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Home » Tips » Stocks In Focus » CleanTech Lithium: rare sustainable lithium miner with two Chile projects
  • London-listed lithium explorer with a focus on two main projects in Chile
  • New approach to lithium extraction that avoids depletion of local aquifers
  • Faster than conventional pond-based evaporation
  • Likely large demand for several large markets – e.g. EU and Japan
  • Draws on established local solar power resources to minimise carbon footprint
  • Led by leading authority on Chile clean energy market

There is no doubt that lithium is going to be one of the defining materials of the decade.

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As Britain rushes towards the 2030, the point when all new electric cars will be powered by electricity rather than fossil fuels, it is also heading towards a step change in demand where the need for lithium will outweigh supply by about eight-fold. Britain is not alone. The EU, the US and China are heading in the same direction with target dates between 2030 and 2040.

Electric vehicles (EVs) depend on electric batteries to store the electricity in a car and to keep it going. What works in favour of this pale grey metal is that lithium-based batteries have the highest energy density and the lowest discharge rate. While lithium is used in other devices too – a smartphone battery typically contains 2 grams of lithium product – electric cars tend to use around 45 kilograms of lithium.

While China produces a large quantity of lithium at home, for large markets like the EU and the US the question arises where will this large quantity of new lithium come from? The EU has particularly stringent rules on the green credentials of lithium production and intends to use only metal that has been mined in line with those rules.

Sustainable lithium mining

The way lithium is mined at the moment has raised a lot of questions about sustainability. It is produced using two types of processes and both of the production methods create some environmental damage.

For instance, in the lithium production triangle of Chile, Argentina and Bolivia where CleanTech Lithium is based, the mineral is extracted by processing brine from salt lake basins using large evaporation ponds that can be as big as 20-50 km2. This method requires a lot of water in an area that is already arid and depletes the aquifers of the salt lake basin. The method used in Australia, the world’s largest producer of lithium, extracts the mineral from hard rock using energy intensive processing with relatively high costs and high levels of C02 emissions.

A new approach to lithium extraction

But CleanTech Lithium offers a whole new and sustainable option. The company proposes to use direct lithium extraction (DLE), a process which pumps brine into the processing unit and uses resin to extract only lithium. The spent brine is then reinjected avoiding evaporation ponds and aquifer depletion. The process plans to produce battery grade lithium.

Not only is the actual extraction method more sustainable than the traditional two, but the sustainability loop is also closed by making use of the ample sunshine in the region (Chile is the region with one of the highest solar irradiations on the planet) and using solar power. CleanTech Lithium projects are well placed to connect to Chile’s power grid and the plan is to sign a power supply agreement with one of the numerous solar and other grid connected renewable energy suppliers, ensuring 24/7 renewable energy supply.

The aim is to achieve high-quality lithium production that is close to net zero emissions.

For comparison, producing lithium using the hard rock method generates 15 tonnes of CO2 per tonne of lithium, brine evaporation generates more than 5 tonnes while using DLE and solar power creates close to zero emissions. Co-founder and CEO Aldo Boitano, is one of the pioneers in Chile’s solar industry and has been involved in the establishment of over 800MW of installed solar capacity across a number of projects in the country.

This is crucial for an environmentally stringent market like the EU which has recently tightened its regulation on the CO2 footprint of the lithium-ion battery supply chain. The region is projected to see a 20 fold increase in lithium-ion battery capacity between 2019 and 2029 to over 400 gigawatt hours. For this reason, CleanTech Lithium sees the EU as its biggest future market (although it will readily entertain other buyers for its output). The company does not have any offtake agreements currently in place, so has plenty of room for negotiation.

Strategic lithium projects in Chile

CleanTech Lithium has two highly strategic lithium projects in Chile located less than 120km from the mining centre of Copiapo. The Laguna Verde project covers a licence area of 67km2 and is further down in the permitting process while the Francisco Basin project covers an area of 110km2. Laguna Verde has a JORC compliant resource estimate of 1.2 million tonnes of lithium starting from the surface. CleanTech Lithium holds mining licences at Laguna Verde via an option agreement.

Resource drilling programs at both projects are currently underway.

“Historically, semi-mature salars were ignored on the basis that evaporation times would be prohibitively expensive capex wise, that the number of ponds and the timeframe needed to gain sufficient evaporation would be exorbitantly expensive,” notes Gaius King, Resources Analyst at Fox-Davies Capital. “This is why DLE will become transformative, it is cost-competitive and eminently scalable.”

This is a key point: the technology removes the lithium from brine more efficiently, and it is faster than conventional evaporation pond based production.

Lithium prices at all time high

Cleantech Lithium has listed on the London AIM market at a time when lithium prices are at an all time high. The pricing of lithium is relatively opaque, but with demand already outstripping supply in most key markets, a resource like this is going to be at a premium.

With the two projects in Chile the company also leverages the existing infrastructure and the Chilean authorities are highly supportive of new lithium production that minimises the environmental impacts of extraction and reduces CO2 emissions.

CleanTech Lithium is expected to complete scoping study and pre-feasibility study on Laguna Verde by the end of this year and move into first production by 2024 – the second PFS on the Francisco Basin is expected by mid-2024.

 

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This article is not investment advice. Investors should do their own research or consult a professional advisor.

Stuart Fieldhouse Editor

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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