North America is primed to open its lithium refining account and ASX juniors are jumping in to fill the gaps
\nUS and Canadian governments are providing incentives, yet more support needs to be done to get projects off the ground
\nFastmarkets is proposing regional North American pricing for lithium for producers to maximise revenue
\nASX juniors are looking to fill the \u2018missing midstream\u2019 of lithium refinement in the region<\/p>\n
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China and the West have had a long, fruitful lithium relationship over the years. That\u2019s changing. Some relationships are forever, however some just grow apart.<\/strong><\/p>\n It\u2019s how each party picks up the pieces towards a brighter future that matters, and this break up could be a significant makeup for ASX juniors adopting their business into North America\u2019s lithium supply chain goals.<\/strong><\/p>\n China has been pumping out the full suite of lithium battery-related products since the mid-1990s, vastly undercutting the cost for countries to build their own domestic supply chains.<\/p>\n That\u2019s because Chinese labour costs were (and still are) consistently low, yet it was the CCCP\u2019s industrial policies that inherently played an integral role in shaping the Middle Kingdom\u2019s \u2013 and the world\u2019s \u2013 EV and battery supply-chain landscape.<\/p>\n \u00a0<\/p>\n In the decade to the end of 2017, the Chinese government invested ~US$60 billion<\/a> to aid in the creation of national supply and demand across the whole EV supply chain.<\/p>\n In addition to policies that encouraged consumers and businesses to adopt EVs (which the West is only just waking up to), in 2015 the Chinese government provided substantial subsidies to automakers that use batteries made by domestic companies.<\/p>\n This provided considerable advantages to companies such as CATL and BYD \u2013 two of the world\u2019s largest battery and automakers, both of which have stakes in the full \u201cpaddock to plate\u201d lithium supply chain.<\/p>\n \u00a0<\/p>\n Demand for EVs and batteries is skyrocketing as the world transitions to lowering carbon emissions; and the global lithium market is now stretching its legs and looking to diversify away from China\u2019s decades-long stranglehold on the market.<\/p>\n China still currently controls about 90-95% of lithium conversion \u2013 a few per cent short of a monopoly \u2013 and has long priced out of the market the economic viability of refinement capabilities elsewhere.<\/p>\n If the rest of us want to create regional supply chains, governments \u2013 as China\u2019s did \u2013 will have to ante-up funding to subsidise the production, processing and refinement of lithium and other critical minerals.<\/p>\n \u00a0<\/p>\n Source: US Govt<\/p>\n \u00a0<\/p>\n Lithium-rich districts across the globe are currently at the grass-roots level to make this happen \u2013 and they better be quick, because global manufacturers (OEMs) such as carmakers and battery producers are now spending billions of dollars to set up shop in North America.<\/p>\n READ MORE: Canada\u2019s sweet on Lady Lithium and Aussie explorers are sharing the love<\/a><\/strong><\/p>\n To support these OEMs, lithium miners are looking to add production, processing and refinement capabilities to feed into North America\u2019s supply chains.<\/p>\n It\u2019s been in the mix for a while, so let\u2019s look at the why, the where and the who that are in support of the de-coupling of battery metal supply chains from the Middle Kingdom.<\/p>\n \u00a0<\/p>\n Recently, alarm bells went off in the West as chemical prices tanked in China last year, falling from over US$80,000\/t to ~US$13,000\/t.<\/p>\n The spodumene concentrate produced by Aussie miners took a dive as well, with benchmark prices sliding from over US$8000\/t to as low as US$850\/t in January this year.<\/p>\n Because of China\u2019s dominance, these price fluctuations affect the whole world\u2019s lithium supply chain.<\/p>\n Adopting regional pricing though can help ensure that lithium prices are competitive and reflect local economic conditions, which can benefit both producers, consumers and the supply chain mechanisms in between.<\/p>\n Through setting different prices based on regional demand and cost structures, producers are able to maximise revenue. This means high-demand regions can bear higher prices, boosting profitability.