A Canadian firm constructing a lithium mine in Brazil will start industrial manufacturing of high-quality materials for electrical automobile batteries subsequent yr, amid a provide scarcity that has despatched costs for the metallic rocketing.
Sigma Lithium mentioned it will begin commissioning the Grota do Cirilo venture in Minas Gerais state this month and goals to have product prepared for delivery by the tip of April.
On the similar time, the Toronto-listed group revealed plans to virtually triple its focused annual output to about 100,000 tonnes of lithium carbonate equal (LCE) by 2024.
Sigma mentioned this could place it among the many high 4 international producers, alongside US-based Albemarle, SQM of Chile and Chinese language group Ganfeng Lithium.
“We see all of the demand is there — considerably unmet demand — for battery-grade lithium within the subsequent three years,” co-chief govt Ana Cabral-Gardner informed the Monetary Instances.
Lithium costs have risen tenfold to $75,000 a tonne for the reason that begin of 2021. A decent market has sparked a rush by carmakers to safe provides of a commodity that, together with cobalt and nickel, is significant for electrical automobile manufacturing.
“With the arrival of electromobility and all this pleasure about lithium, the world wants new sources,” mentioned Daniel Jimenez, founding companion of consultancy iLiMarkets. “Whoever is producing lithium within the coming three years goes to make abnormally excessive margins.”
Investor enthusiasm has propelled a 275 per cent rise in Sigma’s inventory this yr, giving the corporate a market valuation of C$4.7bn ($3.5bn). Its Brazilian growth is among the many first of a subsequent era world wide, many from junior mining corporations.
“Sigma is uniquely positioned as certainly one of actually solely three new greenfield lithium tasks which are coming on-line in 2023, and right into a file excessive pricing surroundings,” mentioned Katie Lachapelle, an analyst at Canaccord Genuity.
Most lithium is extracted from arduous rock mines in Australia and become a focus that’s then usually refined in China. In Chile and Argentina, the metallic is separated from salty brines pumped from underground and evaporated in man-made ponds.
McKinsey has forecast international lithium manufacturing will improve from 540,000 tonnes LCE in 2021 to as a lot as 3.2mn tonnes yearly by the tip of the last decade, relying on the tempo of latest venture completion.
Sigma could have an preliminary capability of 37,000 tonnes LCE at its arduous rock mine, which it calls the biggest within the Americas and has 13 years of life. The 1.44 per cent common focus of lithium oxide in its spodumene ore is comparatively excessive by business requirements, in line with executives.
Together with an upgraded estimate of “confirmed and possible” mineral reserves from 34mn to 55mn tonnes throughout its websites, Sigma additionally unveiled a brand new $100mn debt facility.
Supplied by UAE-based shareholder Synergy Capital, it would assist fund the growth of a plant processing ore into high-purity lithium focus.
Cabral-Gardner mentioned the enterprise ought to generate $970mn of free money circulate after tax within the first yr of operations, rising to $3bn within the second.
Whereas automotive producers have struck offers to purchase lithium immediately from uncooked materials suppliers, Sigma has an settlement with South Korean battery maker LG Power Answer protecting a portion of its output.
Non-public fairness investor A10 Investimentos is the Canadian group’s controlling shareholder.
