CRHL29 Apr 2013 20:27
Galaxy are very clever what they are doing, now I see why we have Sal de vida, James Bay, Mt Cattlin covered all the angels Brine and hard rock nice one.
LIN: A common misconception amongst resource investors is that brine deposits are far more economical than hard-rock deposits, but I’ve heard you say otherwise. Can you explain to our investor audience the upside of spodumene over brine?
GB: At first glance, someone might think that because of the natural evaporation process it’s obviously cheaper to obtain lithium from brine; however, natural evaporation is a long process that can take between two and four years to go from deciding you want to produce one tonne of additional material to being able to sell that additional tonne to your client. So, the brines cannot react rapidly to emerging markets or unexpected increases in demand. To give you an example, last year SQM (NYSE:SQM) missed its target production by over 52 percent because of inclement weather and technical problems. They don’t know how generous nature has been until the end of the year when they do their harvesting.
When you look at the statistics, between 2009 and 2011, brine producers together had over 70 percent of the overall supply of lithium compound. In two years, they lost 15 percent of their market share to spodumene deposits because they were not ready to increase their capacity of supply. So they forever lost that market share because the hard-rock operations, mainly the Greenbushes operation expansion, were able to rapidly react to the global increase in lithium demand. Obviously a hard-rock mine is not affected by temperature, and at a mine you can rapidly increase production by adding some loaders and crushers, so within, say, six months, you can answer additional demand from your client.
A brine deposit is a live thing, so it’s not as easy as it may seem to harvest the lithium unit. The concentration of lithium in a specific salar varies laterally and in depth, and it moves with the water that flows into the salar. With a spodumene deposit, when you’ve done your drilling, you know it’s not going to move. If the grade is 1.4 percent, it’s going to be 1.4 percent when you extract it, and the contaminants are no different from one meter to another, so it’s a lot easier to do your planning.
All the brines have different chemistries and it’s a very long production process. If you are addressing added demand for battery-grade lithium, then you have to add polishing steps to your production process. So the initial costs associated with getting lithium out of the brine might be lower, but when you need to improve the quality and remove the impurities, then you’re nearing the same price as a spodumene deposit.
If it is that much easier and cost effective to obtain lithium from brines over hard rock, why would Rockwood Lithium (NYSE:ROC), the second-largest supplier of lithium compound from brine, ma
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