Lithium Australia Ltd (ASX:LIT, OTC:LMMFF) has signed a non-binding Memorandum of Understanding (MoU) with Centrex Ltd (ASX:CXM) relating to the potential development of a lithium ferro phosphate (LFP) and lithium manganese ferro phosphate (LMFP) cathode active material manufacturing plant in Australia.
The MoU will see the parties cooperate regarding the potential supply of phosphoric acid from the Ardmore Rock Phosphate Mine owned by Centrex’s wholly-owned subsidiary Agriflex Pty Ltd.
This would be used in a proposed demonstration plant constructed by Lithium Australia and utilising its proprietary technology to produce cathode powders, including LFP and LMFP.
Building battery supply chain
The plant would be potentially located in Queensland and have an estimated initial annual capacity of 250 tonnes of LFP or LMFP. As such, the plant would require approximately 200-300 tonnes per annum of phosphoric acid.
Lithium Australia CEO and managing director Simon Linge said: “The signing of an MoU with Centrex, a leading phosphate concentrate producer, is an exciting progression in Lithium Australia’s commitment to commercialising the company’s LFP and LMFP technologies.
"LFP and LMFP-based batteries continue to experience rapid adoption amongst EVs globally, with China’s current dominance of the global LFP battery supply chain driving many governments to implement policies to secure future access to critical minerals and seek diversification of supply chains.
"The MoU between Lithium Australia and Centrex highlights our commitment to building a battery supply chain domestically in Australia, which can provide global battery manufacturers an alternative supply source for LFP and LMFP.
"We look forward to working alongside Centrex to progress the development of a demonstration plant.”
Commercial plant plan
Following successful operation of the demonstration plant and the pre-qualification of the cathode powders, LIT would then seek to construct a commercial plant with estimated annual capacity of around 25,000 tonnes of LFP or LMFP requiring about 20,000-25,000 tonnes of phosphoric acid.
Potential subsequent expansions to commercial plant capacity would be made in line with market requirements.
The MoU, which has a term of 24 months, comes as Centrex pursues value-added opportunities for Ardmore, including within the LFP battery market vertical, with the Ardmore resource having a high-grade and low impurity profile.
Accordingly, Centrex believes it has a significant competitive advantage over peers to produce high-quality, low-impurity phosphoric acid suitable for the LFP battery market.
Pathway to LFP battery market
This agreement represents a potential pathway to the LFP battery market via the supply of phosphoric acid from Agriflex to Lithium Australia to produce LFP and/or LMFP utilising LIT’s proprietary technology.
Agriflex and Lithium Australia will provide support to the MoU and will seek to progress towards a conditional binding offtake agreement for phosphate offtake.
LIT will provide technical input and testing of phosphate samples from Agriflex in respect to their suitability for producing LFP and LMFP.
Agriflex will conduct a study to produce phosphoric acid in Queensland and will provide Lithium Australia with phosphate product specifications.
“Substantial opportunity”
Centrex CEO and managing director Robert Mencel said: “We are excited to enter into this MoU with Lithium Australia, an Australian company that has developed significant know-how and expertise in the rapidly growing LFP battery market space.
"As China currently dominates the global battery supply chain, concerns about supply security have led to increasing investment being driven towards more reliable jurisdictions, such as Australia.
"With Australia's significant lithium production base and the emerging global trend towards adopting LFP battery technology, the opportunity to establish an LFP battery operation in Australia is substantial.
"The Australian Government's recent decision to include phosphorous on its Strategic Minerals List also underscores the emerging opportunity for a domestic LFP battery operation.
"The Ardmore Phosphate Mine possesses significant potential to capitalise on several lucrative market verticals due to its high-grade phosphorous and low-impurity content. With respect to producing high-quality and low impurity phosphoric acid suitable for the LFP market vertical, we believe Ardmore has a substantial competitive advantage relative to its peers both domestically and globally.
"We look forward to collaborating with Lithium Australia and our other partners on this exciting opportunity.”
About Lithium Australia
Lithium Australia aims to lead and enable the global transition to sustainable lithium production.
The company operates Australia’s market-leading battery recycler, produces critical battery material LFP and has developed a patented lithium extraction technology.
LIT’s revenue-generating recycling business and technologies are well-placed to capitalise on growing global lithium-ion battery demand and provides diversification benefits to global supply chains.