This Week in Critical Minerals – #18

Lithium, copper, nickel, and rare earths news

Lithium

• Lilac raises $145M, moving forward with Utah project. California-based direct lithium extraction (DLE) company Lilac Solutions announced last week that they have raised a Series C. The company is developing several pilots to test (then expand) its DLE system, including at the Great Salt Lake in Utah and the Kachi project in Argentina, a partnership with Lake Resources. Lilac’s DLE tech is able to extract 40 of the 60 ppm of lithium in the Great Salt Lake, and the company is planning a pilot test later this year, followed by a phase one production of 3000 tonnes per year of lithium carbonate, eventually scaling to 20,000 tonnes per year. Another DLE company, Compass Minerals, abandoned a project at the Great Salt Lake last November following the passing of Utah HB 513, which would drastically reduce water use from the lake and require companies to pay a severance tax to a lake fund. HB 453 was just passed by the Utah House last week and will limit evaporation volumes of water from the lake by resource companies. These limits could make extracting lithium in Utah difficult and uneconomic, though Lilac is pressing forward in the hopes that the superiority and environmental friendliness of their technology overcomes regulatory barriers.

Copper

• First Quantum adds options to explore in Zambia. First Quantum Minerals, reeling from the closure of its flagship Cobre Panama mine last year, has exercised its options in a deal with African Pioneer. The agreement will have First Quantum spend $500,000 on 4 projects in Zambia, as well as deliver a technical report on each project to earn in 51% of subsidiary African Pioneer Zambia. First Quantum currently operates the Sentinel and Kansanshi mines in Zambia and is developing the Fishtie mine, with first production expected in 2026. Low on cash from the Panamanian mine shutdown and loan repayments, the market has speculated that FQM could sell the entirety or a stake in one of its Zambian assets, perhaps to Jiangxi Copper or Barrick. In a media interview last week, Barrick CEO Mark Bristow said that they are not interested in buying part of an asset and are taking their time to evaluate all options. With the main growth driver for FQM out of the picture, the company is ramping up exploration and development projects in a region where they currently have operations.

• Gécamines offers to buy some ERG assets. Gécamines is the state-owned mining company in the DRC, and recently they have been focused on taking a more active role in mining operations and ownership in the country. Eurasian Resources Group, a Luxembourg-based Kazakh mining group, is a major producer of copper (among other metals) with operations across the globe. Last week Gécamines CEO Robert Lukama told Reuters that the company has a proposal and the funding to back it to purchase three of ERG’s copper and cobalt assets. The state-run company is particularly interested in unlocking value from assets currently not producing, so we may see ERG and Gécamines partner on the development of assets in the future. A few months ago Gécamines announced a push for offtake from projects they are involved in proportional to their ownership to unlock further value from the marketing and sale of their resources.

• $2B Antamina expansion approved. The seventh-largest copper mine in the world is about to get even bigger, as Peru’s environmental regulatory agency approved the modified environmental impact study for the mine. The expansion will increase the mine area by 25% and deepen the pit by 150 meters. Most importantly, this will extend the mine life from 2028 to 2036. Antamina produces ~450,000 tonnes per year of copper at a grade of ~1% and is owned by Teck (22.5%), Glencore (33.75%), BHP (33.75%), and Mitsubishi Corporation (10%)

  

  Antamina

Nickel

• BHP's nickel business is struggling. Last week BHP realized a $2.5B impairment for Nickel West, its massive nickel complex consisting of the Mt Keith, Cliff, and Leinster mines, concentrators at Mt Keith, Leinster, and Kambalda, a smelter in Kalgoorlie, and a refinery at Kwinana. They also stated that the low prices could slow the development of the West Musgrave project. In response to BHP and others’ writedowns, the Western Australian government announced a 50% royalty rebate for 18 months (at prices below $20,000/mt, currently $16,804/mt), repayable over 24 months. However, nickel royalties in Western Australia are just 2.5%, so a rebate of 1.25% will do almost nothing to move the needle on these struggling projects. Nickel was also finally placed on the Australian list of critical minerals, allowing nickel projects eligibility for low-interest loans and grants from the $2.6 billion Critical Minerals Facility.

• And so is Glencore’s. Glencore is looking to sell its 49% stake in the Koniambo nickel mine and processing plant in New Caledonia. Koniambo is a joint venture with Société Minière du Sud Pacifique that began production in 2014. The project had been losing money well before the recent plunge in nickel prices, and despite commitments of $216M per year by the French government to support the operation, profitability does not look likely any time soon, given the current price environment. Trafigura and Eramet also own nickel processing facilities on the island, so this may not be the last withdrawal of majors from New Caledonian nickel.

  Sticking with Glencore, Horizonte Minerals, backed by Glencore (17.74% shareholder) saw the budget jump 87% from $539M to $1B for its planned restart of the Araguaia nickel mine. Nearly half a billion dollars has already been spent on the project, and CEO Karin Nasr said the project’s construction is “still subject to the successful completion of a full financing solution, which the company will seek to develop in the coming weeks, but with no guarantee of success.”

Rare earths

• American Rare Earths expands resource by 64%. ASX-listed American Rare Earths is exploring the Halleck Creek deposit in Wyoming, and they recently updated their measured and indicated resource to 1.417B tonnes of total rare earth oxides (TREO) at 3,295 ppm (0.3295%) with a 1000 ppm cutoff. With ~60 holes drilled and the latest campaign being primarily infill drilling, only about 25% of the property has been drilled today, so a potentially much larger resource looms in the near future. Though lower grade than existing mines like Mountain Pass and Mount Weld, or even other exploration projects like Defense Metals’s Wicheeda property, the company is confident they have a flowsheet to profitably process this massive critical resource in the United States.