The head of lithium producer Orocobre says scepticism around lithium has been overblown, with the market for the commodity set to remain tight for years to come.
Brisbane-based Orocobre, the largest of the pure-play lithium companies listed on the Australian Securities Exchange, on Monday unveiled a $US21.9 million ($29m) loss for the 2016 financial year as it absorbed unfavourable currency movements and ramp-up issues at its Salar de Olaroz lithium project in northern Argentina.
But the company confirmed it was on track to finally hit nameplate capacity at Salar de Olaroz by November, with its annual output set to more than double from 6903 tonnes last year to over 15,000 this year.
Orocobre has been among the big beneficiaries of the rise in investor interest in the lithium sector over the past year. Its shares have gone from $1.68 to more than $4 as the market bets on significant growth in lithium batteries due to electric vehicles and home energy storage systems.
But the share price of Orocobre and other lithium plays have eased in recent months due to growing concerns that new and expanded sources of lithium supply could swamp the global market.
Orocobre chief executive Richard Seville told The Australian that his company’s modelling showed that the lithium market would struggle to keep pace with even a conservative 10 per cent compounding growth rate in lithium demand.
His company’s problems in ramping up Salar de Olaroz to nameplate capacity over the past 18 months — which yesterday saw it trim its September output guidance slightly — were a reflection of the challenges the lithium industry would have meeting growing demand. “Our view is we’re staying in a tight market for a considerable period of time,” Mr Seville said.
“Projects take longer, they never take less time, and they always cost more money as well.”
Brine-based lithium projects such as Salar de Olaroz are large and low-cost sources of lithium, but they are more expensive and take longer to develop compared with the hard-rock lithium projects being pursued by ASX-listed Galaxy Minerals, Pilbara Minerals and Neometals.
Orocobre is already studying a potential major expansion of Salar de Olaroz, and is set to release a scoping study into the plan in the coming months. It is weighing up whether to lift the project’s nameplate capacity from 17,500 tonnes a year to as much as 42,500.
Mr Seville said the lessons from the first stage of Salar de Olaroz would deliver cost and time savings in any future expansion.
“This is the first new lithium brine plant in 20 years and therefore there will be some learnings,” he said.
One of Orocobre’s Australian lithium rivals, Pilbara Minerals, will tomorrow release the details of its definitive feasibility study into its big Pilgangoora hard rock lithium project in Western Australia.
Source: http://www.theaustralian.com.au/business/mining-energy/orocobres-seville-expects-ongoing-demand-for-lithium/news-story/1344f63141c921a2b60e5f0a334bdd77
