Lithium Universe on spodumene hunt to feed | Australian Markets

Lithium Universe is on the hunt for a minimal 10 years’ price of spodumene provide from native producers to feed its future Bécancour Canadian lithium refinery. The company expects to kick-start the conversion of the battery mineral into battery-grade lithium carbonate on the refinery in 2028.

The company is concentrating on a non-binding settlement to source the massive provide to appease financiers and help lock in its required project finance, having reached a last investment determination earlier this yr for the project to start kicking into gear.

Initially it plans to source 56,000 tonnes of SC6-grade spodumene materials, comprising 6 per cent lithium oxide, to fire up its conversion facility in 2028. That will increase to 98,000t in 2029 and attain the refinery’s full capability of 140,000t from 2030 onwards.

Lithium Universe will search the feedstock materials ideally from native Canadian producers or near-term builders, in any other case it could look to procure its required provide from a producer within the North Atlantic area, together with Brazil and Africa.

Sourcing native materials presents apparent logistical benefits, significantly vital financial savings in transport prices and potential tariffs imposed by the Canadian authorities on export materials from nations together with China.

Lithium Universe says many producers see the advantages in coping with a native converter. Savings of US$100 (A$155) per dry metric tonne of spodumene might equate to a discount of about US$800/t in transformed lithium carbonate product prices.

Canada prices a 25 per cent import tariff on all Chinese lithium chemical substances introduced into the nation, so native conversion of the battery mineral might symbolize vital financial savings to end-users.

There are a number of potential spodumene suppliers that would meet the 2028 timeframe and discussions are ongoing. There is actual curiosity within the market… as soon as we will secure feedstock provide for the refinery the main target will shift to getting a strategic OEM on board the project in exchange for the precious battery grade lithium carbonate offtake.

Under the company’s lately revealed definitive feasibility examine, it proposes pumping out an spectacular 18,270t of battery-grade lithium carbonate when its processing operations have absolutely hit their stride by 2030. Production will help the growth of Canada’s electric vehicle and power storage industries.

Lithium Universe plans to buy the spodumene feedstock from the market at benchmark costs and retain full possession of lithium carbonate transformed product.

It intends to promote on the open market or straight to an authentic gear producer, which ideally it hopes to source as an investor into the project in exchange for an offtake provide of the battery ingredient. It just isn’t trying to toll deal with any spodumene materials.

Management says its mission is to close what it phrases the “lithium conversion gap”, the place an anticipated 20-plus main producers plan to deploy 1000 gigawatts of battery capability by 2028, with demand for 850,000t of transformed lithium product. It anticipates solely a potential 100,000t of lithium carbonate onerous rock converters shall be constructed by that timeframe.

The Bécancour refinery will implement a smaller, off-the-shelf model refinery in desire to bigger, more difficult-to-operate plants. Its initial focus shall be on producing lithium carbonate to feed the lithium-iron-phosphate batteries utilized in electric automobiles.

Lithium Universe’s board accredited a last investment determination on the Bécancour lithium refinery after its accomplished definitive feasibility examine delivered a web current worth of US$718M (A$1.109 billion). Based on the examine outcomes, it should purpose to secure US$549M (A$848M) in funding to assemble the ability.

Lithium Universe expects to generate an EBITDA of US$148M (A$228.5M) from an annual income of US$383M (A$592M) over a 3.9-year payback based mostly on the examine’s price assumptions. The assumptions are greater than present lithium spot costs.

The company says the refinery will generate a 21 per cent inside fee of return, based mostly on forecast costs of US$1170 (A$1807) per tonne of spodumene focus consisting of 6 per cent lithium content material and US$20,970/t of lithium carbonate.

Actual spot costs for battery-grade lithium carbonate hover close to US$7500/t.

The break-even price is estimated at US$14,000/t for lithium carbonate on the expectation it should produce 18,270 tonnes each year of battery-grade lithium carbonate.

With expectations that lithium pricing will improve within the coming 12-18 months as the availability and demand steadiness improves, management believes its financial modelling exhibits the company has a compelling and economically viable project on its palms.

If the management staff can lock within the bucketload of spodumene it requires to persuade project financiers to back it and leap on board, the project may very well be on its path to enjoying an important half within the Canadian electric vehicle battery market’s future.

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