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Lithium Power International: Pioneering the lithium supply chain

Lithium Power International: Pioneering the lithium supply chain

Industry-leading energy company Lithium Power International (LPI) is advancing their Maricunga brine project in Chile, a significant enhancement to the lithium supply chain

Adversity often breeds innovation, and that is certainly the case with Lithium Power International’s Maricunga brine project in the dry deserts of Chile’s rich Lithium Triangle. Lithium Power International first experienced setbacks to its goal to become a low-cost, world-class producer of this critical electric battery storage mineral from the region’s vast salt lakes because of COVID. It then confronted delays within its development joint venture, which includes the state-owned mining company Codelco. Flexible thinking and quick decision-making, however, are opening a new and better path to development right at a time when global prices for lithium are rising intensely.

Persevering through the pandemic

Lithium Power International’s team, and that of their other local joint venture partner Minera Salar Blanco S.A. (MSB), was hamstrung by a tough national lockdown for many months. This affected the people tasked with exhaustive testing of the resource, production design, and implementation. By working remotely, however, staff and contractors came up with a new and better development plan that should soon see the Maricunga project fulfil its promise. That plan involves Lithium Power International focussing its attention on those tenements that it owns, rather than initially including neighbouring ones held by Codelco under the joint venture that the pair intended to enter. Nevertheless, Codelco is still looking to participate under the terms of its original Memorandum of Understanding. This gives it the flexibility to develop an operation more quickly rather than to hold off until an all-encompassing agreement between the parties is reached.

Before the development was delayed, the joint venture partners had to navigate other challenges. Civil unrest emerged in Chile late in 2019 and was quickly followed by the severe onset of COVID. The board members of both Lithium Power International and MSB had been meeting in Chile once every quarter up to that time to help quickly sort out any issues as they arose. As COVID spread and caused a heavy impact on Chile, that in-person presence ceased. Lithium Power International relied more heavily on representatives from the Australian Ambassador to Chile’s office and from the government-run Austrade. For 18 months, those two organisations acted as proxies for Lithium Power International.

However, one issue that they could not overcome was the need for the team engaged in project planning to regularly visit the site on the Maricunga Salar (salt lake), nearly 900km to the north of where the lithium extraction is to occur. Nevertheless, it is comforting to say now that Chile has regained control of the epidemic thanks to an extensive vaccination program, which has reached 86% of the target population with at least one dose and 79% with two doses. The country is cautiously removing its tough restrictions and has partially opened its borders so that those who have been vaccinated have the option of international travel. Cinemas, theatres, and the interiors of bars and restaurants have reopened, although, in many parts of the country, a curfew still exists. At first, this lockdown and travel ban severely slowed down work on the Maricunga project, but with new protocols in place, progress is now moving forward efficiently.

The LPI-MSB team worked remotely during this period, but discussions to finalise an agreement with Codelco to develop the Salar jointly have yet to be completed. Eager to restart the detailed development process, Lithium Power International and MSB decided in December 2020 to push forward with a modified lithium extraction operation at Maricunga. It would fast-track the first stage based on what is known as Old Code tenements. They are grandfathered from current lithium legislation and do not require any further significant permitting before production can commence. Codelco holds no ownership interest in those areas, but it is expected to join the development at a later stage and bring its own tenements into the venture.

The decision to proceed with this option was made partly because of the positive global outlook for the lithium industry and Maricunga’s position as a potential world-class producer. The first stage of the revised project will have a 15,000 tonnes-per-year capacity yielding high-quality lithium carbonate for 20 years. It will provide significant expansion potential through the development of subsequent stages.

Drilling the Salar for lithium

A critical part of the new plan was to first test for the presence of lithium-rich brine at depths of more than 200m in the Maricunga Salar. The initial drilling and project design was undertaken on resource and lithium concentration information gathered during an extensive drilling program only to that level. But the brine extends to greater depths. If this contained sufficient lithium to be converted into further mining reserves, then that would provide a strong foundation for substantial consolidation opportunities for LPI, MSB, and other parties on the Salar. Lithium Power International knew that rich lithium grades extended at depth because, in 2018, they had drilled one hole to 380m in depth.

An Environmental Impact Assessment has already been completed for the initial project. It took two-and-a-half years to complete and was reviewed for 15 months by Chilean Government agencies before being approved in February 2020. A year before that, a Definitive Feasibility Study had been undertaken on the joint venture’s tenements, not including those owned by Codelco. These Chilean Government approvals mean that the critical decisions about Stage One of the project now reside entirely with LPI and MSB. There is no need to repeat them. They took the opportunity to push forward with an initial, lower-cost project and consider expansion proposals at a later time.

But first, however, deeper drilling needed to be completed to be sure that the lithium grades extended below 200m. The program involved reforming a highly credentialed technical team comprised of Worley, GEA Messo, Stantec and Atacama Water, among others, to update engineering work to resize and optimise the project to its revised output and specifications. This included reviewing the technical and economical design and, importantly, resizing and optimising the work to handle the new output levels. The special focus was on the option of using a new Stage One development as a starter project that could later allow rapid expansion.

In February 2021, a new field program started at Maricunga, comprising 2,400m of drilling. Analysis of the earlier deep drill hole showed a higher drainage porosity and permeability than brine nearer the surface. This has raised expectations that the life of any future operation could be raised to 20 years plus. For the first time in many months, Lithium Power International was able to mobilise people and equipment to the high altitudes of the Maricunga basin and get the project back on track.

Over subsequent weeks, the results achieved by one drill hole after another were reported. The news was very encouraging. Late in April, three holes had been completed to depths of 400m, core samples were taken and then sent to the US for drainage porosity and further hydraulic testing. Another 56 samples were sent for chemical analysis, showing average lithium concentrations above 1,000 ppm and positive lithium, calcium, and magnesium ratios. By early July, the remaining two drill holes had been completed. Calculations showed an average lithium concentration of 989mg per litre across all of the drill holes, with a maximum amount of 3,375mg per litre. This confirmed that Maricunga was one of the richest lithium brine projects globally.

By this time, people other than those toiling on the remote Maricunga drilling site were paying close attention. Preliminary indications of interest were being received from international financial institutions and private funds for debt financing and equity participation. This was aided considerably by the fact that just weeks earlier, LPI and MSB signed a strategic alliance with the large Japanese trading and investment company, Mitsui & Co, for the development of Maricunga and other possible lithium projects in Chile. The project was firmly back on course.

This new alliance includes a potential off-take of up to 15,000 tonnes per year of high-purity lithium carbonate, battery-grade material for a minimum of ten years, with a possibility of extending for another decade. It also includes funding rights for Stage One, potential direct participation in the operation by Mitsui, off-take and funding rights for future expansions and collaborations on direct lithium extraction technology being studied and tested by the project’s new partner.

Much work remains before final commitments can be made. But the outlook is more promising now than at any time in the recent past. A new resource estimate is being calculated, taking in the information on the lithium resource in the newly drilled 200-400m zone. This will form a critical part of the updated definitive feasibility study for stage one. Expectations are for a sizeable expansion in the resource, in the range of 1.5 times to 1.8 times the size announced in 2019. The ongoing work has also brought several opportunities to light that can optimise the engineering of the project, which is expected to have the potential to reduce the capital costs of development. Initial indications of interest have been received from international financial institutions for debt financing and future equity participation. This is all assisted by a considerable uplift in global prices for lithium carbonate as electric vehicle and battery manufacturers scramble to secure reliable supplies.

Source: Andrew Phillips ( Lithium Power International Ltd )

 

Lithium Power International: Pioneering the lithium supply chain

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