[institutional Review] milestone of European Lithium Resources Strategy-Ehrman of France resumes salt lake construction in Argentina

Event description

Eramet, the world's leading producer of manganese, nickel, ore and high-performance alloys, announced that it would join hands with China's Qingshan Industry to restart the construction of the salt lake lithium extraction plant in Argentina.

Event comment

Eramet's Argentine Salt Lake has complete mining rights and ideal resources, but the lithium concentration only belongs to the second-tier level.

French Eramet, through its subsidiary Eramine Sudam é rica, wholly owns Centenario-Ratones Salt Lake in Salta Province, Argentina, which is composed of Centenario Salt Lake in the north and Ratones Salt Lake in the south. The mining right covers the entire salt flat and is a permanent mining right, with a total area of about 500square kilometers, 3800 meters above sea level, and currently proven reserves of 1.1 million tons of lithium carbonate equivalent, resource equivalent of nearly 10 million tons of lithium carbonate equivalent, and the average lithium concentration is close to 400mg/L. On the whole, we think that the resource scale of Centenario-Ratones is ideal, but the lithium concentration only belongs to the second-tier level. together with Rincon Salt Lake, it belongs to the few large-scale salt lake lithium resource projects with complete mining rights in Argentina, which can be integrated and developed in the future, and there is no need to coordinate and integrate mining rights, so it has a high scarcity, but the infrastructure conditions will pose a challenge.

By using the technology of adsorption and membrane separation, there is no need to build salt fields, and lithium can be extracted directly and efficiently from raw brine. Centenario-Ratones Salt Lake plans to use the "adsorption + membrane separation" technology developed by Eramet to directly extract lithium from raw brine, with a budget investment of about 500 million euros, and will build a battery-grade lithium carbonate plant with an annual capacity of 24000 tons in the mining area. According to the feasibility and experimental plant parameters, the technology is expected to achieve a recovery rate of up to 90% (the traditional salt field process is only 4050%), the lithium extraction cycle takes only one week (it takes 18 months to dry the bittern in South American salt fields), and the estimated cash cost of lithium carbonate is only $3500 / ton. We believe that this process is similar to the design of Livent and some salt lakes in Qinghai, China, but the difference is that the adsorption is not "selective adsorption", but the cations are all absorbed and concentrated, and the separation is carried out in the back-end membrane section, in view of the limitation of the concentration of nanofiltration membrane, the efficiency of separating small molecules (magnesium-lithium, sodium-lithium) and the loss of the membrane itself. The efficiency, actual capital expenditure intensity and capacity running-in cycle of the process in large-scale continuous production need to be verified.

Aoyama Industries, a partner for many years, contributed shares to help restart the project. Eramet planned to start construction at the end of 2019, but was forced to seal the project in April 2020 due to a global epidemic and financial difficulties. This time, Castle Peak will provide US $375 million in financing to acquire 49.9% equity in the lithium extraction plant. Eramet has invested US $185 million in the early stage, and only US $25 million is needed to retain the controlling stake (50.1%) and the right of operation, which will be underwritten in proportion to equity in the future. the previous successful cooperation between the two sides on Indonesian laterite nickel has also laid a solid foundation for this re-cooperation. Schedule 22Q1 restart construction, 24Q1 commissioning.

Eramet is a milestone in accelerating the transformation of clean energy metals and a big step in the strategic layout of lithium resources in Europe. We believe that: (1) Europe, as one of the major new energy vehicle terminal markets in the world, currently needs to purchase all lithium resources. Centenario-Ratones is the first large-scale lithium resource project operated by European enterprises, and it will bring a certain degree of self-supply security to the European market and alleviate "lithium resource anxiety" after it is put into production. (2) Eramet and Aoyama cut into lithium resources, which is also an example of the transformation from traditional metal mining giants to clean energy metals, which will increasingly become an industry trend. Through this cooperation, the two sides are expected to improve their new energy industry puzzles and achieve a win-win situation. (3) in the long run, more efficient and greener lithium extraction technology is expected to gradually change the ecology of the lithium industry and promote the maturity of the lithium industry, but at present, the industry is continuing to usher in a larger order of demand increment. This urgently requires high confidence capacity and mature processes for efficient and saturated capacity.

Risk tips: 1, the release of global lithium mine supply is higher than expected, while the production and sales of new energy vehicles are not as expected, which will lead to another decline in the price center of lithium products; 2, the innovation and industrialization of battery technology such as sodium ion batteries, will reduce the demand for lithium in the field of power and energy storage.