Tesla's Potential North American Battery Metals Supply Chain Contenders

Source: Matt Bohlsen

Link:https://seekingalpha.com/article/4383766-teslas-potential-north-american-battery-metals-supply-chain-contenders

Summary

Tesla's existing supply chain. Latest Tesla news as related to EV metal miners (Piedmont Lithium supply deal, Tesla lithium converter plan in Texas, Tesla interest in LG Chem).

Tesla's potential North American battery metals supply chain contenders - lithium, cobalt, nickel, and manganese. Also, who might supply Tesla with anode materials or graphite.

Tesla's existing supply chain
As I stated in my article from late last year: "Choosing EV Metal Miners And Battery Manufacturers By Connecting The Supply Chain - December 2019:

Tesla Inc. - Battery supply deals with Panasonic (and themselves (Tesla)). Last month Tesla signed a supply deal with CATL, and they also recently signed a deal with LG Chem to supply Model 3 in China. Tesla has signed lithium offtake agreements with Bacanora Lithium [LSE-AIM:BCN] [GR:2F9] (OTCPK:BCLMF), Pure Energy Minerals [TSXV:PE], Kidman Resources (bought by Wesfarmers [ASX:WES] ---> Mt Holland JV with SQM), and more recently Ganfeng Lithium[SHE:002460] [HK: 1772]. Cobalt supply comes via Panasonic/Sumitomo Metal Mining Co. (TYO:5713) (OTCPK:SMMYY) and hence from sources in the Philippines and previously Cuba (Sherritt)... Cathode supply from Tesla/Panasonic and Umicore (OTCPK:UMICF).

Note: Tesla also sources lithium from Albemarle (ALB), who source spodumene from their Greenbushes mine in Western Australia. They also source nickel from Norilsk Nickel (LSX: MNOD) (OTCPK:NILSY). Since the article above was published, Tesla has signed a cobalt deal with Glencore [HK:805] [LSE:GLEN] (OTCPK:GLCNF) and a lithium spodumene deal with Piedmont Lithium [ASX:PLL] (PLL). See the latest Tesla news immediately below.

Note: Tesla gets its anodes via Panasonic which source their anode supply from Shenzhen BTR New Energy Materials Co. Ltd. ('BTR') in China.

Lithium (spodumene) - 'Most likely source'
The fact that Tesla plans to build a lithium converter in Texas next to their terafactory and planned cathode facility means they will need large supply of lithium spodumene. The closest main sources being from USA and Quebec, Canada. This week's Piedmont Lithium deal and lithium converter announcement show this is the way Tesla plans to proceed.

Galaxy Resources [ASX:GXY] (OTCPK:GALXF) (James Bay, Quebec, Canada)

Galaxy Resources would be a strong possibility due to having 3 lithium projects (Australia, Argentina, and Canada). Their James Bay spodumene project in Quebec Canada would be a nice fit for Tesla.

Critical Elements Lithium Corp. [TSXV:CRE] [GR:F12] (OTCQX:CRECF)

The Rose Lithium-Tantalum Project is located in Canada and has lithium as well as some rare earths.

Sayona Mining [ASX:SYA] (OTC:DMNXF)

Sayona owns the Authier Lithium Project in Quebec Canada, and is also bidding for North American Lithium [NAL] assets in Canada. A low market cap junior with an outside chance.

Frontier Lithium [TSXV:FL] (OTC:HLKMF)

Frontier Lithium owns the PAK Lithium (spodumene) Project comprising 6,976 hectares and located 175 kilometers north of Red Lake in northwestern Ontario, Canada.

Nemaska Lithium restructuring/creditors

Nemaska Lithium restructuring announced in C$600 million [AUD$624m] dealseen as ‘first piece of the puzzle’ in Québec (Canada) lithium sector’s revival.

AMG Advanced Metallurgical Group NV [NA:AMG] [GR:ADG] (OTCPK:AMVMF) or Sigma Lithium Resources [TSXV:SGMA](OTCQB:SGMLF) (South America)

If Tesla was prepared to source spodumene from South America, that could mean possible supply deals from AMG or Sigma Lithium.

Sigma Lithium Resources [TSXV:SGMA](OTCQB:SGMLF) (South America)

Sigma completed raising the equity funding required to build the Grota do Cirilo Project (the “Project”). On August 12, 2020 Sigma closed a non-brokered private placement and has issued 8,285,200 common shares at a price of C$2.15 per share for gross proceeds of approximately US$13.3 million (the “Offering”). The Offering was upsized from US$10.0 million initially announced due to strong institutional investor demand. Sigma also signed a term sheet for a US$45 million senior secured project finance facility with Societe Generale, which is subject to customary closing conditions. These amounts will be complemented by US$ 27 million that remains to be disbursed under a production pre-payment agreement with Mitsui & Co. Ltd. to fully fund the Project.

