Grounded Lithium, Part 3: Lithium prices have tripled in a year, so now what?

Brian Zinchuk

Brian Zinchuk is editor and owner of Pipeline Online

Bonanza Drilling Rig 1 at Grounded Lithium’s first targeted lithium well, drilled near Coleville in late July. Grounded Lithium

In recent weeks, Ford has announced price increases of over US$8,000 for both its electric F-150 Lightning and Mach-E Mustang due to higher material costs.  

Gregg Smith, president and CEO, and Greg Phaneuf, VP finance and CFO, are the founders of Grounded Lithium Corp. Pipeline Online spoke to them via email in early August, and they responded Aug. 24.

You can read Part 1 here.

You can read Part 2 here.

Pipeline Online: How important is oil and gas knowledge, processes, hardware and personnel to your take on lithium development? Can you elaborate?

Smith: It is super important and one of the key success factors of GLC. We are proud of the team that we’ve assembled. They all provide extensive expertise in their respective discipline as it relates to oil and gas operations. We are extremely connected to this sector and all of its various services. These relationships will serve GLC well now and into the future as the skillsets are essentially a ‘lay-up’ when it comes to finding and developing lithium resources.

Pipeline Online: Lithium prices have roughly tripled from a year ago, from around US$20,000 per tonne for lithium carbonate equivalent (LCE) to closer to US$70,000 now. Do you think these prices are going to stay at that level, go higher, or retreat?

Phaneuf: Wouldn’t it be great to have a crystal ball??!! Seriously though, the energy transition movement is just that. It is a global shift, not merely a fad, and we believe it will continue for years to come. This is not just the exponential growth in EV cars but also energy storage and all consumer goods which are moving to battery power. The battery supply chain could prove down the road to be as great or higher from a global GDP perspective than the oil and gas industry. At GLC, we run extensive economic modeling with all cases considered. In our Base Case, we do believe there will be a softening from the current price as new sources of supply begin to come to market, however we support the view of many industry experts that demand will continue to grow as well such that the equilibrium price will likely not see price levels of lithium seen years ago.

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Pipeline Online: Is the exponential demand growth for lithium making it easier to find financing? Is the market hungry for this sort of work?

Phaneuf: We were quite successful in our Series A financing. The macro tone has only gotten stronger since our inaugural external financing. We believe if priced appropriately, new infusions of capital into the GLC story will be available. GLC and our peers all benefit should more recognition and the potential of lithium from brine in Western Canada be communicated more broadly by governments, industry associations, media, etc. We all have a part to play in this for the benefit of all Canadians.

Bonanza Drilling Rig 1 at Grounded Lithium’s first targeted lithium well, drilled near Coleville in late July. Grounded Lithium

Pipeline Online: Will markets that have recently shunned oil and gas development embrace lithium development?

Phaneuf: I think that’s right. ESG investing is far more prevalent than it was even just a couple of years ago. Energy sourced from lithium clearly appeals to an ESG-focused investor, whether that be a large institutional account or an individual investor with similar motivations. That said, and a plug for our friends and colleagues in the oil and gas world, the world will still require fossil fuels to maintain our current quality of life until a more orderly transition can be made to renewables and other cleaner forms of energy including stored energy in batteries comprised in part from lithium.

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Pipeline Online: What is the ultimate potential – five years out, ten, twenty years out?

Smith: For the industry and specifically Western Canada, the potential is immense. We look to be part of an exciting industry. We are very supportive of our colleagues in this space. It will take all of us to put the industry on the map. This industry has the potential to be a major source of GDP, employment, tax revenues for the various provinces to fund social programs, etc. We at GLC definitely want to be part of that story and in doing so, provide returns for our shareholders, while also being responsible to all stakeholders.

We’ve heard a lot about the “Green transition,” which is often considered dirty words in the oilpatch. Is this it, in real form? If so, how so?

Smith: Coming from previous oil and gas companies, I’m not sure I would characterize it as dirty words. Frankly, many of the oil and gas companies spend considerable time and money in becoming the most environmentally conscious and responsible they can be. Canada’s oil and gas companies are on record leading the global community. Energy transition is a natural extension of this movement. Many oil and gas companies are effectively deploying wind and solar to reduce their carbon footprint. It is only a matter of time in our opinion that they turn to lithium/battery supply chain verticals. In fact, you are already seeing this as evidenced by some of peer’s recent news releases.

Pipeline Online: Is there anything you would like to add?

Smith: We are proud of GLC’s achievements to date and excited to be part of this industry. That said, we are not resting on our accomplishments. There is much work to be done to unlock the endowment or value proposition of our story. We are keen to be part of the Saskatchewan business community and will always be looking to give back where possible. As our vision statement goes, we strive to be a best-in-class, environmentally responsible, Canadian lithium producer supporting the global energy transition shift. Any thing less than that would be a disservice to all our stakeholders. We are excited about the journey ahead.

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  0066 WBPC Promo video 30 seconds
• 0065 Anova Resources field operator Oxbow
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• 0063 Turnbull Excavating hiring crusher
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