The Rise of Lithium: An Interview with Peter Secker

Interview conducted by G.P. ThomasJul 30 2012

In this interview, Peter Secker, President and CEO of Canada Lithium Corp., talks to AZoMining about the benefits of mining in Quebec and why lithium demand will continue to grow.

Could you please provide a brief introduction to Canada Lithium Corp. and the sector which it works within?

Canada Lithium Corp. is a mine developer working within the lithium sector. We are primarily involved in the Quebec Lithium Project, which we purchased three and a half years ago. We have carried out feasibility studies and detailed design and we are now 35% through the construction of a $207million project that will be commissioning at the end of this year.

This project will produce around twenty thousand tonnes per year of battery grade lithium carbonate that will go into the battery industry. This is predominantly in Asia, but some will also go into Europe and North America.

Could you provide a brief background and history of the Quebec Lithium Project, Canada?

The project is located 60km north of Val d’Or, which has been a centre for mining for about 100 years. It is a good location, as we have good road and rail infrastructures.

We also have good power infrastructure: this is the most important commodity we have, as it is some of the cheapest power available in the world. We typically pay around 4.5cents per kilowatt hour.

The mine was in first in production in the 1950’s and 60’s when it produced lithium carbonate, lithium hydroxide and lithium chloride. In fact, all the commodities we will begin producing, it produced back in the 50’s and 60’s.

At that time the biggest market was the US government, but around 1965 the US government decided they didn’t want any more lithium products and stopped stockpiling the metal. The mine went on care and maintenance the following year.

When we picked the mine up again in 2008, at the time lithium wasn’t seen as a ‘sexy’ commodity, but demand for lithium in recent years has increased significantly.

How pleased are you with the results of feasibility studies and drilling results?

Most of the drilling was done in the 50’s and 60’s, so there is a huge database from this time already available for us. In 2010 we drilled around 60 new holes and in 2011 we did a definitive study and drilled another 60 holes. We have twinned some of the old holes and also drilled a little bit deeper to see the extent of the resources.

The current resource is around 33 million tonnes at 1.19% lithium oxide. There is also a further 13 million tonnes in the ‘inferred’ category, so the total resource is around 48million tonnes. Our reserves, which are what we will mine for the first 15 years, are about 17 million tonnes. So we have enough for a 15 year mine life at least, and obviously in the future we will do some more drilling.

When is production scheduled to commence at the Quebec Project? What further studies have to be undertaken before this?

We will finish building the plants at the end of the year and we will start commissioning in December. We’re going to make our first shipment to Asia in March 2013, and then from March to the end of the year we build up from 0 to 100% productivity, which will be around 20,000 tonnes of lithium carbonate annually.

There are no further studies required on the lithium carbonate, but we are undertaking some further studies regarding other commodities.

Our main product is lithium carbonate, but we’ve just finished some further design work for lithium hydroxide. This is a material that is starting to be of interest in the manufacturing industry.

We are also starting to undertake lithium metal test work. Lithium metal is interesting because it’s high revenue. Lithium carbonate sells for around $6000per tonne, lithium hydroxide around $7000 per tonne, but once you get to lithium metal, then you’re talking about $60,000 per tonne.

Lithium metal is now going into new polymer batteries and also into aerospace industry alloys along with aluminium and titanium. So there is an increasing demand for lithium metal. The biggest operating consumable in lithium metal is power, in the refining and smelting processes. We have a significant competitive advantage in Quebec with the inexpensive power source. So the studies that will finish at the end of this year will be focused on lithium metal.

What makes Canada Lithium Corp. a relatively ‘green’ mine developer?

Well the reasons for this are threefold. Firstly, the main power source in Quebec is hydropower from the large hydro-dams which are plugged into the grid, so our main source of power is hydropower which is utilising green energy. We also supply the EV industry, making our end products sustainable. Furthermore, in terms of our discharge from the site, our tailings (waste material) are predominantly silica sands which don’t contain cyanide and there is no acid mine drainage from our waste dumps. So in terms of mining projects we are quite green.

Lithium is becoming an increasingly important metal for the future-why is this?

It’s mainly to do with relative weight and energy density. In the 70’s and 80’s there was little demand for lithium, but in the 90’s people started investing in the ‘lightweight’ cell phone and laptop industry. Once you are marketing something as lightweight, the battery weight becomes incredibly important. So lithium batteries, which had been around since the 60’s (NASA had originally developed them for the lunar landing), became the battery of choice once weight and energy density became critical.

So lithium demand started to increase from the mid-90’s onwards, mainly for the cell phone and laptop industries. Now of course there is a whole range of electronic devises that use these batteries, from tablets and mini tablets to MP3 players. Demand has increased year on year by about 7-8%. On top of that, there is now the emergence of hybrid cars and fully electric vehicles. As the hybrid industry increases, so will demand for lithium. For example in Japan, approximately 18% of cars sold are now hybrids. In China, the government wants around 5 million electric vehicles on the road by 2020.

If you look at the unit cost of a lithium battery about 5 years ago, it cost about 1000dollars per kilowatt hour to build. Now it is down to about 500dollars and by the time it gets down to the 300-200dollar mark so that it is comparable to lead acids batteries we will start to see a significant replacement of lead acid batteries with lithium.

Do you believe the growing demand for lithium is sustainable?

The main source of lithium carbonate is from South America, from Chile and Argentina. It predominantly comes from brine operations that are mainly potash producers making it mainly a by-product.

At the moment supply and demand is in balance, but as demand increases with greater use of electric vehicles and hand held electronics, we believe there is going to be a shortage. This is why we are coming into the market, because we believe that there will be a shortage of lithium carbonate around 2014-2015 in the battery segment.

In your opinion, how healthy is the current outlook for the mining industry in Canada?

Quebec is one of the friendliest places to develop a new project and we have strong government support for new industries. Perhaps if we were a gold mine or a base metals mine then there wouldn’t be so much interest, but because we are a lithium producer that feeds the battery industry there is strong support from both the government and community in Quebec. The reason for this is the government has already started developing an energy cluster in Montreal, where there are 2 lithium battery companies that are operating already and in addition there is Hydro-Québec, who spent a significant amount of money each year developing grid storage technologies. Grid storage utilises large, multi-megawatt batteries, in the range of 30 to 400MWatt, to store off-peak energy for use during higher demand periods. So there is a strong support at all levels to develop a ‘green energy’ cluster that encompasses mining the lithium in Quebec, manufacturing the batteries in Québec, and then using the batteries in Quebec.

Add all this to the fact there is a rich history of mining in the area, Quebec is by far one of the best places I have ever worked.

Does Canada Lithium Corp. have any plans to expand operations into other nations?

Currently we are totally focussed on the Quebec project. We want to take this project as far as we can and we would like to be as integrated as we can. So taking a 400dollar concentrate and turning it into a 60000dollar per tonne metal is the best value-add that we can do. The focus is going to stay in Québec due to the good support infrastructure and energy costs.

How do you see the mining industry in general progressing over the next 10 years?

I think we are still in a commodity cycle and I think it will continue for a while. China and India are still growing along with Vietnam and Indonesia. There you have a conurbation of around 3 billion people who over the next 10-20 years will significantly increase their standard of living, so power will be in demand, whatever source it comes from. The bulk commodities that go into making consumer goods, such as iron ore and copper will also be in demand and then you have the issue with food supply because of a growing population. I think we are on a hiatus at the moment which could last about 6 months, but I think the general trend over the next 15-20 years is going to be up.