Friday, November 26, 2021

ioneer Strikes Offtake Agreement with Cathode Manufacturer for Lithium Ion Batteries in US Electric Vehicles

Deal seen as significant step forward for development of US domestic supply of lithium

ioneer recently announced it has signed a three-year offtake agreement with EcoPro, a Korean-based cathode manufacturer, that will in turn be used in lithium ion batteries for Ford and Volkswagen cars in the US electric vehicle (EV) market. The offtake agreement marks a major milestone not only for ioneer’s proposed Rhyolite Ridge Lithium-Boron Project in Nevada’s Esmeralda County, but also for the development of a domestic lithium supply in the US.

“Cathodes are a key component that goes into lithium ion battery cells,” Bernard Rowe, president and managing director of ioneer, said. “The agreement itself is to supply a minimum of 2000 but up to 7000 tonnes per annum of lithium carbonate, which will be converted by EcoPro into lithium hydroxide and then used in those cathodes. It’s a wide-ranging tonnage, but we think it will be closer to 7000 tonnes, that’s about 1/3 of the lithium carbonate that will be initially produced at Rhyolite Ridge per annum.”

While EcoPro is a Korean-based company, their cathode supply goes to battery manufacturers Samsung and SK Innovation, the latter of which produces lithium ion batteries used in Ford and Volkswagen electric vehicles in the US. 

“It was important for ioneer that we do offtake agreements with a direct linkage back into the US car market,” Rowe said. “The reality is that as of today, there are no cathodes of any significant size or quantity made in the United States for the electric vehicle industry. It’s really dominated by Korea, Japan and China, so yes, lithium carbonate is being sold to a Korean company, but it’s directly involved in production and manufacturing of batteries that ultimately go into electric cars in the US and that will be a trend that continues into the future.”

Rowe is confident that as the EV market in the US develops, so will its domestic lithium ion battery supply chain.

“If we were producing lithium carbonate today, there would be no buyer for it in the United States, so it has to go to Japan, Korea or China,” Rowe said. “But that’s going to change as I think you’re going to see cathodes and cells manufactured in the United States and that’ll be done as close as possible in order to feed into EV manufacturing in the US.”

ioneer has produced sample products from Rhyolite Ridge ore – Litium Hydroxide, Lithium Carbonate, and Boric Acid – Photo: ioneer

As evidence of this development, Rowe points to SK Innovation’s $2.6 billion investment into building two lithium ion battery factories in Commerce, Georgia. Furthermore, SK Innovation recently signed a Memorandum of Understanding with Ford Motor Company to facilitate the manufacturing of battery cells and arrays in the US.

The offtake agreement, although a legally binding contract, does come with what’s called a ‘condition precedent.’ 

“What that means is, in order for this contract to be complete, the mine and the processing plant has to be built,” Rowe said. “So it’s subject to or condition precedent on the board of directors making a Final Investment Decision (FID). We’re committed to the project’s permitting, the financing is in place and when ioneer commits to build the project that then triggers this legally binding contract.”

As it stands today, ioneer has already received one of the three key permits that are vital to moving forward with construction of the Project. Last month, the company was issued its Class II Air Quality Permit from the State of Nevada. Still pending are the State of Nevada’s Water Quality Permit and a federal permit for its Plan of Operations. 

As part of the federal permitting process, ioneer’s Plan of Operations will go through an evaluation under the National Environmental Policy Act (NEPA), complete with an Environmental Impact Statement (EIS) and public consultation. 

“In May of 2020, we submitted all of our documents to the State BLM [Bureau of Land Management] in Nevada and we’ve completed all the baseline studies over a two and a half year period,” Rowe said. “In August of last year, the BLM deemed our Plan of Operations to be complete and compliant and they appointed Stantec to do the EIS. Now we’re waiting on the new Biden administration to publish the Notice of Intent, which marks the commencement of the NEPA process. So we’re ready to start that NEPA process and we’re just waiting for that to be published in the Federal Register as a Notice of Intent.”

Permitting for the Project, however, may be complicated by the US Fish and Wildlife’s recent 12-month finding to consider proposing a listing of the Tiehm’s buckwheat under the Endangered Species Act. A final determination on whether to list the Tiehm’s buckwheat, regarded as a highly sensitive plant and native only to Nevada, is expected in September of this year. 

“[Listing of the Tiehm’s buckwheat] doesn’t make a big difference to us,” Rowe said. “From day one of working on this Project, we have assumed that this plant would be listed whether it ultimately got listed or not. So everything we’ve done has been on the basis that this plant would be listed and that it would be protected.”

Tiehm’s buckwheat, Eriogonum tiehmii – photo: Jim Morefield, licensed under CC BY-SA 2.0

Consequently, ioneer has developed a Protection Plan that includes a Habitat Suitability Model (HSM) identifying candidate locations for new or undiscovered populations. The locations indicated by the HSM, which is still pending BLM approval, could serve as possible relocation or transplant sites for any of the Tiehm’s buckwheat population or their seedlings deemed at risk.

While Rowe attests that the specific locations of mining operations at the Rhyolite Ridge site will be targeted away from local Tiehm’s buckwheat populations, ioneer is also funding research through the University of Nevada, Reno to better understand the distinct plant/soil relationships of the Tiehm’s buckwheat and explore possibilities for seed collection and banking.

“There is a well developed protection plan that’s built into the Plan of Operations,” Rowe said. “So in our view, it’s not a binary choice of one over the other. It’s a coexistence of the two and we acknowledge that if we are to build an operation out of this site, then it must coexist with maintaining a stable, long-term and viable population of Tiehm’s buckwheat. We’ve done the research and work over the last three years to be confident that it can be indeed achieved.”

As ioneer awaits decisions for its remaining permits, the company has a confident outlook on the future of both its project and the development of domestic lithium supply chain opportunities in the US. For Rowe, this offtake agreement with EcoPro is a sign of the positive times to come. 

“EcoPro’s involvement, along with other Japanese and Korean companies that are already actively building battery factories in the United States is showing you where this industry is heading,” Rowe said. “[Our lithium] will be in the cathodes of the batteries and cars manufactured in the United States, which is a very good thing. That’s why in any offtake agreements that we do, we will give priority to selling our material to any companies that are going to use that material ultimately, in electric vehicles manufactured in the US.”


Top photo caption and credit: Rhyolite Ridge, Esmeralda County Nevada – photo: provided by Jen Eastwood, foundryideas.com.


Scott King writes about science, technology, and the environment for the Ally. Support his work.