Orocobre to expand LCE production at Olaroz OROCOBRE LIMITED (TSX:ORL) POSITIVE SCOPING STUDIES CONFIRM 17,500TPA LITHIUM CARBONATE EXPANSION FOR OLAROZ LITHIUM FACILITY IN ARGENTINA
Orocobre Ltd. has provided an update on the studies conducted for the Stage 2 expansion of the Olaroz lithium facility:
- Lithium carbonate equivalent (LCE) production will be expanded from the current 17,500-tonne-per-annum capacity to 35,000 tonnes per annum with commissioning targeted for late 2018/early 2019.
- Capital expenditure for the additional 17,500 tonnes per annum of lithium carbonate capacity is circa $190-million (U.S.) (including a $25-million (U.S.) contingency) and is expected to be financed through a combination of project finance and Stage 1 operating cash flows.
- Construction of a 10,000-tonne-per-annum battery-grade lithium hydroxide plant is being investigated with the preferred location being in Japan. Additional capital expenditure is expected to be circa $30-million (U.S.) before potential government incentives. Financing of this development is expected to include debt and/or offtake financing.
- Following site visits, five engineering firms have been prequalified for the Olaroz lithium carbonate expansion, and three specialist engineering firms have been preselected to undertake work on the lithium hydroxide plant.
A number of different expansion options were assessed focusing on the production of both lithium carbonate and lithium hydroxide using either conventional and non-conventional technologies and combinations of technologies with different rates of production. The Stage 2 expansion strategy has considered product market conditions, processing risk, capital costs and potential returns.
The key results of the studies were:
- There are key strategic advantages to add lithium hydroxide to the Orocobre product range to feed the growing demand in the battery sector.
- The preferred location for a lithium hydroxide plant is Japan to be close to, or integrated with, cathode manufacturers servicing the growing electric vehicle sector.
- Only existing conventional processing technologies will be used in the expansion. All unconventional technologies reviewed carried a significant level of process risk and were not seen to hold any commercial advantage over conventional technologies.
- Stage 2 is expected to be fully financed by project debt and internal project cash flows.
Stage 2 will entail the construction of a 17,500-tonne-per-annum lithium carbonate production facility adjacent to the Stage 1 operations at Salar de Olaroz in northern Argentina. The expansion is expected to include both primary and purification circuits capable of producing battery-grade lithium carbonate. In addition, studies continue into construction of a 10,000-tonne-per-annum lithium hydroxide plant, with a preferred location in Japan facilitating integration into production of cathode for battery manufacture.
Capital requirements
The Stage 2 capital cost is estimated to be $190-million (U.S.) including a $25-million (U.S.) contingency for construction of a 17,500-tonne lithium carbonate facility.
If a lithium hydroxide plant is constructed in Japan, the approximate capital cost will be $30-million (U.S.) before any government incentives.
It is expected that the financing of both developments will involve project debt (circa 70 per cent) and operating cash flow from Stage 1. In addition, a lithium hydroxide plant based in Japan is likely to be eligible for offtake financing and government incentives.
Orocobre does not anticipate the need to raise equity capital to finance either the Stage 2 expansion or lithium hydroxide plant.
Operating costs
Stage 2 operating costs for battery-grade lithium carbonate production are expected to be similar to Stage 1, which are currently circa $3,500 (U.S.) per tonne and forecast to decrease to $2,500 (U.S.) per tonne in fiscal 2018.
Timing
The process to obtain the necessary permits and approvals for Stage 2 has commenced and will run concurrently with engineering and design work.
Orocobre and its joint venture partners expect to reach a final investment decision by mid-2017. Stage 2 commissioning is planned to commence in late 2018/early 2019, which aligns with a projected undersupply of lithium chemicals in global markets.
Orocobre is the first new brine-based producer of lithium carbonate to emerge in approximately 20 years.
About Orocobre
Orocobre is listed on the Australian Securities Exchange and the Toronto Stock Exchange, and is building a substantial Argentine-based industrial minerals company through the construction and operation of its portfolio of lithium, potash and boron projects and facilities in the Puna region of northern Argentina.