Wednesday, December 9, 2015

Orocobre continue debottlenecking efforts at Olaroz Lithium facility

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Production at the Olaroz Lithium Facility continued to increase in November with 365 tonnes of lithium carbonate produced, an increase of 49 tonnes on October. Of this production, 53 tonnes was recovered from within the purification circuit. During the first part of the month a supply chain issue was encountered with limitations in carbon dioxide (CO2) supply. This reduced production during the period by approximately 70 tonnes that would have been produced in the month. Without this limitation, production would have been in the order of 435 tonnes. To solve this issue and mitigate future risk, arrangements have been made to add an additional carbon dioxide supplier to supply the facility.

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The Olaroz Lithium Facility will reach breakeven point on an operating cost basis (net of taxes paid or reimbursed), when production reaches approximately 650 tonnes per month, subject to variability in final average sales price. This production rate (~21-22tpd) is still expected to be achieved during December 2015.

The thesis of the speculation is that lithium continues to increase as the world moves off of fossil fuels to a renewable energy based economy. The demand for lithium for batteries is increasing and the supply is not. Orocobre's facility is the first greenfield plant in years. I am betting that they continue to improve production until they reach name plate rates. This would be extremely lucrative at current lithium prices.

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