Benchmark Mineral Intelligence

Critical mineral specialist Advanced Metallurgical Group N.V. (AMG), has announced plans to build a spodumene processing plant and chemical conversion facility for the production of lithium as a by-product from its Mibra tantalum mine in Brazil.

The project – which is scheduled to come online in Q1 2018 at an initial output of 90,000 tpa lithium concentrate, rising to 140,000 tpa – was given approval by the company’s board following years of exploratory work which culminated in the completion of prefeasibility study in March 2016.

The parent company of Graphit Kropfmühl, the Germany-based graphite processing specialist, is expecting to spend $50m to establish the operation and estimates production cost plus transport to be $206/tonne FOB and $127/tonne production costs alone.

“Following a number of years spent on preparatory activities, including the operation of a pilot plant at AMG’s Mibra mine in Brazil, we are delighted to announce our entrance into the lithium market,” said Dr. Heinz Schimmelbusch, CEO and Chairman of AMG.

AMG will be sourcing lithium from both ore and tailings and the average grade of both sources combined is 1.15% Li2O.

This prefeasibility was quickly followed by a scoping study to assess the conversion of the concentrate to lithium’s primary chemicals – carbonate and hydroxide.

AMG’s lithium resource analysis:

Screen Shot 2016-07-21 at 21.25.54

Successful test work has seen the company commission a prefeasibility study for the construction of a chemical conversion plant, targeting production of between 14,000 – 20,000 tpa (LCE).

While AMG did not specify its marketing plans, there are clear routes to market including the direct sale of concentrate to China, toll chemical processing or the direct production of lithium chemicals, the much tougher of all three options.

The move will see AMG further diversify its portfolio of critical minerals which includes silicon, tin and antimony, as well as other battery raw materials such as tantalum, silicon graphite, aluminium and vanadium.

The move comes amidst a backdrop of a growing deficit in lithium raw material supply.

New production from brine – the primary source of lithium chemicals – has been restricted in the Atacama desert for a number of reasons, while the industry’s only new comer, Orocobre in Argentina, has had difficulties reaching its nameplate capacity and recently saw Chairman James Callaway resign.

This at a time when double-digit demand increases from the battery sector look likely to continue out to 2020.

As a result, spodumene resources have become the most likely source of much-needed new raw material in the short-term, with a host of companies in Western Australia targeting near-term concentrate production which they can sell into Chinese conversion facilities.

The introduction of an established critical mineral major in AMG may, however, be a sign of more powerful disruption to the existing supply structure. It is a company that not only understands the private and sensitive nature of speciality minerals but is also willing to back that experience with investment.

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