Lithium projects series: Rincón, Sal de Vida, Centenario-Ratones

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Tuesday, October 31, 2017

With the global economy preparing to adapt to a low-carbon future, where electric vehicles and long-term batteries take center stage, lithium supply has been at the forefront of mining sector conversations throughout the year.

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And that's because many fear there won't be enough lithium to meet the surge in demand that is expected over the coming years. Chilean lithium giant SQM is forecasting that the market could reach 500,000t/y by 2025 from 200,000t/y currently.

Argentina, Bolivia and Chile, the so-called lithium triangle, are expected to benefit from this surge in demand. But the degree of preparation between the three nations varies immensely.

Chile, the most advanced of the three in terms of lithium production, is currently engulfed in a political debate on whether or not to open up the sector beyond the two existing players, SQM and US chemicals company Albemarle.

Bolivia, with its vast resources in the Uyuni salt flats, seems to be adopting a nationalistic approach, along with the rest of its economy, and developing its own state-owned industry, which is still years away from bearing fruit.

And Argentina, with President Mauricio Macri opening up the country to foreign investment, is seeking to steal the thunder from Chile, as it has several projects in the development pipeline.

In an effort to understand where new lithium supply will come from, BNamericas provides a rundown of three projects in Argentina.

RINCÓN

The Rincón lithium project comprises some 2,347ha in the Salar del Rincón in Argentina's Salta province.

The project is owned by a local firm, but Australian junior Argosy Minerals has a joint venture agreement which allows it to assume a majority stake through certain staged commitments.

In order to reach a 50% interest, Argosy has to complete a lab-scale pilot plant to produce up to 100-150t of commercial grade lithium carbonate equivalent (LCE). To reach a 77.5% interest, the company needs to expand production to up to 1,000-1,500t LCE, and once it achieves full commercial production, it will hold a 90% interest in the project.

At the moment, the company is progressing on stages 1 and 2 and has targeted first production from a 1,500t/y LCE plant for next March, according to its latest corporate presentation.

The company is well funded, having recently raised Aus$15mn (US$11.6mn) through a share issuance, which will be used to fund stage 2 development works.

SAL DE VIDA

The Sal de Vida project is located in Catamarca province. It is 100% owned by Australian lithium miner Galaxy Resources, which also owns two hard rock projects, Mt Cattlin in Western Australia and James Bay in Quebec.

The company has focused on developing Mt Cattlin and is in the process of achieving commercial production.

At Sal de Vida, in 2016 Galaxy engaged Techint to review the project's definitive feasibility study (DFS), which estimated a post-tax net present value of US$1.42bn at an 8% discount rate.

The project's operating costs have been estimated at around US$3,370/t of LCE before potash credits and US$2,959/t after potash credits, which puts it at the lower end of the cost curve of brine-based lithium projects. Estimated capital costs are US$376mn, according to Galaxy's first half 2017 report.

So far this year the company converted exploration boreholes into production wells at Sal de Vida, while a test lab has been commissioned. Further studies for potential hydroxide sub-circuit and co-location of processing facilities are also underway.

The company is in talks with potential strategic partners to develop the project, which could be in the form of financing or off-take.

CENTENARIO-RATONES

French mining and metallurgical group Eramet owns the Centenario-Ratones project, located in Salta province's Centenario salt flat and covering a 500km2 area, through its subsidiary Eramine Sudamérica.

The company completed a prefeasibility study, which envisions initial investment of US$350-380mn, according to Eramet's latest investment presentation.

Last December it filed the environmental permitting request, and during the 2017-18 Eramet is conducting a detailed feasibility study and an economic evaluation of Centenario-Ratones.

If given the go-ahead, construction is slated for early 2019, with first production at the end of 2021 and capacity of 20,000t/y of LCE.