CLEAN TECH:

Company tries to gain cash, political backing for Nev. lithium project

Developers of a Nevada lithium project are making the rounds in Washington, D.C., this week trying to rally political support for a mine that they say could provide the United States with a key mineral for making batteries for electric cars and other "clean energy" technologies.

Jay Chmelauskas, the president of Western Lithium Corp., is trying to convince lawmakers, investors and tech manufacturers to embrace his company's Kings Valley Project as a viable U.S. source of lithium.

"We are at the point now where we can say, this is what our project can offer in Nevada, and we want you to like our project," he said in an interview this week. "And we want you to like Nevada and view Nevada as a stable place where you can get your next 20 years of production."

The company, which has an operations office in Reno, Nev., and a headquarters in Vancouver, British Columbia, is in the process of raising $250 million for the project.

In Washington for the Electronic Drive Transportation Association conference -- comprising car companies, battery makers and others -- Chmelauskas and his entourage made the rounds on Capitol Hill, meeting the Nevada delegation's staffers to win support for what may be a long, hard effort to get permits for the lithium project.

"It's a simple mining process, we don't even have to drill and blast," said Dennis Bryan, the company's senior vice president of development.

But there is a complication: Western Lithium hopes to extract the element from clay as opposed to brine deposits or spodumene rock, using a process that has never been used on a commercial scale (Land Letter, June 17, 2010).

"We are pretty much the pioneers," Bryan said. "It's never been tried on a commercial scale before but it was shown to work. It does work."

Western Lithium plans to draw the resource through a process that Chmelauskas says involves roasting the clay at 1,000 degrees to liberate the lithium and make it water leachable. The company then makes its own brine and from there extracts lithium carbonate.

"The trouble is that the capital cost is considered to be on the high side," R. Keith Evans, a geologist and lithium expert, said in an interview.

The company insists Kings Valley will be profitable, especially since it plans to sell a byproduct of the project, potassium sulfate, a key ingredient in fertilizers.

"We have a project that can compete with offshore product, particularly product coming from South America. We also compete with product coming out of China," Chmelauskas said. He sees Chile, Argentina and China as his strongest rivals.

So far, Western Lithium is getting positive reviews from analysts.

"I like it," Evans said. "Quite honestly, I have always been quite a fan of the project."

Said Brian Jaskula, a lithium analyst with the U.S. Geological Survey: "It's taking the shovels and digging this stuff up. As long as the price for lithium stays where it is or goes higher, it seems they have an economic chance of sustainability."

U.S. lithium projects

Jaskula estimates that between 2009 and 2010, about 100 exploration companies emerged and staked claims for lithium worldwide, with some in the United States. They are banking on the demand for lithium increasing dramatically as clean energy technologies take off.

Right now, the United States has only one operating lithium mine, a brine deposit owned by Chemetall, a unit of Rockwood Holdings Inc. FMC Corp. used to mine for lithium in North Carolina but decided that deposits in Argentina were more cost-effective and environmentally friendly.

As part of the resurgence, Simbol Mining is hoping to extract lithium from geothermal wells in the area of California's Salton Sea.

"It's either going to be a great success or a great failure," Evans said. "I'm not quite sure."

Another company, American Lithium Minerals LLC, is working to develop the Borate Hills Project in western Nevada, also for lithium extraction.

But Jaskula and Evans say Western Lithium is running ahead.

"It could make the United States totally self-sufficient in lithium," Evans said.

But analysts caution that many projects won't make it because there is currently more than enough supply of lithium.

"In my opinion, there is going to be a significant oversupply situation in the short term," Evans said. "If all these projects come, the over capacity is going to be horrendous."

Western Lithium, for one, has scaled back its plans, hoping to extract 15,000 tons at first and then expand later.

But Chmelauskas said the trend is clearly toward more hybrid and electric cars. There are three companies on the planet that process the type of lithium needed for advanced batteries -- FMC, Chemetall and Chile's SQM.

Western Lithium is looking for users for its raw material and hoping its domestic reserves fuel the growth of the United States' advanced lithium and battery industry (E&E Daily, March 8). They hope to begin production by 2014.

"By creating the lithium molecules in the U.S., we expect there will be chemical producers that will then produce proprietary lithium powder technologies, which will then go in to proprietary cathode technologies, which will then go into proprietary battery technologies," Chmelauskas said. "This is what we believe you can create with a domestic supply source."