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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

SGRF’s backing for lithium project stresses Oman’s sustainability goals

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Plans by the State General Reserve Fund (SGRF), a sovereign wealth fund of the Sultanate of Oman, to make a “strategic investment” in a lithium mining project in Mexico in Central America attest to the Sultanate’s broad commitment to sustainability, say market observers.


In July, Bacanora Lithium plc, the London-listed lithium exploration and development company, announced that it had agreed a conditional strategic investment of $65 million from SGRF as part of a funding package for the development of an initial 17,500 tonnes per annum (tpa) lithium carbonate (Li2CO3) operation at the Sonora Lithium Project in Mexico.


“SGRF’s commitment to conditionally invest $65m upon completion will further validate Sonora’s potential to become a leading supplier of high value lithium products to fast-growing industries, such as electric vehicles and energy storage, and once completed will significantly strengthen Bacanora’s funding platform for the construction of a 17,500 tpa Li2CO3 operation,” said Bacanora Lithium plc in a statement issued at the time.


Additionally, SGRF signed an agreement to become an offtake partner for the second stage of lithium carbonate production. The Fund would have the option to purchase up to 10,000 tpa (expandable by a further 3,000 tpa) produced at the Sonora project.


According to experts, the sovereign wealth fund’s commitment to provide funding support for the lithium mining project is in sync with the Omani government’s broader embrace of sustainability. This is also evident in the Sultanate’s energetic transition towards renewable and alternative energy resources, natural gas management, energy efficiency, emerging technologies, 4th Industrial Revolution, and so on.


Lithium carbonate is the source of lithium — a hugely coveted metal that goes into the production of lithium-ion for batteries used in all kinds of electronic devices, including mobile phones, laptops, iPads, and so on. Demand for lithium carbonate has skyrocketed in recent years as car manufacturers prepare to roll out lithium-based battery-operated electric cars for the mass market.


Over the period from January 2016 to October 2017, contract prices of battery grade lithium carbonate in Asia surged from $8,000 per tonne to around $21,000 per tonne on the back of robust demand. Prices soared to $24,750 per tonne on the spot market in China in January this year, although the rates have since plummeted to $14,400 per tonne last month, according to Bacanora.


In audited financial results for the year ended June 30, 2018 — published last week — Bacanora revealed that a feasibility study had underlined the “strong economics” of a 35,000 tpa lithium carbonate operation in Mexico. Net Present Value (NPV) of the proposed project was estimated at $1.25 billion based on lithium carbonate prices of $11,000 per tonne.


Peter Secker, CEO — Bacanora Lithium, stated: “Sonora will sit in the lowest quartile for operating cost, marking it a stand-out proposition. Blue-chip institutions of the calibre of RK, SGRF and Hanwa have recognised this and have offered us development capital on attractive terms. Advanced discussions are ongoing with other potential funders, both at the corporate and project levels. We are confident that the outstanding funds will be secured which will enable us to move into the construction phase at Sonora.”


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