stocks are being heavily shorted by the short plaers.
From Business Australian

Lithium miners are increasingly in the firing line of short sellers seeking to exploit a plunge in lithium prices as questions circle over demand prospects for the key component of electric vehicle batteries.
Data from the Australian Securities and Investments Commission shows that the list of the most shorted companies on the Australian Securities Exchange was heavily titled towards materials and lithium miners made up six of the top 10.

It is a stark contrast to the same time in 2022 when just one mining stock was in the top 10 that was populated by tech and buy now, pay later businesses feeling the pinch from rising interest rates and inflation.

Pilbara Minerals was the most shorted company on the sharemarket in the 12 months to September 27 with 12 per cent of all shares short compared with 1 per cent in the previous year.

ASIC’s aggregated short position reports are reliant on the accuracy of reports it receives from individual short sellers.

Tribeca Investment Partners lead portfolio manager Jun Bei Liu said lithium stocks were in the firing line of short sellers due to an increase in supply and wobbly demand from the world’s biggest market, China.

“A lot of lithium stock companies are not yet profitable and won’t be for some time, hence their valuations are linked to lithium prices which is being heavily sold because of more supply coming online, and wobbly demand from China.”

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Mick

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DLE is being touted as the third way, and eventually the winner in the "supply response", with the prospect of eclipsing brine evaporation and spodumene hard rock mining. Will it? Big guns are getting on board.

11 Lithium Stocks Betting on Direct Lithium Extraction

Lithium demand is expected to increase significantly in the coming decades as the world turns to greener sources of energy to meet its net-zero goals. But extracting and processing lithium is not an easy task, and challenges and delays are common across projects in the industry. Many experts...

investingnews.com

At one end of the range of players looking at DLE, if a producer drills into the earth’s crust and extracts a valuable fluid, this feels like familiar territory for big oil producers such as Exxon.

“It requires a good understanding of the subsurface, requires a good understanding of reservoir management, it requires drilling and injections,” said ExxonMibil CEO Darren Woods. “Processing the brine and extracting the lithium is very consistent with a lot of the things that we do in our refineries and chemical plants.”

But Exxon doesn’t want to get into lithium to just make up the numbers. Woods hinted to investors that his company wanted to bring a new approach that would dramatically reduce the cost of extracting lithium from underground.

“We believe that by applying our advantages in this space we can bring on a much-needed resource ... we can bring it on at much lower cost and I think importantly, with much less environmental impact versus say the open mining that they’re doing in other parts of the world,” he said, in reference to the more carbon intensive method done in Australia, where hard rock lithium is mined with trucks and shovels.

“This to us feels like a win-win-win opportunity; a win using our capabilities, a win from an environmental impact standpoint and a win in terms of supplying markets with a crucial component to electrification. “We are actively exploring that opportunity set, and like what we’re seeing so far.”

and at tbe other end, are the small startups:

Charlie McGill won’t name the American oil companies that are beating a path to his laboratory in the Melbourne suburb of Clayton, but he says interest in his company ElectraLith is strong.

“We get phone calls from Rio Tinto who have a large brine resource in Argentina, we get calls from the oil and gas majors in the US,” he says. “They are saying, ‘There’s loads of brine in our oil fields, how can we get those brines and that lithium out of our oil fields?’ ”

Rio bought 30.8 per cent of the pre-revenue start-up last year in the hope its novel twist on “direct lithium extraction” or DLE can deliver a breakthrough.

Earlier forms of DLE have been used by companies such as Livent in Argentina for close to 25 years; rather than evaporate the groundwater in ponds, traditional DLE methods strip lithium out of groundwater using chemical resins or absorption strips. Once the lithium is extracted, the groundwater can be returned underground.

DLE shapes as a more socially acceptable method of lithium extraction than solar evaporation, where the groundwater is effectively wasted.

Only time will tell if Rio’s Rincon punt in Argentina is successful, but Goldman Sachs analysts believe DLE is a “game changer” that could have a “revolutionary” impact on lithium supply.

In a research note, the Goldman analysts said DLE would be a more efficient and cheaper way of extracting lithium from groundwater and could boost global lithium supply by a staggering 8 per cent. The Goldman analysts likened DLE’s potential to the shale revolution of 15 years ago, where innovations in horizontal drilling unlocked vast amounts of oil and gas trapped in rock, and completely rewrote the world’s understanding of how much fossil fuel was available for extraction.

“Much like shale did for oil, DLE has the potential to significantly increase the supply of lithium from brine projects, nearly doubling lithium production [and] yield and improving project returns, though with the added bonus of offering sustainability benefits and ESG credentials,” said Goldman in the note published in April.