Sigma also signed with Duro Felguera (“DF”) a contract for front-end engineering design, which includes an agreement for DF to offer Sigma its engineering, procurement and construction (“EPC”) services (the “FEED Contract”) with a multi-currency lump sum turnkey guaranteed maximum price in US Dollars and Brazilian Reais (the “Multicurrency GMP”), structured to capture procurement savings resulting from the 40% devaluation of the Brazilian Real in 2020. Primero Group Americas Inc. was the nominated engineering firm in the FEED Contract. Subsequently, Sigma received a letter of intent from the Spanish export credit agency CESCE to supply financing for up to 85% for the FEED Contract.

The Project will be designed to produce 220,000 tonnes per year of high purity battery grade 6% lithium concentrate in its first phase (the “First Phase of Production”), followed by an additional 220,000 tonnes per year in its second phase estimated to initiate in 2023 (the “Second Phase of Production”), doubling the planned production capacity of the Company to 440,000 tonnes per year.

Lithium (from clay)
This is an unlikely source to make lithium hydroxide in the near term as lithium has never been mined at scale from clay before. Tesla has said they intend to mine their own lithium from clay from land they recently acquired in Nevada. At least this is near their Nevada gigafactory. We will see.

There have also been reports that Tesla had discussions to acquire Cypress Development Corp. (TSXV:CYP) (OTCQB:CYDVF) which has a Nevada lithium clay project. The other talked about target is Lithium Americas'[TSX:LAC] (OTC:LAC) Thacker Pass project in Nevada. Another Nevada lithium-boron junior is ioneer Ltd [ASX:INR] [GR:4G1] (OTCPK:GSCCF). Finally, it should be noted that US company Albemarle (NYSE:ALB) is the only Nevada lithium producer, albeit their plant is currently temporarily shutdown.

I view any Tesla lithium from clay deals as a Tesla post 2025 lithium strategy.

Lithium (from brine)
Generally, lithium from brine is used to make either lithium chloride or lithium carbonate. There are many lithium brine miners such as Albemarle, SQM (SQM), Livent Corp. (LTHM)[GR:8LV], and Orocobre [ASX:ORE] [TSX:ORL] (OTCPK:OROCF) sourcing from either Chile or Argentina. The next lithium mine to commence (in 2021) is the Caucharí-Olaroz Project in Argentina owned by Lithium Americas (49%) and Ganfeng Lithium (51%).

Orocobre [ASX:ORE] [TSX:ORL] (OTCPK:OROCF)

Lithium (direct extraction, lithium chloride)
Standard Lithium [TSXV:SLL] (OTC:STLHF)

Standard Lithium recently commenced operations at first-of-its-kind direct lithium extraction plant in Arkansas, USA. The plant recently produced and shipped 20,000 liters of lithium chloride product. Could be promising.

Standard Lithium (TSXV: SLL) is an innovative technology and lithium development company. The Company’s flagship project is located in southern Arkansas, where it is engaged in the testing and proving of the commercial viability of lithium extraction from over 150,000 acres of permitted brine operations. The Company has commissioned its first of a kind industrial scale Direct Lithium Extraction Demonstration Plant at LANXESS’ South Plant facility in southern Arkansas. The Demonstration Plant utilises the Company’s proprietary LiSTR technology to selectively extract lithium from LANXESS’ tailbrine. The Demonstration Plant is being used for proof of concept and commercial feasibility studies. The scaleable, environmentally friendly process eliminates the use of evaporation ponds, reduces processing time from months to hours and greatly increases the effective recovery of lithium. The Company is also pursuing the resource development of over 30,000 acres of separate brine leases located in southwestern Arkansas and approximately 45,000 acres of mineral leases located in the Mojave Desert in San Bernardino County, California.

Lithium from tailings in boron mine California USA
Rio Tinto [ASX:RIO] (RIO) has discovered lithium in their tailings at their California boron mine. If their pilot program is successful, Rio could produce 5,000 tons per year of lithium carbonate, for a modest $50m CapEx spend. Rio's main lithium project is known as Jadar. It is a unique, world-class, lithium-borate deposit near the town of Loznica in Serbia.