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Lithium hydroxide production improves profitability of Keliber’s lithium project
The economic calculations of Keliber Oy’s Definitive Feasibility Study for the lithium hydroxide production show a significant improvement in profitability, according to the company.
Keliber Oy’s updated Definitive Feasibility Study for the lithium hydroxide production confirms Lithium Project’s strong financial and technical feasibility. All the key financial figures have improved significantly compared to the Definitive Feasibility Study based on lithium carbonate production (“DFS”) published in summer 2018. Keliber’s Lithium Project shows a pre-tax NPV (8 % discount rate) of MEUR 510, a pre-tax IRR of 28 % and payback period of 3.7 years. The pre-tax NPV is now 73 % higher, pre-tax IRR 17 % higher and pre-tax payback period 49 % shorter than in the lithium carbonate DFS published in summer 2018.
“The strong economics of lithium hydroxide production show that our environmentally sustainable production process is economically viable. We believe that the strong economics will have a positive impact on the financing of our construction phase, as well as the completion of customer negotiations. Our project is important on a European scale and locally. We will be an important and essential part of future European lithium value chain supporting Europe’s need for domestic supply of critical raw materials. Our planned investment is one of the biggest investments in Central Ostrobothnia for decades. Our future production will directly employ about 150 people, with the multiplier effect on employment being even greater,” says Mr. Pertti Lamberg, CEO of Keliber Oy.
The key financial figures and data for the updated DFS are presented in this release. The company will publish an updated Executive Summary by the end of the first quarter (Q1 2019).
Keliber published the Definitive Feasibility Study for the Lithium Project in summer 2018 based on the production of battery-grade lithium carbonate. However, the Company estimated that lithium demand, especially from the cathode chemical, lithium-ion battery and electric vehicle manufactures locating in Europe, will move quickly to lithium hydroxide and the Company commenced a test program related to production of lithium hydroxide together with Outotec Finland in autumn 2018.
The Company completed the pilot-tests included in the test program by the end of 2018. During the pilot-tests, battery-grade lithium hydroxide was produced successfully. All the technical and economic studies related to the pilot program have now been completed. The changes made to the production process only concern the downstream part of the chemical plant in Kokkola and are small. The annual design capacity for the production of lithium hydroxide will be 12 500 tonnes, about 1 500 tpa higher than the previous planned production of lithium carbonate.
The updated DFS of Keliber’s Lithium Project shows a pre-tax NPV (8% discount rate) of MEUR 510 (73 % increase), a pre-tax IRR of 28 % (17 % increase) and payback period of 3.7 years (49 % shorter). The Project has potential to generate total life of operations revenues of MEUR 3 060 (34 % increase) and operating cash flow of MEUR 1 945 (60 % increase).
The total project development capital cost (“CAPEX”) is MEUR 313 (23 % increase). The direct investment cost estimate for the mines, concentrator, tailings storage facilities, chemical plant and closure costs is total of MEUR 236.
The total unit operating cost for lithium hydroxide tonne based on production from Keliber ore averages EUR 4 125 which makes Keliber one of the low-cost producers of lithium hydroxide. As the Project life is extended 7 years by purchasing concentrates from third parties the operating cost (“OPEX”) will be higher. The estimated OPEX per tonne of lithium hydroxide, including the purchased concentrate, during the full life of operations is EUR 4 541.
The market demand for lithium products is strong, which is reflected in the selling price for lithium hydroxide. In the updated DFS, the sales price estimates for the battery grade lithium hydroxide were delivered by Roskill Consulting Group Ltd (“Roskill”). Roskill forecasts that annual price (in real terms) for battery grade lithium hydroxide range between US$ 12 470/t and US$ 15 742/t from 2019 to 2032. The average price being US$ 14 142.
Highlights of the updated DFS outcomes are provided below. All figures are quoted in euros (EUR, €) and represent for expected life of operations (20 years), unless otherwise specified. The exchange rate used in the calculations is 1.00 € = 1.18 US$.