Specialist
SVP at Americas lithium miner
Agenda
- Key execution constraints for lithium projects, including jurisdiction and permitting risks
- Development cost inflation and PPE (property, plant and equipment) lead-time elongation trends
- Development capability across key players and project execution success factors
Questions
1.
My understanding is that there are over 50 lithium projects in the post-PEA [preliminary economic assessment] stage – let’s say that’s over 50 lithium development assets. Do you think most of these will make it to the commercial operation stage?
2.
The litigation process you noted basically freezes the development timeline for a lithium project. How long does that process typically take and what are the biggest pitfalls within that litigation stage?
3.
In the long term, especially for world-class deposits or large-scale mining developments, what are the top three biggest execution challenges you’ve encountered and would anticipate?
4.
When we think about releasing capital equipment or the general trend of impatience with key development milestones, what are the mechanics of that, and what are the resulting pains? You noted releasing long-lead capital items too quickly, given delivery timelines. What are your thoughts on ongoing cost? Do you think that, considering CAPEX or budget blowouts on the cost side, that comes from being too quick with certain milestones you noted?
5.
In your experience, when execution errors happen, where companies jump the gun and it leads to cost blowouts, how bad can it be in the long term and given the backdrop of so many projects being developed concurrently?
6.
You’ve highlighted permitting as a key challenge, especially in the US. Which particular parts of the permitting process are the hardest? Are there specific permits that are specifically difficult to acquire, or that typically hold up the entire development process?
7.
Can you talk us through other parts of the development equation? Other than permitting, satisfying local stakeholders and managing the release of capital equipment, what’s the impact of factors such as a mine’s connection to local infrastructure or the actual construction phase? Do those stages of the development cycle typically come with challenges or are those easier by comparison?
8.
What does the development cycle or timeline look like right now for lithium projects? Generally, how long does it take to develop a large-scale lithium project today? Is this timeline elongating, given various recent issues such as with Thacker Pass with Lithium Americas or Piedmont and its permitting issues?
9.
Are timelines getting longer? If yes, do you think those elongations of lithium product development cycles are sticky long-term – will it take longer and longer to develop a new project?
10.
For the refinery and lithium conversion projects we’re seeing with Tesla or Albemarle on the downstream portion, do you anticipate those being similarly difficult to execute relative to more upstream projects? Do such conversion projects have things going for them that might make it easier to develop by comparison?
11.
Where do you see the most favourable jurisdictions for lithium projects? Which are the best, and is the US an attractive jurisdiction in the long term?
12.
Where do you think the CAPEX per tonne of lithium carbonate equivalent is at the moment? Do you see that inflating moving forward?
13.
Could the CAPEX advantage with brine incentivise more brine developments from players, or are certain operating flexibilities with hard rock and clay worth the higher CAPEX tag?
14.
Outside of what’s going on with PPE [property, plant and equipment], are there any other major CAPEX buckets that explain the inflation we’re seeing?
15.
Focusing on capital items and lead times, what’s the major delay risk you’ve been seeing with key PPE items? How badly does that hit overall project delivery lead time?
16.
What are the specific long-lead-time capital items that present the biggest issues? Do you think that the cost of these is going to increase as a result of longer lead times?
17.
Are delays and longer lead times the temporary consequences of the supply-chain tightness we saw during the pandemic, or do you see delivery lead times generally being longer for a longer time?
18.
What are the top three success factors, criteria or leading indicators that tell you that a player that’s trying to build a lithium project is executing this well?
19.
Given the leading indicators that imply a particular company will be successful with its execution, what are you looking for when considering EPC [engineering, procurement and construction] contractors and capabilities for miners trying to build out projects? What top 2-3 indicators imply such capabilities are good or bad for a project developer?
20.
Considering issues with EPC capability and subsequent impacts on project delivery, what are some examples of how bad EPC execution or capability can hold back an overall project or cause cost overruns? How can this happen?
