(Kitco News) - Production of lithium carbonate is underway for the first time in Canada’s history as Canada Lithium Corp.’s (TSX:CLQ) Québec Lithium open-pit mine moves toward full production by the end of 2013.
Canada Lithium will produce 20,000 metric tons annually of lithium carbonate, mostly used to manufacture lithium-ion battery cathodes in electronic items used in everyday life, which will represent a small chunk of the lithium carbonate available in the market.
“Very roughly there’s 130,000 to 140,000 tons of lithium carbonate on the market every year, so at 20,000 tons, and if you take the lower end of that, you get about 11% of the market,” says Olav Svela, director of investor relations at Canada Lithium.
The company’s production has already been picked up in off-take agreements.
“In total all our production for 2013, since we won’t be at full production through the year, at least 75% of our production is tied up in off-take agreements,” Svela said. “One is a Chinese commodities trading firm called Tewoo and the other, we found fairly recently, is Marubeni.”
The deal with Tewoo-ERDC is a five-year agreement that will see a minimum of 12,000 tons of battery-grade lithium carbonate delivered to the Chinese commodity trader. There is a clause in the deal that off-take volumes could increase by 20% in 2014.
In the event Tewoo triggers the 20% clause in 2014, Canada Lithium could deliver up to a maximum 14,400 tons during the calendar year of 2014 and prices will be adjusted quarterly based on actual market prices, Canada Lithium said in the initial release.
Marubeni, a Japanese commodity trader, signed an off-take agreement in early January with Canada Lithium where the Marubeni will distribute 2,000 tons of battery-grade lithium carbonate for three years with an option to increase distribution to 5,000 tons.
Marubeni will then be able to extend the agreement in 2016.
While the company is focused on lithium carbonate, an updated feasibility study in October 2012 showed the ability to produce an additional 2,000 tons of battery-grade lithium hydroxide and up to 30,000 tons of sodium sulphate annually.
“What we’re planning to do is set a lithium hydroxide circuit, which is a product that attracts a premium price to lithium carbonate. We’re planning that circuit towards 2014 or so,” Svela said. “Lithium hydroxide is an add-on circuit that we can do and that would attract probably 2,000 tons of lithium hydroxide – that trades for around $7,500 per ton and lithium carbonate is roughly in a $6,000 – 6,500 per ton range.”
The Québec Lithium open-pit mine has proven reserves of 6.6 million tons and probable reserves of 10.46 million tons at a cut-off grade of 0.60% lithium oxide.
“We’ve got enough in terms of the proven and probable minerals reserves to take us for at least 15 years,” Svela said. “We feel there is potential at depth in this property and probably more mineralization off to the northwest, and maybe southeast.
“We feel we’ve got pretty good stuff right now and plenty of it,” he added.By Alex Létourneau of Kitco News aletourneau@kitco.com