Denys Aloshyn, Chief Strategy Officer UkrLithiumMining LLC

 

In August of last year, Chinese company CATL announced the construction of the largest battery factory in Europe in Hungary, with investments totaling €7.3 billion. In May of this year, Taiwanese company Prologium also planned to establish a similar production facility in France, with investments amounting to €5.2 billion.

Following such news, Ukraine often recalls its vast lithium deposits and seems destined for success in this field, even to the extent of creating its own Tesla. However, despite the bold statements, billions of dollars in Western investments are not flowing into our country. The reasons go beyond the full-scale war. To attract international investors, Ukrainian businesses must independently address problematic issues and overcome obstacles.

According to most estimates, the demand for lithium will exceed supply for at least the next 5-10 years. During this time, dozens of new gigafactories for battery production will begin operating in Europe, becoming significant consumers of lithium materials. How can Ukraine seize this opportunity?

Since 2019, we have been professionally engaged in the development of a lithium deposit in Kirovohrad region. Therefore, based on our own experience, we know that access to mineral resources does not guarantee instant billion-dollar profits or a queue of investors, especially in such a high-tech industry with specific requirements for each production stage, from ore and concentrate to finished batteries. Hundreds of millions of dollars in investments, immense international experience, and years of patience are needed, even without wars and quarantine restrictions.

There are four known lithium deposits in our country: "Shevchenkivske" in Donetsk region, "Polokhivske" and "Dobra" in Kirovohrad region, and "Kruta Balka" in Zaporizhia region. Most of them have only undergone preliminary geological surveys dating back to the Soviet era, and mining is not taking place. The reasons for this vary. The Donetsk region deposit is under occupation, and Zaporizhia region is in a front-line area. Work in these areas will resume only after the de-occupation of Ukrainian territory. The "Dobra" deposit in Kirovohrad region is subject to legal disputes. Only at the "Polokhivske" deposit, despite the ongoing war, preparatory work and the search for a strategic international investor are still ongoing.

We believe that Ukraine should export products with added value. This can be petalite concentrate, lithium carbonate, or lithium hydroxide, which are already used to produce battery components. However, no Ukrainian company can independently navigate the process to successfully integrate into global manufacturing chains. To attract international partners and investors at each stage of lithium production development, preparatory work worth tens of millions of dollars is required. Ukrainian businesses are doing just that.

The first mandatory step to initiate negotiations with foreign investors is to confirm the surveyed reserves. Ukrainian or Soviet approaches do not work. After the crisis of the 1990s, the country was left with virtually no samples (cores) taken during geological exploration. It is impossible to match documentary records with physical core samples taken at the deposits. This is why a reassessment of the geological resources according to one of the internationally recognized standards was necessary. We chose JORC.

To confirm the reserves of the "Polokhivske" lithium deposit according to this standard, we conducted additional exploration, including over 5,000 meters of new drilling and laboratory and chemical analysis of the extracted core samples. All of these activities were carried out in collaboration with several reputable international companies. These endeavors cost millions of dollars and lasted for over 2.5 years, demonstrating the seriousness of our intentions.

However, our objective is not to sell the deposit but to create a value-added product. Therefore, the next step is the construction of a mine and an ore processing plant. The completed Scoping Study has already indicated a viable economic feasibility of mining and processing the mineral from Ukrainian deposits.

By the end of 2023, we will conduct a Pre-Feasibility Study, followed by a Definitive Feasibility Study by the end of 2024. These studies will provide us with key financial indicators of the project with a high level of accuracy, with a margin of error of only 10-15%. This will serve as a crucial argument for potential international investors, especially considering the ongoing full-scale war in Ukraine. Currently (before the completion of these studies), we estimate the investment required for the mine and ore processing plant to be in the range of $200-300 million USD.

The third step involves integration into global production chains. Here, we face a question concerning the raw material. While most players in the lithium market extract and process spodumene from ore, the "Polokhivske" deposit contains a different mineral known as petalite. In collaboration with the German laboratory Anzaplan Dorfner, we have already obtained a concentrate that meets the technical specifications for both the battery market (Battery Grade) and the ceramics and glass ceramics market (Technical Grade). This implies a potential global demand for lithium from Ukrainian deposits. However, producing is not the same as selling. Globally, petalite concentrate is already being produced or planned for production by only a few companies in Zimbabwe, Canada, and Portugal.

Currently, we are exploring the possibility of constructing our own plant, which would not only produce petalite concentrate but also convert it into carbonate or hydroxide. These are more versatile products with a stable demand. We estimate the cost of such a plant to be up to USD 400 mln.

Can Ukraine become a producer of lithium anodes, cathodes, and finished batteries? In our opinion, in the near future, such high-tech products will be manufactured in close proximity to the major consumers, namely countries with developed automotive industies. Nevertheless, even producing concentrate for refining would create new jobs, increase export revenue, and have a positive impact on the country's economy.

What about a national electric vehicle in partnership with global automakers that utilizes Ukrainian lithium? This should be a dream or goal for the post-war transformation of the Ukrainian economy.