The Fraser Institute on why Canada needs A LOT more lithium…
As you’ll know, one of the projects we are most active at right now is Zigzag.
Just before Christmas, we reported that all nine of our recent drillholes had intersected visible spodumene. This a key step towards our ultimate goal of making a lithium discovery, and right now we’re awaiting sampling results to guide our next steps on the ground.
In the meantime, I wanted to highlight a recent report from the Fraser Institute that emphasises exactly why we’re doing what we’re doing at the project…
Plugging the lithium gap
One of the key reasons we want to explore for lithium right now is there isn’t enough of it. Far from it, actually.
Governments worldwide are mandating a shift away from internal combustion engines to battery-powered vehicles. As the Fraser Institute highlights, that will mean a lot more electric vehicles on our roads.
The visual below from the report demonstrates this well, showing how electric car sales are expected to rise from around three million in 2020 to 40 million in just ten years. Between 2030 and 2040, meanwhile, they are expected to double again.
Projected growth in global electric vehicle fleet (Source: The Fraser Institute)
More vehicles require more of the raw materials used to make them. And few of those raw materials are more important than lithium.
Did you know, for example, that there is around 8kg of lithium in every EV battery? That’s roughly equivalent to a large watermelon.
The problem is, there’s nowhere near enough of the metal currently available to meet this requirement.
The International Energy Agency estimates that reaching this point would require an enormous 50 new lithium mines globally.
Not just that, but as the Fraser Institute highlights, this enormous shortfall needs to be filled quickly. To use just two examples…
Canada wants 35% of all new medium-and heavy-duty vehicle sales to be electric by 2030 and 100% of them to be electric by 2040.
The US wants 50% of all new passenger cars and light trucks sold in 2030 to be electric, or largely electric.
Picking Canada
The urgent need for enormous amounts of new lithium supply is clear. This means any discoveries that can be developed into producing mines have a good chance of being snapped up at a good price.
So, why are we trying to make a discovery in Canada? Rather than Zigzag, couldn’t we have found an equally prospective project somewhere else in the world?
We could have. But as the Fraser report highlights, Canada is a particularly optimal jurisdiction in which to operate in this area of the market.
Canada and the US share an integrated automobile market. And as part of that, they are extremely keen to reduce their reliance on other countries (like China) by establishing stronger domestic supply chains.
Given the scale and timeline here, that’s no mean feat. So, both countries are increasingly doing what they can to support companies that can help them reach their goals.
Fraser highlights Canada’s ramping up of lithium production refining capacity, its approval of the James Bay lithium mine, and its plan to produce and refine lithium in Saskatchewan as specific examples of this that have already taken place.
But a quick look at the country’s Critical Minerals Strategy shows that this is likely to just be the start of support offered. In the document, which lists lithium as one of six priority critical minerals, the Government writes:
“Critical minerals present a generational opportunity for Canada in many areas: exploration, extraction, processing, downstream product manufacturing and recycling. This federal government is committed to seizing this opportunity in a way that benefits every region across the country.”
It goes on to list everything from research funding to exploration tax credits as ways of specific encouraging and seizing this opportunity.
Some of the critical metals budget commitments in Canda’s 2021/2022 Budget (Source: Government of Canada)
Commercial value
This all means we’re exploring for lithium against a backdrop of strong urgent demand in a country particularly focused on meeting that strong urgent demand on its own soil.
That not only benefits us at Zigzag, but it could also be attractive to third-parties looking to develop any discovery we make.
Particularly with Ontario, where Zigzag is based, boasting a supportive legislative backdrop and strong existing mining sector. It reduces the risks that can arise between the discovery and production phases considerably.
Of course, our focus right now is on actually making a discovery at Zigzag. If we can, then all of these positive factors stand to enhance the shareholder value we derive from the project.