<\/p>\n It incentivises downstream processing, refining and manufacturing in regions \u2013 something the US is actively pursuing.<\/p>\n \u00a0<\/p>\n Commodity price negotiator Fastmarkets is putting forth proposed changes to how it gauges its lithium pricing to the market to cater for regional supply chains.<\/p>\n Fastmarkets was the first price reporting agency to launch spot battery-grade and technical-grade lithium hydroxide and carbonate price assessments for the US and Europe, starting back in 2017.<\/p>\n Lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price, cif China, Japan & Korea<\/strong> These are currently the underlying settlement mechanisms of cash-settled contracts available from CME Group, the London Metal Exchange and the Singapore Exchange \u2013 lithium\u2019s most active trading hubs.<\/p>\n \u201cThe battery raw materials market has evolved significantly since 2017, with supply and demand factors playing out markedly differently in North America, Europe and Asia,\u201d Fastmarkets Yolande Peters writes.<\/p>\n \u201cPreviously, Fastmarkets provided price assessments for the US and Europe combined. These prices are now being amended to price the US and Canada jointly<\/a>, and Europe separately.<\/p>\n \u201cPricing the US and Canadian lithium markets separately to Europe is essential<\/strong> to capture distinct regional dynamics following the implementation of the US Inflation Reduction Act.\u201d<\/p>\n \u00a0<\/p>\n The US recently signed in its Inflation Reduction Act (IRA), prohibiting using critical minerals and battery components from a \u201cforeign entity of concern\u201d, which includes companies based in China, Russia, North Korea and Iran.<\/p>\n This could give nations such as Chile and Argentina in the near term \u2013 and, potentially, the European Union, Japan, South Korea and Australia in the medium term \u2013 more opportunity to sell lithium products into the US.<\/p>\n Yet it\u2019s US and Canadian-based resources companies that are in the box seat to supply North America \u2013 the world\u2019s largest market. Let\u2019s see who\u2019s kicking about:<\/p>\n \u00a0<\/p>\n US lithium major Albemarle\u2019s energy storage president Eric Norris said that \u201cseveral years ago, we were often being asked whether we would supply more lithium into the US, but at the time, there was little economic rationale to build a lithium refinery here when all the demand was in Asia\u201d.<\/p>\n \u201cWhat the IRA created was an incentive to build a supply chain here [in the US], generating local demand for lithium and derisking that problem.\u201d Speaking with Stockhead<\/em>, Lithium Universe (ASX:LU7)<\/strong><\/a> CEO Alex Hanly reckons that counter to what many in the industry believe, operational expenses in Canada for the production and refinement of lithium is actually on par with China \u2013 it\u2019s the initial capital spend that hurts the most.<\/p>\n \u201cLabour and construction costs are about three to four times less in China, and governments need to understand that subsidising project development is the only way to get these regional supply chains online.\u201d<\/p>\n The benefits of North America compared to other jurisdictions from an operational standpoint \u2013 particularly in Canada, Hanly says, is the access to hydroelectricity, which tends to be about 3c\/kWh \u2013 roughly 10 times less than power costs for similar mining projects in the US or Australia.<\/p>\n \u201cTakeaways from recent discussions we\u2019ve witnessed in Washington DC with the US Department of Energy and Department of Defence is that they\u2019re looking for supplies away from \u2018foreign entities of concern\u2019.<\/p>\n \u201cThere\u2019s a strong push for supply chain security from business too and what they call the \u2018missing midstream\u2019 \u2013 referring to North America\u2019s refinement capabilities.<\/p>\n \u201cGovernments are now understanding that the only way to compete with China is for these supply chains to be subsidised \u2013 especially through the capex period.\u201d<\/p>\n Hanly\u2019s LU7 is eyeing the development of its Qu\u00e9bec Lithium Processing Hub (QLPH) at B\u00e9cancour<\/a>, which will operate an independent 1Mtpa concentrator and a 16,000tpa battery-grade lithium carbonate refinery.<\/p>\n Its plan is to capture feedstock from the nearby burgeoning James Bay lithium district, endowed with >500Mt of economic lithium resources to date.