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MINING | Orocobre

OROC

speaks to the lithium triangle’


Australian Business Network

OBRE

’s first new brine producer in 20 years


MINING | Orocobre

Orocobre is the newest brinebased global lithium carbonate producer in over twenty years and is positioning itself to become a top global supplier of battery grade lithium ahead of the forthcoming EV boom. However, the company is not operating exclusively in the lithium space and is building a substantial industrial chemicals company with lithium, potash and boron assets based in Argentina – home to a major portion of the fabled ‘lithium triangle’. Orocobre operates under three separate entities in Argentina, with its flagship operation Salar de Olaroz set to receive a major boost to its production capacity after Japanese firm Toyota Tsusho purchased a 15% stake in the business and agreed to invest in expanding the facility. AusBN’s editor interviews Orocobre’s managing director and CEO Richard P. Seville.

Our flagship operation, Salar de Olaroz, in the Jujuy province of Northern Argentina has been developed over this period and is the newest brine-based lithium carbonate supplier to emerge in over 20 years. It would not have been possible to develop this worldclass resource without the strength of our strategic partnerships. The Olaroz Lithium Facility began as a joint venture project built in partnership with Japanese trading giant Toyota Tsusho Corporation (TTC) and the mining investment company owned by the provincial government of Jujuy, Jujuy Energia y Mineria Sociedad del Estado (JEMSE). The Olaroz Lithium Project Joint Venture is operated through Orocobre’s Argentine subsidiary, Sales de Jujuy S.A. (SDJ), the ownership of which is held in a Singaporean company, Sales de Jujuy Pte Ltd, that is the joint venture company with partner TTC and JEMSE. The effective Olaroz project equity interest will be Orocobre 66.5%, TTC 25.0% and JEMSE 8.5%. JAW: Orocobre is currently engaged with several developments in all three of its

Jacob Ambrose Willson: Explain Orocobre’s

operations – How does the company ensure

company strategy with regards to entering

progress is consistent across all three

into partnerships to advance lithium, boron

partnerships?

and potash assets in Argentina? RS: Orocobre has been operating for Richard P. Seville: Orocobre has been

more than a decade. We are not a new

operating in Argentina for over 10 years.

company and as such, we have carefully


Australian Business Network

WE HAVE CAREFULLY AND METHODICALLY DEVELOPED A CORPORATE STRATEGY AND COMMENSURATE STRUCTURE OVER THIS TIME THAT ENABLES US TO DEVELOP THE WORLDCLASS LITHIUM RESOURCES AT OLAROZ AND BORON CHEMICALS AT BORAX ARGENTINA” RICHARD P. SEVILLE, MANAGING DIRECTOR AND CEO


MINING | Orocobre

Richard P. Seville, CEO


Australian Business Network

and methodically developed a corporate

structure is critical to ensure that our

strategy and commensurate structure over

resources maintain their focus on creating

this time that enables us to develop the

value from these projects.

world-class lithium resources at Olaroz and boron chemicals at Borax Argentina. These

JAW: How important is it for Orocobre to

are established operations that are both in

expand its Olaroz project so that it endures

production and expanding.

the mass demand growth expected from the lithium-ion battery market over the coming

In addition, our strategy and structure enable

decades?

us to also maintain an ‘exploration’ profile through our 35% interest in Advantage

RS: In January this year, we announced a

Lithium.

significant strategic initiative to accelerate our expansion plans at Olaroz through a larger

In November 2016 Orocobre entered into

Phase 2 expansion of the lithium facility. This

a joint venture agreement with Advantage

strategic initiative involved a 15% placement

Lithium on its Cauchari Project and a number

to TTC, priced at a 17% premium to 30-day

of exploration projects.

VWAP.

Having a well-established strategy and


MINING | Orocobre

This initiative fully funds Orocobre’s

Fukushima, Japan with expected operating

expansion plans to bring Olaroz to a total

costs of US$1,500/tonne. This will further

annual production capacity of 42,500 tonnes

develop our ability to deliver high purity

lithium carbonate production.

battery grade product to the growing global lithium market.

