Bloomberg Línea — Canadian mining company Sigma Lithium (SGML), one of the largest global players in the lithium industry, is set to make its first shipment of lithium concentrate
from its Vale do Jequitinhonha operations in Brazil0s Minas Gerais state.
The shipment, which also included tailings, the so-called “ultrafine”, marked an important step for the company as it consolidates itself in the growing and increasingly valuable global lithium market.
The company is evaluating a new phase of expansion in the face of a significant increase in demand for the production of batteries for electric vehicles, Sigma’s CEO, Ana Cabral-Gardner, told Bloomberg Línea, and with the ongoing expansion, the company’s capacity - currently the sixth largest in the world - will be tripled.
“The plan is to make another extension of the plant. We are studying the feasibility of a fourth production line. We would then be the fourth-largest company in the world. Our vision is to be among global top five permanently,” she said in an interview.
Half of the shipment, 30,000 tons, is lithium concentrate, and the rest is ultrafine tailings from production.
“Not only the main concentrate is coming out perfect, but also the ultrafine. It is another proof that our technological innovation has worked,” she said.
Cabral-Gardner said the initial plan was to supply the production tailings to the ceramic industry in Brazil. As Sigma does not use harmful chemicals in the process, the separation of by-products is easier, she explained.
As the price of lithium escalated late last year however, the company began receiving requests from customers of lithium refiners and concentrators to market the tailings. “We will get between $500 and $600 per ton in China, which covers all operating costs. As we are getting a premium for the concentrate and tailings, it is profit,” she said.
Production began in April. In May, the company announced a contract to supply up to 300,000 tons per year of ultrafine lithium tailings to China’s Yahua refinery for up to three years.
Sigma’s Grota do Cirilo project in Brazil has no tailings dam: the stacking system is dry, which experts say is considerably more expensive than the conventional mining method - and more sustainable. The production process is done with 100% recycled energy and water. In total, the company invested 3 billion reais ($624 million) in the project. “We entered this market to eradicate tailings dams,” Gardner said.
The first phase of the project provides for annual production of 270,000 tons of lithium concentrate. In phases two and three, starting in 2024, volumes are expected to increase to 766,000 tons annually.
Sigma also has a zero-tailings project at the mine, and the plan provides that, in addition to the sale of ultrafine, the company will donate 700,000 tons of coarse gravel as a by-product to pave rural roads in the region, in partnership with municipalities.
“We are not saying that the production process is zero waste, but that our strategy aims for zero waste,” she said.
Water divider
According to Cabral-Gardner, the collapse of the Samarco dam in Mariana in Minas Gerais in 2015, which left 19 dead and environmental damage in the region, was the “genesis” of Sigma’s rebirth.
With the disaster, she said, the mining sector as a whole began to face difficulties in financing projects.
In this context, Sigma - which at that point was in a pre-operational phase - ran out of resources to move forward.
“We decided to make the investment in Sigma because of Mariana,” said Gardner, who is a partner at A10 Investimentos, a private equity fund that owns 46% of the mining company.
She said that, soon after the disaster, Sigma was hawking a round of venture capital fundraising to develop lithium reserves. “But [market] interest was zero, the company couldn’t raise a dollar,” she said, adding that, in order to grant the investment, the fund set a letter of conditions that was considered “robust”.
“We made it clear that we would only work with zero tailings, which is difficult for traditional mining entrepreneurs. We saw alignment of purpose from Sigma’s founders and took control of the operation.”
The success of Sigma’s operation has even sparked interest from Tesla (TSLA), the leading global electric vehicle maker in terms of sales. Elon Musk’s company is reportedly evaluating a takeover bid for the mining company, people with knowledge of the matter told Bloomberg News.
Gardner said she can’t comment on market rumors, but that it demonstrates the success of the project.
“Producing sustainable lithium was a Herculean effort. We were not lucky and we never gave up.”
The executive pointed out that the race for lithium production is currently between giants.
“These are companies that have large reserves and are investing to get industrial processing plants up and running quickly,” she said, stressing that lithium is not rare and, on the contrary, is abundant in countries such as Australia, Chile and Argentina.
In Brazil, AMG already produces lithium concentrate in Minas Gerais, while Atlas Lithium is exploring for the mineral in the region. Studies by the Brazilian Geological Service (CPRM) indicate the existence of 45 deposits in the so-called “Lithium Valley”, in the Jequitinhonha region, with economic potential.
“What differentiates them are the processing techniques. The use of the green method puts us ahead, especially with vehicle producers in the United States and Europe,“ Cabral-Gardner said.
“Another differentiator is the country’s business environment, respect for contracts, regulatory red tape. Environmental rules have to be strict, but you need predictability,” she added.
--The headline and first paragraph were corrected on July 18 to reflect the imminence of the shipments.