<\/p>\n Green Technology Metals (ASX:GT1)<\/strong><\/a> CEO Cam Henry told Stockhead that Canada\u2019s Ontario province is also emerging as a global leader in the critical minerals sector.<\/p>\n \u201cWith abundant lithium resources, supportive government policies, and a complete end-to-end supply chain, the province offers unparalleled advantages for establishing chemical and conversion businesses,\u201d Henry says.<\/p>\n \u201cIn the last few years, $43 billion worth of investment has been committed to Ontario\u2019s battery supply chain alone.<\/p>\n \u201cSignificant incentives have been announced including the US Inflation Reduction Act, alongside comprehensive critical minerals strategies from both the Canadian and Ontario governments have attracted some of the world\u2019s leading chemical, battery and EV manufacturers to set up shop.<\/p>\n \u201cThis unique opportunity offered in Canada cannot be found elsewhere in the world and the global market is beginning to pay attention to the distinctive opportunities in the region.\u201d<\/p>\n Via a staged strategy, GT1 is looking to become Ontario\u2019s first vertically integrated battery-grade lithium producer from its Root and Seymour deposits<\/a>.<\/p>\n \u00a0<\/p>\n Source: GT1.<\/p>\n \u00a0<\/p>\n Other ASX explorers in Canada include James Bay Minerals (ASX:JBY)<\/strong><\/a> , which owns one of the largest tenement portfolios in the James Bay Minerals lithium district.<\/p>\n Its tenure runs into the same corridor as Patriot Battery Metals (ASX:PMT)<\/strong><\/a> 109.2Mt Corvette and Winsome Resources (ASX:WR1)<\/strong><\/a> Cancet lithium projects and the company is now on the move towards hundreds of mapped lithium targets<\/a> at its greater La Grande project.<\/p>\n Recharge Metals (ASX:REC)<\/strong><\/a> Wapistan project is also nearby, where recent sampling has confirmed the presence of highly-fractionated LCT pegmatites<\/a> with the potential to host lithium mineralisation at the Wapistan West prospect.<\/p>\n Over to the US and Arizona Lithium (ASX:AZL)<\/strong><\/a> downstream idea is the construction of a direct lithium extraction (DLE) plant to compliment its Prairie and Big Sandy brine projects and produce LCE concentrate for companies in the region.<\/p>\n AZL already has a pilot plant up at Prairie in Saskatchewan, Canada, testing LCE production from the project\u2019s 6.3Mt resource and has just started drilling Pad #1<\/a> on its road to commercial production.<\/p>\n Over to the US and within the geological Smackover Formation in Arkansas, Pantera Minerals (ASX:PFE)<\/strong><\/a> has staked a large number of claims across 18,750 acres<\/a> inclusive of its flagship Superbird brine project \u2013 where resources majors ExxonMobil, Albemarle and Standard Lithium are all setting up shop using DLE techniques.<\/p>\n PFE has already defined an exploration target of between 436,000-2.96Mt of contained LCE within its Superbird project area and has identified multiple re-entry wells within its footprint.<\/p>\n Not too far away, Future Battery Minerals (ASX:FBM)<\/strong><\/a> has just released a maiden resource of 6.2Mt LCE<\/a> at the Lone Mountain deposit within its Nevada lithium project, in less than 12 months since drilling into the first discovery hole.<\/p>\n Lone Mountain shares the same mineralisation as Ioneer (ASX:INR)<\/strong><\/a> Rhyolite Ridge and American Lithium Corporation\u2019s (TSX-V:LI) TLC projects.<\/p>\n \u00a0<\/p>\n\n <\/span>\u00a0<\/p>\n At Stockhead we tell it like it is. While Future Battery Minerals, Pantera Minerals, Arizona Lithium, James Bay Minerals, Recharge Metals, Green Technology Metals and Lithium Universe are Stockhead advertisers, they did not sponsor this article.\u00a0<\/em><\/p>\n <\/span><\/p>\n The post North America is opening its doors to lithium refinement. These ASX juniors are stepping in to help<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Lessons from the past<\/h2>\n
Winds of change<\/h2>\n
And it\u2019s North America that\u2019s leading the charge<\/h2>\n
The need for regional pricing<\/h2>\n
The fastest of markets<\/h2>\n
\nLithium carbonate 99.5% Li2CO3 min, battery grade, spot prices, cif China, Japan & Korea<\/strong><\/p>\nInflation Reduction Act<\/h2>\n
Filling North America\u2019s \u2018missing midstream\u2019<\/h2>\n
\nThe juniors agree too.<\/p>\n