But just as importantly, it continues to strengthen our longstanding strategic and

JAW: The Olaroz facility has also been held

joint venture partnership with TTC.

up as one of the lowest cost producers of lithium carbonate in the world – What

Our partnership with TTC does not preclude

other factors, besides being a brine deposit,

Orocobre from selling our product to a wide

contribute to the low production costs?

range of customers in the global industrial, technical and battery markets, which already

RS: Orocobre’s cost of lithium chemical

number more than 70.

production is currently approximately $4,000 per tonne and we expect that to

Additionally, Orocobre and TTC are finalising

reduce further to $3,000 per tonne once our

plans to jointly develop a 10,000 tonnes per

expansion is complete.

annum lithium hydroxide treatment plant in


Australian Business Network

Hard rock sourced lithium spodumene

with dry, windy conditions enhances our

concentrate (not chemicals) is reportedly

brine-evaporation process. Olaroz is also

$800-900 per tonne of concentrate. The

serviced by gas pipelines, high voltage

concentrate must then be converted to

electricity, and paved highways.

lithium chemicals at a cost of $2,000 - $3,000 per tonne (which currently is almost all done

Three major seaports, Buenos Aires in

in China) before it is ready for sale.

Argentina and Antofagasta and Iquique in Chile are serviced by international carriers

It takes 8.5 tonnes of concentrate to produce

and are easily accessible by road and/or

just 1 tonne of lithium chemicals. Taking

rail, all this coupled with onsite treatment

the mid points, hard rock sourced lithium

facilities (that can produce up to 100%

costs around $10,000 per tonne {($850 *8.5)

battery grade lithium carbonate) help keep

+$2,500 + freight = approx. $10,000/tonne}.

our overall cost of production down.

Orocobre’s Olaroz Lithium Facility is

JAW: Orocobre posted half-year revenue of

supported by favourable conditions in terms

$63.1 million in Feb 2018 – How pleasing is

of both the operating environment and local

this financial performance and what is your

infrastructure. Very limited rainfall combined

grand vision for the company? Can Orocobre


MINING | Orocobre

“OROCOBRE IS OBSERVING A VE LITHIUM CHEMICALS MARKET DRI ELECTRIFICATION OF TRANSPORT AND GRID-BASED S break into the land of the giants with regards

tight supply and attractive pricing dynamics.

to global lithium producers (i.e. the Latin American oligopoly)?

Orocobre is observing a very strong and sustainable lithium chemicals market driven

RS: Our financial performance for the half

by ongoing demand for electrification of

year to 31 December 2017 was solid and we

transport and implementation of home and

continue to consolidate our position as a

grid-based storage systems.

mainstream, profitable, low cost producer of lithium carbonate.

Orocobre and our strategic partner TTC are investing significantly in the world-class

The global market fundamentals for lithium

Olaroz Lithium Facility as it is a low cost, high

remain intact with strong demand growth,

margin operation with a very large resource


Australian Business Network

ERY STRONG AND SUSTAINABLE IVEN BY ONGOING DEMAND FOR T AND IMPLEMENTATION OF HOME STORAGE SYSTEMS� capable of sustaining multiple stages of

On the demand side, the end game is

expansion.

becoming clearer – for example:

We believe, and our research shows that

The UK and France have banned the sale of

the long term growth opportunities for

internal combustion engine vehicles by 2040,

lithium producers remain intact and in fact,

China is heading in the same direction, and

are continuing to strengthen. There remain

India plans to only sell EVs by 2030

significant headwinds for new production and supply additions we believe remain over-

Austria, China, Denmark, Germany, Ireland,

stated.

Japan, the Netherlands, Portugal, Korea and Spain have all set official targets for electric car sales.


MINING | Orocobre


Australian Business Network

For example, 750,000 EVs were sold last year,

past 20 years. Just as importantly, we are

OPEC suggests that by 2040 the global vehicle

one of the lowest cost producers of lithium

fleet will include 266 million EVs, Bloomberg

chemicals in the world with a lithium

New Energy Finance suggests by 2040 there

production cost of $4,336 per tonne for

could be 530 million, or one third of all cars

the half year to Dec 31, 2017 and a gross

will be EVs

operating margin of 62%.

So, in terms of demand, the propensity to

We believe that maintaining a low cost

buy electric vehicles is rising, meaning lithium

production base will be a key competitive

prices will remain higher for longer.

advantage for any lithium producers going forward.

Orocobre is already competing in a global market against both established and emerging players. We are the first brinebased lithium producer to emerge in the

ASX:ORE

a jcr


Published by Anderson Murray Media Ltd

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