Lithium expert Keith Evans’ take on lithium

Geologist and renowned lithium expert Keith Evans started his lithium adventure in the early 1970s when he took a job with Selection Trust, which was the dominant producer of lithium ore for the glass and ceramics industry at the time. After studying pegmatite deposits in modern day Zimbabwe, Evans went on to join Lithium Corp. of America, the leading lithium chemical producer and later moved to Amax Exploration.

While at Amax, he was part of the team that negotiated with the Chilean government for the rights to develop a part of the Salar de Atacama that had not been leased to the Foote Mineral company (now Chemetall).

During that time, Evans evaluated and became an expert on the Salar de Atacama even though Amax chose to walk away from the project. Amax’s move was a costly mistake as it allowed Sociedad Quimica y Minera (SQM) to acquire it. SQM is now the world’s largest lithium chemicals producer.

Since then, Evans has continued as a consultant and as a leading lithium expert. His expertise was especially sought out after William Tahil, a research director at Meridian International Research, tabled a report arguing that auto manufacturers would be foolish to pursue lithium batteries because there weren’t enough lithium resources in the world to meet demand.

Evans took a strong stance against Tahil and in his 2010 report on global reserves and resources, he put global reserves and resources at 34.52 million tonnes of lithium — more than enough to satisfy a massive uptick in demand.

It must be noted, however, that because even the most reputable operators on salars don’t generally have compliant resources, Evan’s estimate is not NI-43-101 compliant. His numbers are instead a collection of the verifiable data that exists on all of the world’s known deposits.

The Northern Miner recently interviewed Evans on global lithium projects and lithium-producing concerns.

The Northern Miner: It may appear shocking to some of our readers that large-scale lithium producers do not have resource estimates for their deposits. Can you explain how reserves and resources are used by brine producers?

Keith Evans: Resource definition is certainly somewhat looser when dealing with brines. I was involved in a national research committee back in the 1970s, where we did an inventory of global resources that would be considered viable if demand picked up.

I’m pretty confident that (the report) represents an inventory of potentially viable deposits. Recoveries do vary with each style of deposit as pegmatites will generally have higher lithium carbonate recoveries (roughly 70%) than brines which will have roughly 50% recoveries.

It is also tough to use a tight description of reserves, because reserves have to be economic. But can pegmatites really be classified as reserves given that the economics are much less attractive?

Then there’s the fact that there’s no reserve compliant stage for brine producers. It’s just too expensive for companies to get there. The capital requirement to convert resources into reserves is too high when they already know that they’ll never get to the end of mining a deposit.

T.N.M.: There is some confusion around drilling a salar. Is the drilling process for brine deposits similar to pegmatites and can they be considered as reliable as their hard rock counterparts?

Evans: It depends on the salar. If a salar is predominantly filled with solid salts core recovery is excellent. The Atacama Salar in Chile is a good example of this with 96% core recoveries and the brine varies very little with depth.

At the Uyuni Salar in Bolivia, there are clay horizons over total depths of 200 metres. Recoveries there are about 75%.

Some other salars, however, are filled with sediments and core recovery is more difficult, therefore there is a heavier reliance on pumping tests, which are not as reliable.

All the other major salars are sediment salars except for Hombre Muerto in Argentina.

T.N.M.:There has been a lot of talk on the potential of the Uyuni Salar in Bolivia as it boasts one of the largest lithium zones in the world, but there are also concerns about its composition, and that it might not be economical to mine there. What are your thoughts on this?

Evans: There are a slew of things wrong with Uyuni. Mining it, is not unsupportable but there are issues with grade and with the magnesium to lithium ratio.

Uyuni has seven different salt horizons, and most of the information available is in respect of the top horizon, which is quite thin.

So at this point, we just don’t know very much about what’s at depth, except that the porosity is the same and grade only drops slightly. But it is still early days, as they’ve just started drilling.

The other issue is that the whole thing floods a half a metre every year, which makes the building of solar evaporation ponds difficult.

T.N.M.:Can you describe the evaporation process in greater detail?

Evans: In the first stage, raw brine is brought onto the solar ponds. The water is evaporated and sodium chloride is precipitated out.

Next it is moved onto a second set of ponds where a mixture of sodium chloride and potassium chloride is precipitated. Miners harvest that and separate the salt and potash by flotation.

The remaining brine moves again and cooks up progressively until it reaches lithium concentration of about 6% lithium in the form of lithium chloride. This takes about 18 months depending upon the evaporation rate.

I should mention that in the prior period, when precipitating salts in the first two sets of ponds, you have to get to a thickness that you can run equipment on. So you need to build up about 8 inches of salt base and that can take about six months.

T.N.M.: There is also considerable talk about the differences in production costs between brines and pegmatites, with brines being considered to have a huge advantage. Is this reality?

Evans: I was surprised by Canada Lithium’s (CLQ-T, CLQMF-O) operation costs (which were pegged at US$2,850 per tonne in its prefeasibility study). The general thinking was that it might be twice that amount.

SQM’s production costs are generally estimated to be $2,000 per tonne for lithium carbonate. Chemetall is possibly slightly higher than that and FMC (FMC-N) never publishes production costs.

T.N.M.: Some industry experts have opined that expansion of production at SQM is unrealistic because they would drain the aquifer too quickly and not allow it to be replenished with lithium. How cogent is such an argument?

Evans: That’s not true. SQM is throwing back into the Atacama Salar 400,000 tonnes of lithium carbonate per year.

It’s not like the Chemetall project at the southern end of the salar which was driven by lithium production.

SQM is driven by potash. So the amount of brine it is pumping can produce 800,000 tonnes of potash and the brine contains 400,000 tonnes of lithium. But plant capacity is only for 40,000 tonnes of lithium, so the rest has to be returned to the aquifer.

To expand production they just need to add extra ponds. The brine has already had everything else stripped out.

The whole scenario represents a huge threat to everyone. The environmentalist couldn’t even get upset about pumping more brine because they’d be pumping out the same amount and just extracting more lithium from it. It represents a serious ceiling on price.

People are only catching on to this fact but it’s real. It’s the 800-lb. gorilla in the room.

T.N.M.: Let’s talk about other lithium deposits around the world and what their potential for production might be. There has been a lot of talk about a massive lithium zone in Afghanistan and there are also known brine deposits in Tibet. Can you discuss those situations and also point to other parts of the world with good lithium potential?

Evans: The
main issues in Tibet are high magnesium content and just lousy overall chemistry. They’re producing 5,000 tonnes a year now and little of it meets industry specifications.

There is something in Afghanistan but its very early stage. The Russians obtained one sample many years ago. They did a sampling program and took one sample from a deposit. They found lots of pegmatite and did one analysis on brines. It’s currently being re-sampled and when these results are received one may be able to form an opinion as to whether the brine has any value or not.

As for other good exploration targets, Zimbabwe and Mozambique would be on my list and there are two old operations in North Carolina — a state with significant historic production — and only one company working there. So that could be interesting.