Q&A – Henk van Alphen on the mining industry
Rhiannon Garth Jones talks to Henk van Alphen about his career in the mining industry and why lithium is so important.
Tell me about your background in the industry.
Early in my career, I founded and operated a number of service-related companies, beginning with a line cutting operation in northern British Columbia, Canada, and culminating in a drilling company (Hydracore), which was founded in 1985 and is still in operation today. In 1991, I founded Pacific Rim and travelled extensively throughout South America, acquiring the Taca Taca, Diablillos, and Aqua Rica projects.
From 1994–99, I was Vice-President of Corriente Resources Inc, before leaving to found Cardero Resource Corp. I founded Wealth Minerals in 2005 and have been President, CEO and Director since then.
What have been your major career achievements to date?
I was a co-founder of International Tower Hill Mines Ltd, which went from an initial US$0.60 to US$10 per share, peaking with a market cap of US$800 million and arranging a US$13 take-out offer with Chinese Investors for the Board’s consideration.
As the mining sector was faltering in the 1990s, I heard about discoveries being made in Chile and Argentina and acquired Diablillos, a large silver mine located in Argentina’s Salta province, and Aqua Rica, a large copper mine in the Argentina’s Catamarca province. Both developed into significant deposits. Diablillos represents one of the largest silver reserves in the world, having estimated reserves of 77.1Moz of silver and 0.6Moz of gold. Agua Rica is one of the largest copper reserves in the world, with estimated reserves of 384.9Mt of ore grading 0.56% copper and 0.033% molybdenum.
Where does your main area of interest currently lie?
Cardero Resource Corp is a resource company with copper projects and metallurgical coal interests. Our primary focus today is the flagship Zonia copper-oxide development project in Arizona, USA.
The near-surface copper-oxide resource at Zonia is the primary development focus, but the presence of a potentially significant gold bonus to the copper mineralisation opens up processing possibilities that could add value to the project economics. Zonia is a quality copper-gold asset and, in the past year, we have published a maiden NI43-101 resource, discovered gold in the underlying sulphides and now defined gold mineralisation in the near-surface oxide zone. The underlying sulphide copper-gold resource has barely been drilled and has significant opportunity for resource definition and expansion.
How has the mining industry changed over the course of your career?
I have spent my career in the mining sector and there is no doubt that the past 30 years have shown a dramatic increase in the sophistication of technology in mining. Then, most excavation work was done with hand held equipment using pressurised air and water. The introduction of electric hydraulics made the process faster and safer. Advanced rock mechanics now safely allows the fast advance of stopes and headings.
I have witnessed many volatile cycles in the mining sector. However, now more than ever, in a climate of volatile commodity prices, mining companies need to ensure they enhance shareholder value by rectifying cost overruns, enhancing investor relationships, improving capital efficiency and focus on productivity and cost management.
What further changes do you expect to see over the next 10 years?
As the world grows more reliant on metals used for energy applications, we will be focused on ensuring the supplies we mine are in geopolitically friendly domains and can be mined cost-effectively. By 2026, the world will continue to be globally connected but it will be more complex. Power comes from control of resources and capital and resource-rich regions will have the upper hand.
Why has the lithium market expanded so much in the past few years?
The global market for lithium-ion batteries is a fast-growing one and is expected to gross US$30 billion by 2020. While the majority of lithium-ion batteries are used in consumer devices, such as mobile phones and laptops, forward growth for the market is their use in electric vehicles and energy storage applications. The rise of battery gigafactories, electric vehicles, Powerwalls and energy storage businesses meant the price of lithium carbonate imported to China more than doubled in November and December 2015 alone, when it reached an amazing US$13,000 per tonne. Some contracts in China, according to Bloomberg, were more than US$23,000 per tonne.
Do you see that expansion continuing?
High costs, safety and security concerns and low durability and efficiency restrict the use of batteries in conventional energy storage systems. However, rapid growth in investments to develop battery systems has enabled the production of advanced low-cost and energy-efficient batteries for grid storage and electric vehicles. These advances caused a surge in the use of Li-ion batteries for energy storage. They are also preferred for microgrids with renewable energy sources owing to their deep discharge life cycle, high energy, and power density.
Lithium was the only commodity that showed positive price movement in 2015. Battery makers, such as Tesla, Panasonic and LG Chem, are expanding their production and expected to continue to do so. The rise in lithium carbonate price will likely be supported by the increasing demand and limited ability for the world to meet supply.
Where are the most exciting places to mine for lithium?
In order for a lithium brine to form, the location requires favourable geology with a lithium source, topographic control to form thick sediments in a basin, and an arid climate where annual evaporation exceeds seasonal rainfall. This is an unusual combination of factors and northern Chile is a perfect storm. Chile produced the second-highest amount of lithium globally in 2014 and Chilean mines feature the largest confirmed lithium reserves in the world, with more than 7,500,000Mt of lithium. The lithium produced from the Atacama Salar in Chile is the highest grade produced from brine in the world.