How Brazilian lithium pioneer CBL sees the market

Long before lithium became a major focus for investors and miners, Brazil’s Companhia Brasileira de Lítio (CBL) started producing and using the soft white metal.

CBL is now reaping some early-bird rewards, but management is aware of the difficulties of creating a fully integrated domestic lithium industry.

CEO Vinicius Alvarenga talks with BNamericas about the company’s trajectory and the lithium market.

BNamericas: What’s CBL's trajectory and production capacity?

Alvarenga: CBL is a lithium company that operates in an integrated way and was founded in 1985 by a group of local entrepreneurs who are still the controllers.

Among our operations is the mining unit, where we do all the geology [issues] and removal of the mineral from the subsoil, and we have the chemical plant.

Our spodumene concentrate production capacity will reach 45,000t this year and about a third of that is used at our chemical plant, where we produce high purity chemical compounds.

Our lithium carbonate equivalent capacity is 1,500t/y.

BNamericas: Which markets do you serve?

Alvarenga: We meet the demand of the Brazilian market with applications in the glass, ceramics and metallurgy industries, but the lithium part for battery production is exported, because Brazil doesn’t produce batteries.

At the end of the day, we are mainly an export company.

BNamericas: What are the company’s responsibilities as a lithium pioneer?

Alvarenga: We are lithium pioneers in Brazil and we have established an infrastructure there in the Jequitinhonha Valley [in Minas Gerais state], training local labor, giving structure to the region.

We suffered the pains of pioneering. These were difficult years, but we managed to educate staff and today we have an operation in that region without a tailings dam but with a high level of water reuse and high industrial specialization.

In addition, throughout our history there in the region, we pride ourselves on never having had a serious [labor] accident.

BNamericas: How do you evaluate the risk of a global lithium bubble?

Alvarenga: I would say that we are definitely not experiencing a lithium bubble, because I don't see risks in short- and medium-term demand.

Vehicle electrification and the use of large batteries in the area of wind and photovoltaic energy is here to stay, a path of no return, as several countries have created their own policies and regulations, pointing to continuous expansion. In other words, demand growth is irreversible.

A concern, I would say, would be very high lithium prices for a long time. This could be a problem for competitiveness, because if prices stay high for a long time, the search for alternative materials will intensify. But I believe that this price issue will be corrected by the market.

BNamericas: Is Brazil’s lithium industry starting to verticalize?

Alvarenga: If we don't have high domestic demand for lithium, we won't have vertical integration.

I have my doubts about whether this verticalization will really happen, because we are one of the few large countries in the world that does not have a government policy favorable to the electrification of the vehicle fleet.

Perhaps the biggest movement against vehicular electrification in Brazil is the fact that we have a powerful ethanol industry, which is also considered a clean fuel. But I believe it would make sense for Brazil to think about supporting the electrification of part of its vehicle fleet.

BNamericas: What are the market expectations, and does CBL have expansion plans?

Alvarenga: We expect an increase in revenues and in Ebitda this year, even with the expectation of a slight drop in the lithium price.

We are planning an organic expansion for our chemical plant and a larger increase in mineral production.

BNamericas: What is the investment plan for this expansion?

Alvarenga: We haven't disclosed a number, but it will be an aggressive expansion.

We have an extensive number of mining rights and we did not carry out a large geological campaign until recently.

Last year, we started accelerating our geological campaigns … and we know that we can have more mineral resources in our existing areas. We want to know our potential better.

BNamericas: Do you have IPO plans? What are CBL’s financing needs?

Alvarenga: The listing of shares is a decision for our controlling shareholders. As an executive, I can say that we have high-quality governance and auditing results. Whatever the shareholders decide, we are ready.

Regarding the financing of investments, we only use our own resources, our own cash generation, we have zero debt.