The Goldman analysts hinted that lithium prices would be driven lower for longer by a flood of new supply, when they said DLE could “extend the size and duration of lithium market surpluses”.

ElectraLith’s unique spin on DLE is built on the work of Professor Huanting Wang at Monash University. It uses a membrane to extract lithium from fluids using electro-dialysis.
The end product is battery grade lithium hydroxide. Most DLE producers would need to send their product to a refinery to convert it into lithium hydroxide, so McGill refers to ElectraLith’s process as DLE-R to highlight the “refinery” step.

“We believe ours is the smartest,” says McGill, of the many DLE methods. “It requires no water, no chemicals, it can run on solar and wind, whereas these other processes continue to require water and chemicals and power from the grid.”

McGill reckons disruptive technologies such as the one being developed by ElectraLith will gradually make groundwater evaporation and hard rock mining uncompetitive. “These new technologies like DLE and DLE-R will continue to unlock reserves that are otherwise unviable today,” he says.

“Lithium is one of the most common elements on the planet, the greatest reserves are in the ocean. The challenge will be if these DLE technologies work really well, those [hard rock] resources in WA will become less and less economic and more and more environmentally challenging to produce from. “That is where I think the world changes.”
....
Deutsche Bank’s US-based lithium, solar and clean tech analyst Corinne Blanchard has recently published a series of research notes on DLE, and is not as bullish on the method as her peers at Goldman Sachs.
“We don’t view DLE as a game changer for the Lithium industry – yes it will be part of it and will help bring online some projects, but it will not unlock massive volumes as some could believe it. “It is evolving, but it is taking time. “DLE is not a ‘fits all’ – every brine project is different, with different brine concentration and impurities, which do impact the DLE process.”

Australia’s largest lithium miners have no chance of moving into more profitable parts of the battery supply chain without substantial government subsidies, according to Dale Henderson, the chief executive of $12.3 billion lithium producer Pilbara Minerals. He was speaking at the Citi investment conference on Thursday,

“To be frank, it’s hard to make Australia work given the cost base particularly in the Pilbara region – the labour, construction, and energy costs are high,” said Mr Henderson. “So the first principles case makes it very difficult to justify the investment without more government support if Australia wants to deliver on the ambition of onshoring the value-added processing.”

Dona Ferentes said:

Australia’s largest lithium miners have no chance of moving into more profitable parts of the battery supply chain without substantial government subsidies, according to Dale Henderson, the chief executive of $12.3 billion lithium producer Pilbara Minerals. He was speaking at the Citi investment conference on Thursday,

“To be frank, it’s hard to make Australia work given the cost base particularly in the Pilbara region – the labour, construction, and energy costs are high,” said Mr Henderson. “So the first principles case makes it very difficult to justify the investment without more government support if Australia wants to deliver on the ambition of onshoring the value-added processing.”

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Of course, needs government support.
Always the way.
mick

the heavyweights ... and high probability of more corporate action, with RIO, Abermarle, SQM sniffing around, let alone the end users, Koreans, Chinese and Tesla, looking for future supply.
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Chile's global lithium giant, SQM, continues to enhance its Australian holdings, having recently acquired a 30% stake in the Calidus Resources Pilbara lithium project. This move marks the latest in a series of deals in 2023 that have seen SQM aligning with promising lithium projects and their promoters.

SQM's involvement in Australia includes a 50-50 joint venture with Wesfarmers in Covalent Lithium, featuring the Mount Holland mine valued at over $2 billion and a hydroxide refinery in Kwinana, Western Australia.

Additionally, SQM has entered into an earn-in agreement with Tambourah Metals for the Julimar North Project in Western Australia, situated near Chalice Mining's substantial Gonneville project.

This deal with Calidus Resources comes on the heels of SQM's $4.2 million investment in Azure Minerals in January, solidifying its position as the largest shareholder in the lithium junior. SQM plans to further invest $15.8 million ($10.6 million) in Azure. SQM has also engaged in smaller farm-in agreements with various Australian companies, including Kalamazoo Resources and Dart Mining.

As part of its agreement with Calidus Resources, SQM will make an initial investment of $1.5 million, with the potential to invest up to A$3 million to acquire an initial 50% interest in all mineral rights at Julimar.

In the most recent deal, Calidus Resources announced that SQM will purchase a 30% stake in the Pirra project from its joint venture partner, Haoma Mining. Calidus stated that SQM's total interest in Pirra Lithium Limited will ultimately reach 40% through a $3 million injection to support exploration efforts.

