E155 – Ali Haji from ION Energy

Welcome to the Green Element Podcast, where we discuss sustainability in business with market disruptors, business leaders, and innovators. In the process, we strive to help you on your sustainability journey by sharing insights and expertise from organizations from around the world. I'm your host, Will Richardson. Today's podcast is going to focus entirely on lithium, how it's used, why it's used, its impact on the environment, and the role it has to play in our future. With me today is Ali Haji, the CEO and Director of Aion Energy, an early-stage lithium brine explorer in Mongolia. Welcome, Ali.

Thanks, Will. Pleasure to be here.

I'd love to start by asking you to explain in your words what lithium is.

Lithium is an element in the periodic table that lends itself very well to the conductivity of electricity. It resides sort of in the lower spectrum of the periodic table, and as such, allows conductivity to be quite fruitful, if you will. It's used in electric vehicles for batteries. It's used in medication to treat bipolarism. It's used in glass manufacturing to strengthen glass. But its primary use in the world today remains in the electric vehicle industry for the manufacture of batteries.

And how do you normally mine for lithium?

The more traditional sort of route to extracting lithium is through the brine deposits across the world, the vast majority of which reside in the Lithium Triangle. So Bolivia, Argentina, and Chile, they are salars, so salt flats. And historically speaking, lithium was extracted through evaporation processes, very similar to what you would see in the oil, in the NaCl or sodium chloride table salt extraction process.

So lithium is found in the brine methods.

deposits across the world. Beyond that, you find lithium in hard rocks, so spodumene or pegmatite. That's a bit more of a complex extraction method. And very recently, we've seen clay deposits come on board, including Thacker Pass in Nevada, which is a Lithium Americas project.

And you focus extracting lithium from brine rather than extracting lithium from rock spodumene. Why is one better and how?

Spodumene is very water and resource intensive. Hard rock is generally far more resource and water intensive. And what you find is that brine assets use in and around 25% of the required resources to extract lithium as opposed to hard rock. Clay today is really a new, a newly known or newly discovered way to extract lithium. And we don't quite understand the environmental or the ultimate impact or cost for extracting lithium from clays. So brine tends to be more of the traditional extraction resource. We focus on brines because we have seen brines in Mongolia. The geology very much mirrors that of the Atacama, and we're hoping to do it in a very sustainable manner, given advancements in technology with respect to lithium extraction.

So lithium is a mineral that you're extracting.

How recyclable We've seen more and more companies come online. In fact, a Canadian company, which I forget the name of, and I'm happy to sort of send that on for your notes, came on board about a day or two ago, and they were voted one of the top 50 companies in Canada to work for. And the mandate there is purely to recycle EV batteries and lithium-ion batteries for reuse across the electrification sort of spectrum. So we're seeing more and more recycling companies come on board. And I think that's a really good point. And I think that's where we will start to see real gains with respect to sustainability as far as lithium is concerned.

And that's a real game changer, isn't it? Because of the fact that we can reuse and reuse and reuse.

Indeed. You know, we've come across this environment or where we find ourselves today, which is a sense of let's electrify the world. Let's ensure the adoption of electric vehicles. But the thought process surrounding the recycling of those batteries hasn't quite taken shape. And we're now seeing more and more companies come on board that will ultimately recycle these batteries that either last 100,000 miles if they're the typical sort of NMC batteries that the original Teslas were based on, or the million-mile batteries that the new sort of LFP batteries that are being produced in Japan are based on, or China, that are based on, will allow them to ultimately be recycled and turned back into market and product.

That's really exciting. I've been reading about organic flow batteries, and I've seen that they're as efficient as lithium, but they have, and they have a higher capacity range. Why choose lithium over, say, organic flow?

