Can the buzz around electric vehicles inject new energy into Northwest Territories mining?
As pre-orders for Tesla's latest electric car surpass 300,000 in a week, owners of N.W.T. lithium and cobalt projects — two elements found in Tesla's batteries — say their time has come.
Getting these projects off the drawing board would mark an increasingly rare mining good-news story for the territory. But there are unique challenges ahead.
'This is huge'
Tesla calls it a "gigafactory." Billionaire Elon Musk's car manufacturer is constructing a vast production facility for its vehicles' lithium-ion batteries outside the aptly-named Sparks, Nev.
Tesla boasts this one factory will, by 2020, make more such batteries in a year than the entire world produced in 2013. More factories, serving more companies, are planned.
"Now is the time. If there was ever a time, now is the time," says Adrian Lamoureux, who wants to start a lithium mine in the N.W.T.
Last month, his exploration business agreed to acquire land around Hidden Lake — an area north of Yellowknife where the Northwest Territories Geological Survey is working to pinpoint lithium deposits.
"You have Tesla spending $5 billion on this 10-million-square-foot gigafactory. That alone is absolutely huge," said the 40-year-old.
"Tesla needs supply. Now, do they want to be paying the sometimes $20,000 per ton that lithium is fetching over in Asia? No. They want something a little bit more closer to home."
This excitement extends beyond lithium and new projects.
Outside Whati, N.W.T., Fortune Minerals has spent two decades developing its NICO project. The company says NICO is home to 82 million pounds of cobalt.
"Tesla is a remarkable company that's very innovative and clearly Elon Musk is an incredible salesman. That just helps our story," says Robin Goad, Fortune Minerals' president and chief executive officer.
According to Goad, Fortune decided long ago to focus on producing cobalt for lithium-ion batteries. Like Lamoureux, he thinks Tesla and its rivals will prefer a North American supplier — adding that the Democratic Republic of Congo, where most cobalt is currently mined, represents a "policy risk" companies might want to avoid.
Goad lists two issues holding up development of the NICO mine: the lack of an all-season road and the money to get started.
The company may have help in solving the first problem. Late last month, the territorial government applied for permits to build a road to Whati.
And the $589 million capital cost of building the mine?
"We are in discussions," says Goad.
'Not a commodity'
So far, so rosy. But plans to mine elements such as lithium have been around for decades in the Northwest Territories, without much progress. Nor are lithium mines suddenly guaranteed winners with the advent of electric cars.
In late 2014, despite being labelled the "only significant lithium producer in North America," a new lithium mine in Quebec abruptly closed after hitting a range of problems. Among those issues was a delay processing the lithium — and this is where Daniela Desormeaux, a Chile-based lithium expert, voices concern for N.W.T. startups.
"They have a challenge. When you enter this market, you are not selling a commodity. You are selling a very specific material and the battery industry is very strict in terms of quality," she says.
Don Bubar, president of Avalon Advanced Materials, agrees. His company owns the Nechalacho rare earth elements project, at Thor Lake in the N.W.T., and hopes to start a lithium mine in Ontario.
"The main challenge any new, aspiring producer in this business needs to face is the reality that you're not producing a commodity in the classic sense of the word," says Bubar.
"Really you've got to produce a specially-engineered chemical product designed to serve the needs of the battery manufacturers."
Bubar thinks Avalon can handle that. He's so sure of lithium's potential that his company is now re-evaluating the Nechalacho site.
"It actually has known lithium occurrences on it and we're considering spending a little time looking at that, possibly as a potential lithium asset as well as rare earth," he says.
However, there is another challenge. Currently, most of the world's lithium is drawn from brines located in salt flats — many of them in South America, though similar brines in Alberta's gas fields are being evaluated. That's often a cheaper method of extracting lithium than getting it out of rock. Lithium from brines is currently preferred for batteries.
On top of that, Desormeaux cautions that many junior mining companies have already joined this race to exploit the element across the globe.
But Bubar is confident room exists for the N.W.T. to flourish.
"There's going to be a need for lots of new producers to serve this market," he says.
"It's not like everyone's competing for one market opportunity."
The right time?
Estimates of future supply and demand appear to bear that out. A 2013 study from the U.K. Energy Research Centre suggested lithium supply would have to grow almost exponentially between now and 2050 to meet demand — not just from electric vehicles but a range of battery-powered energy concepts and other fields, such as medical supplies.
Goad and Fortune Minerals believe the same holds true for cobalt.
I think we're now at the perfect opportunity," says Goad, whose company has plans for a refinery in Saskatchewan linked to the NICO project.
"Whether it takes a month or a year, it's certainly in the near term."
Lamoureux thinks time is of the essence at Hidden Lake, too, even though his lithium proposal is in its infancy.
"I wouldn't rule out this decade. Within a few years is absolutely realistic," he says, when asked to put a date on a potential mine.
"The stars do have to align somewhat but we could get something happening.
"The market doesn't lie. This supply-and-demand issue is critical. I want to get in there."