Shares of Core Lithium $CXO and Pilbara Minerals $PLS climbed 6.1% and 4.9%, respectively, to be among the top gainers in the Aussie benchmark index on Tuesday. Wilsons upgraded their ratings for both $PLS and Liontown Resources $LTR.

Dona Ferentes said:

Australia’s largest lithium miners have no chance of moving into more profitable parts of the battery supply chain without substantial government subsidies, according to Dale Henderson, the chief executive of $12.3 billion lithium producer Pilbara Minerals. He was speaking at the Citi investment conference on Thursday,

“To be frank, it’s hard to make Australia work given the cost base particularly in the Pilbara region – the labour, construction, and energy costs are high,” said Mr Henderson. “So the first principles case makes it very difficult to justify the investment without more government support if Australia wants to deliver on the ambition of onshoring the value-added processing.”

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I think the govt is flogging a dead horse here, not only is lithium accountable for many fires in the home they can't recycle it economically in Australia as previously stated either.

Good morning

Lithium Summary
Record Australian lithium exports ($20 billion in 2022–23) are forecast
to decrease over the outlook period, as lower prices offset higher export
volumes ($16 billion in 2024–25). Prices are expected to fall due to the
lithium market entering a sustained period of surplus supply, but remain
well above levels prior to 2021.

Australian lithium mine production continues growing due to expansions
and new mines. Australia accounts for half of global lithium extraction
and rising production meets growing global battery demand for lithium.

Australia is developing capacity to refine lithium domestically, with three
lithium hydroxide refineries (operating or under construction) and a
newly announced lithium phosphate refinery. This contributes to the
diversifying global lithium refining and developing Australia’s battery
value chain.

Lithium World demand
Global lithium consumption maintains high growth outlook
World lithium consumption is expected to maintain a high growth
trajectory, due to battery demand for the energy transition alongside the
growth outlook for China’s Li-ion battery manufacturing. In lithium
carbonate equivalent (LCE) terms, global lithium consumption is forecast
to increase from 797 thousand tonnes (kt) to 1,428 kt over the outlook
period (from 2022 to 2025).

Policy support underpins growth in global electric vehicle sales
The outlook for electric vehicle (EV) demand (60% of global lithium
consumption in 2022) remains very favourable due to high policy support
that continues to be directed to the sector, particularly in China. The
resilience of China’s EV sector is underpinned by almost 20 years of
industrial support, through consumer subsidies as well as producer tax
breaks and finance. Notably, China is now the world’s largest automobile
exporter (due to the success of the EV sector), surpassing Japan and
Germany (in terms of first half 2023 exports).
Resources and Energy Quarterly September 2023 p146

Gina Rinehart’s Hancock Prospecting has pocketed almost $2.14 billion in dividends from its Roy Hill iron ore mine in the Pilbara in recent months.

The aggressive push into lithium comes as Rinehart and her executive team, armed with a huge war chest, look long-term to life beyond the rivers of cash being generated by Roy Hill.
It is estimated there are less than 10 years mining left in Roy Hill, the source of most of Rinehart’s wealth, unless Hancock can tap into satellite deposits ..

cribbed from elsewhere on ASF...

Skate​

TimeISmoney said:

Does anyone know what has made the price spike?

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Why Wildcat Resources shares just hit a 52-week high
If you had $10,000 back in May, it would now be worth $266,666. So, what's going on with this mining company?

(Motley fool)
....

Ellison eyes new lithium prize near Albemarle joint venture​

Brad Thompson Deporter
Oct 22, 2023 – 10.27am

Chris Ellison’s Mineral Resources has turned its attention to a new lithium target with links to the company’s chairman, located near the prolific Wodgina lithium mine jointly owned by MinRes and Albemarle.

The billionaire MinRes founder is looking to build a stake in Wildcat Resources, The Australian Financial Review can reveal, and has sounded out the target’s investors about acquiring their shares off market.

Chris Ellison is the managing director of Mineral Resources.

The MinRes interest sustains a lithium land grab around established mines in Western Australia, and adds to the intrigue around Albemarle’s next move after abandoning a $6.6 billion takeover bid for the Hancock-backed Liontown Resources. A once fragmented WA industry is being rapidly consolidated by a powerful few, as illustrated by Gina Rinehart and Albemarle’s duelling interests in Liontown, and Rio Tinto racking up exploration tenements in the red-hot jurisdiction better known for iron ore.

Wildcat last week completed the acquisition of the Tabba Tabba lithium project in WA’s Pilbara through a deal with Global Advanced Metals, which is owned by James McClements’ private equity firm, Resource Capital Funds. Through the Tabba Tabba sale process, Global Advanced and Resource Capital now control a 17.9 per cent stake in Wildcat, plus a royalty from lithium production.


