This 15,000 metric ton facility will double Livent’s production capacity in China. By the end of 2024, Livent will be largely balanced between lithium hydroxide capacity and the carbonate production capabilities to feed it. During the third quarter, Livent released an SEC SK1300 compliant feasibility study for the upstream Whabouchi mine portion of the Namaska Lithium Project. As a reminder, Livent has a 50% equity interest in and provides operational support to the integrated 34,000 metric ton lithium hydroxide project located in Quebec, Canada. Livent is providing technical and commercial expertise and has been appointed to engage in sales and marketing efforts on its behalf. Namaska lithium comprises two development projects, the Whabouchi mine and the Bécancour lithium hydroxide plant.
The feasibility study for Whabouchi is a comprehensive technical report supporting the underlying economics of the Namaska Lithium Project. This project continues to be very attractive due to its scale with an asset operating life of over 30 years based on current resource definition. It’s strong relative cost position, its strategic location in North America to serve growing regional demand and its favourable sustainability profile, including access to low carbon hydroelectric energy. The study is consistent with our previously outlined expectations for the project. Total capital requirement for the development of the Whabouchi spodumene mine and the integrated lithium hydroxide facility in Bécancour is projected at approximately US $1.6 billion with Whabouchi comprising roughly $400 million of the total amount.
Commercial sales of spodumene concentrate are expected to begin in 2025 and continue until the lithium hydroxide facility comes into full production. First production of lithium hydroxide is expected in late 2026. Having recently celebrated the five year anniversary of Livent’s IPO, we wanted to review what Livent has achieved in that five year period and what has been a very dynamic and often unpredictable market. Five years ago, although demand expectations for lithium were high driven by the rapid adoption of EVs, there was much greater uncertainty about the pace of adoption than there is today. Only China had made a significant push via government support and the US was not expected to play a major role in the near term demand or supply picture.
The fast growth of demand in Europe, largely due to EU policy setting and the direct incentives provided in the US by legislation such as the US Inflation Reduction Act was certainly not seen as likely. Battery technology was still in flux. The debate between lithium carbonate, whether lithium carbonate or hydroxide was going to be predominant was still a major debate, at least with investors. But on the supply side, the bears pointed to massive expansions in low cost brine resources in South America, fulfilling all future demand needs and possibly more. But what we’ve actually seen is brine based production steadily lose market share in this timeframe. Others thought novel extraction technologies, such as direct lithium extraction or DLE, would move the cost curve lower, but again, we’ve actually seen Chinese lipid light resources with the production cost three to four times out of lithium triangle brine operations coming into operation to meet supply shortfalls.
As these dynamics have unfolded, we’ve seen lithium indices mature and as they have done so, we’ve seen a fundamental shift take place in how high and how low lithium pricing can go. Until the last few years, the peak pricing we saw for lithium carbonate, and then really only for a few months, was in the low $20 per kilo. The last two years, we saw multiple courses with carbonate pricing of two or three times that level and on the low end in 2020, we saw carbonate prices fall to $6 per kilo and even lower, but as demand growth has required higher cost resources to come online, and as the true capital cost of lithium projects has slowly been revealed, today we see a cost curve where a meaningful proportion of global supply is today operating at marginal costs that are at least three times that level.
Even prior to 2018, Livent was looking for ways to improve its profitability profile, both in absolute terms, but also in terms of predictability of earnings. Livent has always looked to maximize the sale price of every lithium unit we produce, and also create a business that protects us from the most extreme volatility in lithium pricing. The benefits of this approach can be seen when looking at our historical realized price per lithium carbonate equivalent, or LCE, as well as analysing year-over-year changes in that realized price versus market-based references. We’ve attempted to summarize the results of this strategy on Slide eight. The first thing you can see is that in almost every historical market environment, we have typically been able to generate a higher price for each unit of lithium we produced compared to selling lithium carbonate to customers at market prices.
