The Lithium Americas Arena

Primary tickers: $LAC $AMRZF; related tickers: $CYDVF $ALB

I've been wondering where Lithium America's Cauchari-Olaroz's 20kt expansion is going to come from. Unless they waaay overbuilt their ponds (nah) they'd need a big pond footprint somewhere else in C-O... or do they?

We have the coop agreement with Arena, clearly headed toward a JV in PG basin. The main points were:
    1) combine data for a basin-wide model - declare reserves as a whole; that's how we'll extract them
    2) produce 35% LiCl - lets just NOT build a carbonate plant
    3) lets make carbonate out of it - but somewhere else... 'mkay
    4) share infrastructure - PG currently has no infrastructure, but LAC has a full carbonate pilot at C-O

Its looking to me like this 20kt expansion is strictly a plant expansion at C-O, and the feed may just come right out of PG in the form of LiCl. I even suspect they outsize the expansion and utilize some of that Arena potion to diversify their own C-O feed, maybe even use a pond or four. At least that would seem to make good sense.

LAC has stated they plan to commence this expansion immediately following construction of the current plant. That should be in a couple months. They have actually drilled expansion wells already. They also stated this would include "infrastructure additions to support long-term expansions beyond Stage 2."

LAC Press Release - May 28, 2021

So infrastructure... a carbonate plant at PG, in the 2019 Millennial DFS, had a pricetag of $70M, it required an LG line and an electric grid tie (or solar array). The gas and electric supply was fully $40M in addition to the carb plant, so the plant and its infrastructure was $110M. The total project CAPEX was estimated at $448M. Again, 2019 dollars.

One hundred and ten million dollars is alot of CAPEX to expend just to have your own carbonate plant. I'm fairly certain you could truck Arena's 35% LiCl the 100mi from PG to CO for 100 years and it would still be cheaper than that price tag. No, this plant goes on the east side of the yard at C-O. This potentially fills a different niche and would be first of its kind; a chemical plant, engineered for capacity, processing non-specific feed blends of LiCl into carbonate.

Carbonate plants ex-China are currently still built for project-specific feeds and capacities. Its like if every oil well field built its own refinery. Of course they do not, they put it in a pipe and sell it downstream. The long term model for lithium needs to be more centralized processing and efficiencies of localization and scale. This is the same model the petroleum industry has evolved into.

If you like DLE, this is the VIP ticket. DLE doesn't make carbonate, it makes LiCl. You need a $200M+ carbonate plant for that and there is just no way around it. But whose going to build one? ALB sees it and just released plans for a Chilean facility and a 100kt USA plant. SQM is kinda pigeonholed. LTHM meh maybe. LAC... not by themselves, but with Ganfeng in Argentina... ohyeahyoubetcha.

LAC has a large pilot facility in C-O that has been operating and expanded upon since 2015. The crew complex (left, in blue) alone looks like it could house 50+ personnel. Office space for half that in the trailers. Plenty of structure to house various lab and process equipment, oh and pond space. I imagine these ponds are now holding and transfer ponds, not evap as originally intended. There is a large half-hectare pond for that nearby... not to mention the 1,200 hectares a stone's throw away.

LAC C-O pilot plant complex

Consider for a moment what it would mean not only for production in Argentina, but US domestic producers. If any one of ALB, LAC, Koch, etc. built an 80kt+ solo carbonate plant stateside, Cypress Development, for example, would not need to build a carb plant; they'd cut their CAPEX by a couple hundred million and all of the sudden its all within reach. Throw in a cheap DOE loan. Even LAC might evaluate this model with Thacker Pass, though I think they're on a separate trajectory.

I feel we can pretty reasonably assume these projects are still very profitable if they are at least prefeasibility-stage and based on a low outdated sale price, even if they aren't selling final carbonate product in the end. The cost-of-entry barrier could be lowered such that a 20kt LCE @ 30% LiCl operation might cost $200-300M in CAPEX. 

Lets watch these developments closely. If we see big B's in investment stateside in the coming 1-3 years, the US actually CAN secure the lithium component of its battery materials supply. We have a shot, we haven't taken it yet.