Pilbara-raised Mr McClements is the chairman of MinRes and has served on the board since 2015.
MinRes purchased the Wodgina mine from Global Advanced in 2016 for an amount considered immaterial by MinRes and never disclosed. MinRes then sold a half share in Wodgina to Albemarle for about $1.56 billion in 2018, and Mr Ellison has since recut its partnership with the battery chemicals giant several times.

The latest iteration of the MinRes-Albemarle JV was completed on Wednesday. MinRes no longer has any interest in Albemarle’s lithium hydroxide plant in WA, and Albemarle will pay MinRes $US380 million ($602 million) to $US400 million by December as consideration.

Global Advanced also sold what is now the Pilgangoora lithium mine to Pilbara Minerals in 2014.
Wildcat shares closed at 46¢ on Friday but have been as high at 52¢ since a $5 million capital raising struck at 3.5¢ a share in May as part of the Tabba Tabba acquisition.

The issue of the 200 million shares as part of that was held up until last Thursday and came after the Foreign Investment Review Board ticked off on the royalty aspect of the deal with Global Advanced.

Wildcat executive chairman Matthew Banks declined to comment when asked about MinRes’ interest. MinRes also declined to comment, citing market speculation.

The Financial Review tried to contact Mr McClements, who is based in London, about Global Advanced’s deal with Wildcat. Mr Ellison has previously said MinRes will seek to consolidate lithium assets in WA and taken several steps in that direction since pulling out of a billion-dollar commitment to invest alongside Albemarle in their lithium hydroxide JV in China.

Mr Ellison was newly installed as the non-executive chairman of Delta Lithium, a hopeful backed by MinRes and Hancock, which owns the Mount Ida project about 200 kilometres south of Kathleen Valley in an area where Hancock has an array of exploration tenements.

MinRes is also close to acquiring the Bald Hill lithium mine from administrators. The acquisition of Bald Hill will give MinRes three operating lithium mines with processing infrastructure in WA.

The Bald Hill mine is about 80 kilometres from Liontown’s undeveloped Buldania lithium project and south-east of where MinRes operates the Mount Marion mine in partnership with China’s Ganfeng. MinRes also backed Bill Beament’s Develop Global in a deal to acquire Essential Metals and its Pioneer Dome lithium project near Kambalda. The deal was ticked off by Essential shareholders on Wednesday, six months after MinRes helped vote down a $136 million bid from Tianqi and IGO to acquire Essential.

Electric car prices will shoot up after China threatened to curb exports of a key raw material; Graphite.
China is involved in a series of scrambles to secure supplies of all raw Materials needed for the EV Revolution.

Plus EU has announced a 36Bn Euro fund to secure supplies of Lithium to ensure that the EUROPEAN market (short of such raw materials) can compete in the Green Age of Lithium Batteries.
UK Mail on Sunday p82

the marginals, read China, will always exert a large influence on the market.
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• Albemarle reports 62% fall in adjusted EBITDA as falling lithium chemical prices bite
• Comes after Chinese majors Ganfeng Lithium and Tianqi Lithium reported big drops in profitability in September quarter
• Benchmark says weak NCM cathode demand is weighing on lithium hydroxide prices

Albemarle has become the latest integrated international lithium producer to cop a hit — more than halving net cash forecasts for 2023 — as falling lithium chemical prices place the pressure on downstream producers.

The US giant said a mismatch between spodumene pricing and chemical pricing — part of its energy storage division — was partly to blame for a 61.9% year on year fall in adjusted EBITDA from US$1.19 billion to US$453.3m.

Its net income tumbled 66.3% YoY to US$302.5m, despite higher volumes leading to a 10.5% rise in net sales to US$2.31 billion.

Lithium chemical prices have tumbled 65% in 2023, falling from over US$80,000/t late last year to around US$23,500/t today.

Most of that has come as EV sales growth in China, while strong in nominal terms, has trailed lithium supply growth with rising production from WA’s spodumene suppliers, new Chinese-linked lepidolite mines in Africa and domestic lepidolite mines in China itself, many now considered to be pushing at their margins.

The real threat to the price is that there are other mines worldwide that can possibly get it out of the ground cheaper.

TimeISmoney said:

The real threat to the price is that there are other mines worldwide that can possibly get it out of the ground cheaper.

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pretty sure that's what is a marginal producer

Dona Ferentes said:

pretty sure that's what is a marginal producer

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is that where the workers are paid a pittance and health and safety isn't really a concern.