Canadian mining company Sigma Lithium Resources is developing a mine in Brazil that it claims could put the country on the map as a high-grade lithium producer.
Sigma is raising up to C$30m ($23.8m) through a Toronto Stock Exchange listing, as part of a plan to invest C$85m for initial production of 240,000 tonnes a year by 2020. It will look to raise further capital for a phase two expansion of similar size. This would place it in the ranks of producers such as Kidman Resources in the world’s largest lithium mining country, Australia, said Sigma.
Sigma said it had mining rights to an area covering 18,000 hectares and nine past-producing lithium mines in Minas Gerais in Brazil. The initial Sigma operation had a resource estimate of 12.9m tonnes of ore with a 1.56 per cent lithium oxide average grade, which is considered high in the industry. The entire site could have resources of up to 70m tonnes, executives say.
“It is interesting, it’s going to take a fair number of people by surprise,” said MacMurray Whale, an analyst at Cormark Securities in Canada. “The industry hasn’t really thought about Brazil and what they may have.”
Sigma said its output could be used for electric vehicles in Brazil or could be sold for export. Almost all electric cars, such as the Nissan Leaf and Tesla Model S, use lithium-ion batteries because of their light weight and higher energy density. Brazil is the world’s biggest producer of iron ore through Vale, the country’s largest mining company, but has up to now only been a very minor producer of lithium, which it mines from hard rock.
It would face stiff competition from neighbouring countries with higher reserves, where the material is found in brine under salt flats, pumped, evaporated, and then refined.
The so-called “lithium triangle” of Chile, Argentina, and Bolivia has 27.2m tonnes of identified lithium resources, versus Brazil’s 180,000 tonnes, according to the US Geological Survey. Argentina is investing in its lithium industry, and Bolivia has made progress in exports.
Last month, Chile’s SQM, one of the biggest producers, was given approval to increase production to meet demand from electric carmakers.
“Our reserves are small in worldwide terms, representing less than 1 per cent of the total lithium reserves,” said Vinicius Paes of the Brazilian Geological Service. “Unlike in Argentina, Chile, or Bolivia, where lithium is found in brines, ours is found in hard rock, which has slightly higher extraction costs.”
He believes growing demand means Brazil can compete nonetheless. Tim Oliver, a US-based lithium consultant, said that if there were a deposit in Brazil with very high grade lithium, the country may be able to compete with Australia, but he warns there are other projects in the pipeline there.
Source: FT.com
