Chile Nationalizes Lithium Resources, Continuing Global Trend

Written by

Robin Lefferts

Published on

May 04, 2023

Last updated

May 04, 2023

Highlights Need for Domestic Resources

Chile is home to the world’s largest known lithium reserves, and is the second largest producer of the metal that is crucial to an electrified future with reduced CO2 emissions. Chilean President Gabriel Boric recently announced the country’s plan to nationalize lithium mining, mandating that current independent production be transferred over time to state-owned companies. Going forward, new lithium contracts will only be issued as a private-public partnership with state control.

Chile’s decision is part of a wider global trend. In recent years, Mexico has nationalized lithium resources and put development under the control of its energy ministry. Zimbabwe has outlawed the export of unprocessed lithium. Indonesia has banned export of nickel and bauxite, and is considering doing the same for tin and other metals. In many ways, supply chain issues exacerbated by the pandemic have spurred these moves, making it plain that China’s dominance of the resource sector was not a sustainable model.

Though Canada and the United States don’t appear to be interested in nationalizing resources, they along with many other nations have implemented critical minerals strategies to encourage the domestic development of resources like lithium that are crucial to national security. The trend of resource nationalization will likely serve to ratchet up those efforts.

In that light, investors may be well-served to investigate quality domestic lithium projects. One such prospect is FE Battery Metals Corp. (CSE: FE) (OTCQB: FEMFF) and its flagship Augustus Property. FE Battery Metals is currently conducting advanced exploration on the project which is located directly adjacent to the North American Lithium (NAL) mine. The NAL mine very recently restarted, and is one of only two operating lithium mines in Canada. The other one is, of course, owned by a Chinese company.

The Augustus Property

Historic exploration at Augustus, as well as more recent geologic mapping by the Québec government, indicate the presence of lithium-bearing pegmatites within the same geologic units that host the NAL mine. FE Battery has completed the re-drilling of the historic areas and is now embarking on a more comprehensive and methodical drill program with the goal of building out the extent of the lithium-bearing pegmatites.

Click here to see FE Battery Metals Director Craig Alford, P.Geo, talk about the company’s 2023 drill program designed to further expand the lithium resource on the Augustus Property.

Results of the 2023 drill program are starting to come in. The most recent announcement reported one hole intersecting two zones of lithium mineralization, with highlights including one 3 meter stretch of 1.38% Li2O and another 10 meter section of 1.03% Li2O. Another recent drill hole cored into multiple sections of lithium mineralization, including a 17 meter zone of 1.19% Li2O which aligned nicely to a 2021 hole, located 120 meters away, that encountered 1.17% over 19 meters. Other positive 2023 drill results recorded 1.07% Li2O over 6.9 meters, while another hit 1.17% over 2 meters. A review of the 2022 results reveals grades ranging from 0.93 - 1.56% within the Augustus main zone. These are all promising results as FE Battery Metals moves closer to producing a NI 43-101 Technical Report, an important step in the development of a potential resource.

Some information to keep in mind when examining lithium grades, drill results and any future resource estimates is that the NAL mine reopened based on a proven and probable reserve of 29.2 million tonnes of ore with an average grade of 0.96% lithium oxide. In general, hard rock lithium mines are very profitable with deposit grades of 0.6 - 1.6% Li2O (lithium oxide) range.

Location, Location, Location

If you were to choose a spot to explore and develop a lithium resource, you would be hard-pressed to find a more suitable location than the Augustus Property. The biggest factor in its favor is its proximity to an existing lithium mine with concentrator/processing operations on site. Sayona Mining, 75% owner of the NAL mine (Piedmont Lithium owns the other 25%), is committed to finding more ore to process there, looking to maximize production onsite beyond what its own mine can provide.

Click here to see FE Battery Metals Director Craig Alford, P.Geo, discuss the importance of infrastructure to a mining project, and the advantages the Augustus Property has over many other prospects.