International Race for Lithium Heats Up as Auto Giants Invest in Mining Space
An international scramble for lithium is fully underway, with some of the world’s largest automakers now jockeying for position in the mining space to secure supplies for the battery metal moving forward. The latest to throw its hat in the lithium ring is General Motors Company (NYSE:GM), which announced a $650 million equity investment in Lithium Americas Corp. (NYSE:LAC) (TSX:LAC) in connection with construction on the upcoming Thacker Pass lithium project in Nevada. GM’s investment is another symptom of the race that’s heating up on the international scene, with perhaps even more attention being placed on South America’s prolific ‘Lithium Triangle’ where the West is competing with Chinese interests to secure whatever they can ahead of an EV market that will likely require as much as 3x as much lithium that’s currently being produced for the entire global market. Among the Lithium Triangle projects underway, some of the most active developers currently working today are Lithium South Development Corporation (TSXV:LIS) (OTCQB:LISMF), Allkem Limited (TSX:AKE) (OTCPK:OROCF), and Livent Corporation (NYSE:LTHM).
Working to expand upon its M+I resource of 571,000 tonnes Li2CO3 equivalent at its Hombre Muerto North Lithium Project (HMN Li Project) in Salta Province, Argentina, is Lithium South Development Corporation (TSXV:LIS) (OTC:LISMF), which just announced results from its ongoing deep well drill campaign, with one final core well completed to a depth of 410 meters.
“We are very excited to complete a hole to such significant depth at the Alba Sabrina claim block,” said Lithium South President and CEO Adrian F.C. Hobkirk. “We look forward to concluding the drill program and completing an updated resource study.”
The HMN Li Project is at an advanced stage of evaluation, with a Preliminary Economic Assessment (PEA) completed in April 2019, which was based on an original Tramo claim of 383 hectares of the project’s original claims, whereas today the property package comprises of 5,687 hectares over 9 mining concessions.
It’s important to note that the PEA was published when in 2019, the HMN Li Project was given an after-tax Net Present Value (NPV) of $217 million with an after-tax internal rate of return (IRR) of 28%, the project price assumption was based on US$12,420/t Li. But now almost 4 years later, lithium was selling at 5.5x that as recently as December 2022.
Also, while Lithium South continues to test their project’s conventional viability with evaporation test work and generating excellent drilling results, the company is also evaluating Direct Lithium Extraction (DLE) as an alternative method.
In order to advance their project’s DLE potential, Lithium South sent three 2,000-liter bulk samples of high-quality HMN Li brine for test work performed by three DLE developers: (strategic partners) Chemphys Chengdu located in Sichuan Province, China, Eon Minerals of Salta Province, and Lilac Solutions of Oakland, California.
The HMN Li Project is adjacent to a US$4 billion lithium mine under development by the Korean multinational corporation POSCO, which acquired their holdings from Galaxy Resources— Allkem Limited (TSX:AKE) (OTC:OROCF)—for US$280 million, closed in 2018. Also to the south of the HMN Li Project, Livent Corporation (NYSE:LTHM) is producing lithium and has actively operated there for over twenty-five years, with its Fénix project that involves integrated brine extraction and lithium processing facility located in the Salar del Hombre Muerto that contributes to Argentina’s 37,500t annual lithium output.
Last year, prior to General Motors Company’s (NYSE:GM) new deal with Lithium Americas Corp. (NYSE:LAC) (TSX:LAC), the automaker had signed a long-term lithium hydroxide supply agreement with Livent Corporation (NYSE:LTHM), which later went on to expand its North Carolina lithium hydroxide production capacity.
“We are building a strong, sustainable, scalable and secure supply chain to help meet our fast-growing EV production needs,” said Jeff Morrison, GM VP, Global Purchasing and Supply Chain at the time of the July 2022 announcement. “We will further localize the lithium supply chain in North America over the course of the agreement. In addition, it is aligned with our approach to responsible sourcing and supply chain management and demonstrates our commitment to strong supplier relationships.”
So it wasn’t a huge surprise when news of the GM/Lithium Americas deal was finalized in January 2023, marking the largest-ever investment by an automaker to produce battery raw materials, and allowing GM to become Lithium Americas’ largest shareholder.
“GM has secured all the battery material we need to build more than 1 million EVs annually in North America in 2025 and our future production will increasingly draw from domestic resources like the site in Nevada we’re developing with Lithium Americas,” said GM Chair and CEO Mary Barra to Tech Crunch. “Direct sourcing critical EV raw materials and components from suppliers in North America and free-trade-agreement countries helps make our supply chain more secure, helps us manage cell costs, and creates jobs.”
But another potential North American lithium producer on the horizon is Allkem Limited (TSX:AKE) (OTC:OROCF), which is the resulting entity of a major lithium merger between Galaxy Resources and Orocobre Mining.
Allkem still has plenty of asset value in its Sal de Vida project in the Lithium Triangle near groups like Lithium South Development Corporation (TSXV:LIS) (OTC:LISMF), and Livent Corporation (NYSE:LTHM), where the company just acquired another 1,800 ha through the Maria Victoria Tenement.
“The Maria Victoria tenement is expected to add resource tonnes to the already substantial lithium brine resource defined at Olaroz,” said Allkem Managing Director and CEO Martin Perez de Solay. “Control of this tenement will enable the more efficient development of the Olaroz salar as we consider the long term expansion of production.”
Since then, Allkem recently updated the market by stating its Olaroz Lithium Facility achieved record production of 4,253 tonnes of lithium carbonate which was up 17% on the previous corresponding period.