Objective Capital's Global Resources Investment Conference 2011 Stationers' Hall, City of London 27-28 September 2011 Day 1- Session 3: Strategic metals – the resources everybody wants Speaker: Gerry Clarke, International Lithium Institute
Announced LCE Capacity Rises (‘000 tpa)*SQM will also increase capacity but not yet announced<br />
Near Projects in Development<br />Company Start Location Plan capacity* <br />Galaxy Resources 2011 Aus/China 17k<br />Orocobre 2012 Argentina 15k <br />Canada Lithium 2012 Quebec 19k<br />Western Lithium 2014 Nevada 27k<br />Lithium Americas 2014 Argentina 15k<br />Total 93k tpa LCE<br />*Company published LCE annual capacity <br />By 2012 Talison’sGreenbushes, WA capacity will equal 2010 world demand: 110k tpa LCE <br />Reserves: 9.6m. te 3.9% Li20 (920k LCE) M&I Resources: 22.0m te 3.7% Li20 (2m LCE)<br />Capacity: 315k tpa concentrates (47k LCE) going to 740k tpa(110k LCE) June 2012<br />Li2CO3 plant: Undertaking engineering & location studies for Li2CO3 plant & targeting first stage 20ktpa fiscal 2015 with a second 20ktpa stage to follow. Total: 40,000 tpa<br />Courtesy: Talison Lithium, Greenbushes, WA<br />
Chemetall LithiumSalar de Atacama: 30k tpa LCE<br />
SQM’s final LiCl evaporation pond <br />In 2010 the brine volume (2,700 ppm Li) pumped to produce 1.5m tonnes of potash contained such a large volume of lithium in excess of the 44k tpa LCE capacity that 400k tonnes LCE were reinjected into the aquifer.<br />
Emerging & Advanced Projects<br />Brines Mines<br />Rincon Lithium 2010 Galaxy Resources 2010<br />Orocobre2012 Reed Resources 2011<br />Albemarle 2012 Canada Lithium 2012<br />Lithium Americas 2014Nemaska Exploration 2013<br />Lithium One 2014 Western Lithium 2014<br />POSCO 2014 <br />Rodinia2015<br />International Li 2016Rio Tinto 2016 <br />Plus other projects further out------and------China? <br />
Rincon Lithium Ltd Privately-owned<br />Salar del Rincon, Salta, Argentina: ADY Resources<br /><ul><li>Initiated 1,200 tpa 99.5% Li2CO3 December 2010
Project initiated 2002 by Equity-1 Resources morphed into Admiralty Resources 2004 and developed project to envisaged 17,000 tpa Li2CO3 2007 starting mid-2008.
Sold to Cayman-based The Sentient Group December 2008 for $22.17m. </li></li></ul><li>OrocobreASX:ORE TSX:ORL<br />Salar de Olaroz, Jujuy, Argentina: Flagship project 2008 init.<br /><ul><li>Strategic partner: Toyota Tsusho backed JOGMEC
Expect 75% phase 1 production 2015: 16,000 tpa Li2CO3
Also in Incahuasi, Pocitas, Arizario: 82,200 ha total </li></li></ul><li>Lithium OneTSX-V:LI<br />Sal de Vida, Salar de Hombre Muerto, Salta, Argentina :39,200 ha<br /><ul><li>Strategic partner: Kores/GS Caltex/LG Int’l consortium
Earn-in: any Li project General Mining, UVS Nuur, China </li></li></ul><li> Galaxy ResourcesLithium Carbonate plant nearing completion<br />Zhangjiagang, Jiangsu: 17k tpa starting Q4 2011<br /> NB: Continuous process production line<br />
Reed Resources ASX: RDRMineral Resources Ltd 30%<br />Mt Marion, near Kalgoorlie, WA: 10 year mine life (plus)<br /><ul><li>JORC M+I Res July 2011: 44kt Li: Total 93 kt Li @ 1.3% Li2O and 0.3% cut-off grade
Now joined by Pan Global Resources/LithiumLi Holdings and Ultra Lithium Corp</li></li></ul><li>
Lithium Resources in China<br />Continental Brines: One in Tibet, two in Qinghai: Remote west<br />Hard Rock: Four in Sichuan, two in Jiangxi, one in Hunan<br />Mineral Conversion: Ten companies 2011 capacity: 52.5k LCE<br /> Sichuan Tianqi, Xinjiang Lithium Salt, Ganfeng Lithium, Sichuan Ni&CoGuorun are the majors now being joined by Galaxy Resources at Zhangjiagang, Shanghai (17k tpa LCE)<br />External reliance: Spodumene imports from Australia, partnering new resource development in Canada (Tianqi/Nemaska) & Argentina (Internat’l Lithium/Ganfeng)<br />High altitude, high magnesium, remoteness & robust growth in traditional lithium mineral uses especially glass/now battery <br />
Other projects further out<br />Simbol Materials, S California KGRA, Geo brines<br />Bollore-Eramet: Minera Santa Rita, Argentina<br />Salares Lithium Inc, Salares 7, Atacama RIII<br />East Coast Minerals: Austria<br />Li3 Energy, Salar de Maricunga, Chile<br />American Lithium Minerals, Borate Hills, NV, USA<br />Perilya Canada, Moblan, QC, Canada (Globestar)<br />Rock Tech Lithium, Georgia Lake, ON, Canada<br />And many more: see LAWM June 2011<br />
Financial strength: patience for ROI, failure risk
Project entry timing v market uptake: minimum capacity
Major companies’ actions: price, capacity expansion
Long term global resource capability: Ford Motor Co: 2100 need 40m tonnes Li up to 2100 for 50/50% losses/market compares with LAWM 2009 39.4m tonnes Li broad base identified global reserve.</li></li></ul><li>Prognosis <br /><ul><li>Galaxy only significant emerging entrant today!
Buyers support supply diversification allowing several only to enter at low occupacity levels restraining prices and slowing project development
Market volume growth to 2020 too slow causes project delays, shelving, abandonment.
Market volume growth to 2100 requires all projects (except seawater) to meet cumulative demand of 20m. tonnes Li -- 50% of broad based reserves of over 39m. tonnes (LAWM 2009) just covers need for double demand levels to cover extraction losses (Miller, Ford Motor Co. 2011).
Timing and project capability are key </li></li></ul><li>Survivors<br />Simple analysis: Is any new project essential?<br />Future market demand<br />What will be the truth? <br />Thank you<br />