Lithium customers are still jostling for offtake, suggesting long term outlook is strong

News.com.au

11 hours ago

Lithium prices are tumbling but customers involved in the EV supply chain are more focused on lithium grade and purity
Lithium-ion batteries require battery-grade lithium with a purity of 99.5% or higher
Juniors like Green Technology Metals and Cosmos Exploration continue to demonstrate the strength of their projects despite challenging market conditions
While ASX lithium prices fall and retail investors flee, the world's battery makers are quietly locking in supply deals, with expected demand of three million tonnes by 2030 having the potential to make today's prices look like a bargain.
To put the current lithium 'crash' in perspective, at US$8800 per tonne, today's prices are still nearly double the $4450/t lithium was fetching in 2012.
And despite an apparent flood of material, customers are still eager to lock up future supplies, worried the market could flip on its head as demand soars.
Pursuit Minerals (ASX:PUR) managing director Aaron Revelle told Stockhead, its partners involved in the EV supply chain are less concerned about the depressed market and more focused on who can deliver the ultra-pure product that tomorrow's batteries demand.
Revelle said Chinese buyers, who dominate global lithium demand, are hunting for lithium chloride to refine into battery-grade material of 99.5% purity or better, which is where ASX juniors like Pursuit are separating themselves from the pack.
Pursuit's Rio Grande project in Brazil has already demonstrated it can deliver 99.5% lithium carbonate, putting the asset in the premium tier offtakers are actually chasing.
That's great news for future producers in the South American brine space.
'Chinese buyers are going into the South American salars which have a history of producing the higher-grade material, especially from the more established projects like Olaroz or Pheonix in Argentina,' Revelle said.
'These mines are producing 99.5% lithium carbonate and the companies that own them are upgrading the product to the 99.95% battery grade."
Proven quality
By remaining active even with prices at a low ebb, Pursuit is ensuring Rio Grande is ready to feed a high quality product into the flobal market.
'When you look at Rio Grande, the attraction is that it's already proven it can produce 99.5% technical grade lithium carbonate. It has a long life, it's low cost, robust and has over a million tonnes of resource with potential upside,' he said.
'You can't find projects like ours anymore where we have what we call tier-1 chemistry profile where the brine is 450-500mg/l Li, one of our drill holes had an intercept of 620mg/l Li which is getting towards the higher end of the lithium content.
'And there's still plenty of upside at our project because we were originally going to drill around six to eight holes and we've only drilled two of that program.'
Pursuit is now transitioning to the next phase of development and commercialisation at the asset, after dispatching lithium carbonate samples to multiple prospective offtake and strategic partners earlier this month.
Initial pilot plant production at the company's 250tpa pilot plant in Salta churned out 15kg of lithium carbonate at 98.9% purity, validating everything from their Rio Grande brine quality to their processing tech.
Lithium's wild ride
Revelle believes the long-term fundamentals for lithium are intact. And, he is no stranger to the lithium rollercoaster.
The seasoned operator has weathered three or four price cycles since founding Argentinian-lithium focused company Centaur Resources in 2018, which sold to Arena Minerals for a tidy $23m in 2020.
Two years later, with no further work done and when lithium prices caught fire, Arena was acquired by Lithium Americas Corp for US$227m.
'That's the sort of environment you'll see,' he said.
'What history has shown us is that lithium is immature – prices go up, supply comes online, price drops, then a couple years later demand catches up and more supply is needed, price spikes and it repeats the cycle.
'We're seeing surging EV sales where it's estimated to hit 7 million units globally in the first five month of 2025, that's quite significant – that's a 28% year on year growth rate,' he said.
'When you're looking at the horizon, in the next five years lithium demand is to reach 3-4x, and it's not a question of will it happen, but when it will happen.
'We'll probably see another couple of cycles before it stabilises but there's definitely another spike coming and with added project scarcity, there'll be more economies of scale introduced with more M&A to take place, and more consolidation in Argentina.'
Lithium players still inking deals
Plenty of other companies have also managed to attract potential partners, enter offtake deals and agreements despite the market carnage, showing interest in the metal remains strong.
Argosy Minerals (ASX:AGY) has struck a spot sales contract with a Hong Kong chemical company for 60 metric tonnes of premium battery-grade lithium carbonate (>99.5% purity) from its 77.5%-owned Rincon project in Argentina's Salta province.
The company is developing the 12,000tpa project with engineering and feasibility works currently underway to achieve a final investment decision.
Rincon holds a total resource of 731,801t of LiCO3 with a weighted mean average lithium concentration of 329mg/L, which includes an indicated resource of 640,330t LiCO3 with a weighted mean average lithium concentration of 327mg/L.
In December last year, Cosmos Exploration (ASX:C1X) signed an exclusive option agreement to acquire EAU Lithium, a private lithium development company part owned by Vulcan Energy Resources (ASX:VUL) with a technology-testing agreement with Bolivian state-owned company Yacimientos de Litio Bolivianos (YLB).
This agreement enables EAU to test lithium brines from Salar de Coipasa, Salar de Empexa and Salar de Pastos Grandes salars – some of the largest salars in the country.
The Bolivian Government, through YLB, is seeking to unlock its vast lithium resources to drive economic growth and establish Bolivia as a global leader in the lithium supply chain.
Previous extraction attempts using chemicals plus solar evaporation-based methods have faced challenges due to the high magnesium content in the salars.
By partnering with EAU lithium and using Vulcan's DLE tech, YLB aims to overcome these technical hurdles and capitalise on rising global lithium demand while reducing environmental impacts.
So far, five cubic metres of brine samples have been shipped from Bolivia's lithium salars to Germany for testing.
Up in Canada, Green Technology Metals' (ASX:GT1) hard rock lithium assets in Ontario are on the doorstep of North America's EV sector.
Leading South Korean battery materials group EcoPro is a major shareholder, while GT1 has already locked in a lithium offtake agreement with LG Energy Solutions (also a shareholder) for 25% of its spodumene concentrate production from the Seymour lithium project for five years.
First production at Seymour, home to a 10.3Mt at 1.03% Li20 resource, is targeted for 2026, with DFS work currently underway.
It is GT1's flagship project and plays a central role in the Eastern Hub strategy, which involves developing multiple satellite sites to supply long-term feedstock for a planned concentrator at the site.
Meanwhile, GT1's Western Hub, slated for operation in 2029, centres around the Root Bay deposit and will serve as additional feed for a proposed lithium conversion facility.
An updated preliminary economic assessment reinforced the Root lithium project as a viable, standalone project delivering an increase in NPV at the Root lithium project to US$668m, after tax IRR of 53.5% and a payback period of three years.
At Stockhead we tell it like it is. While Pursuit Minerals, Cosmos Exploration and Green Technology Metals are Stockhead advertisers, they did not sponsor this article.