So lithium has been around for quite some time. And I forget the gentleman's name. That's, I believe he's a PhD at Oxford, but I met him at a conference in Toronto where he spoke about the origins of the lithium-ion battery back in the '50s. When they sort of started to produce power and storage from these chemistries. It's a sort of a formula that's worked very well over the course of the last 60, 70 years. It's one that's been tried and tested. It's one that's been approved for use on our regular transportation routes. And in terms of bringing on new technology, I'm all for it. I believe that we must continue to progress and look at alternatives. But something that's been tried and tested, like lithium, has sort of built a foundation where it has the approval. It's shown that it is capable and it continues to essentially provide the necessary power and range for consumer use is why lithium continues to succeed. So while these other technologies may have some catching up to do, lithium's had that sort of pedigree, if you will. And this is why lithium-ion batteries continue to be successful.

And what are the environmental impacts of mining lithium with your company? I think that— I think let's focus in on Ion Energy here.

So Ion's a bit different. We're still very early stage. We started our exploration efforts to better understand the chemical composition of the brines that exist beneath surface. We're going to do a bit more work to understand the average grade as well as potentially an early resource indication in the coming months, if not the coming quarters. And that allows us to really dictate or better understand, if you will, how much lithium exists in the ground, what sort of chemical composition exists underground. But importantly, I think it's imperative that we speak about the advancements in lithium extraction that exist in the marketplace today. So historically, you might have had what's called evaporation, which is the primary technique for the extraction of lithium in the salars of the Atacama, for instance. And where Mongolia is situated, or rather where Bava Yul, our flagship license, is situated in the Gobi Desert, we have 250 days of sunshine, very high winds. So we could use evaporation as a technique. The challenge with evaporation is that you're pulling up these brine aquifers to surface. You're building evaporation ponds. These evaporation ponds then have to have the vast majority of the water sort of enter the atmosphere, and you're extracting from the underground aquifers. So you're affecting the water table.

Yeah.

We're now seeing more and more that there are technologies in play and in use, including those of the like of Lilac Technologies that use an ion exchange resin. So you ultimately flow your, your brine across that resin, it extracts the lithium, and you pump back about 90% of the water back into the ground. Other solutions include membranes that allow you to separate the lithium from the vast majority of the other elements, and then you pump that water back into the ground as well. So you're putting back between 90 to 95% of the water back into the water table and the aquifer beneath surface. So the extraction methodologies of past are now well beyond where we're operating today. So the environmental impact is quite minimal, if you will.

Something that we've read and learned a lot about is the human impacts of mining lithium. And I wouldn't be doing my job properly if I wasn't to ask you, what are the human impacts of mining lithium for you at Iron Energy?

Well, for us as a company, we've operated in Mongolia for a number of years. We've continued to put ESG at the top of our mandate well before it was a thing, if you will. You know, today institutional funds talk about it and they want to ensure that locals are looked after. They want to ensure that you're checking off all those boxes. In Mongolia, for instance, where we operate, The Baba Iwo Jima project, which is our flagship license today, we confer with the environmental services on a quarterly basis. Without their sign-off, we cannot continue with the work that we're looking to do. So the impact locally, I think, given our proximity to a very nomadic population, is very minimal. But the hopes of the company are to ensure that we're employing those that are within the vicinity of our assets. We can enrich their education through training. and allow them to be an integral part of the company as we start to grow.

Similar to Step Gold, your sister company, because their workforce comprises of, I think, 99% of Mongolian nationals?

That's correct. So Mongolia as a country is, you know, only 3% explored. 20% of their GDP comes from mining. There's a lot of skilled labor in country that allows the local population to really advance projects and ensure exploration and production success, as we've shown with Step Gold. And with Ion Energy, we would hope that we would train local individuals, contract with the local soums, if you will, build some sort of cooperation agreement where they are providing the dairy, the vegetables, and everything else that's necessary for the local exploration team to succeed. But beyond that, we're happy to train those folks to ensure that they are able to work with us and understand their assets better as we start to progress.

And you touched upon CSR and sustainable practices within Ion Energy. A lot of what companies and organizations adhere to is down to government regulation. What are the government regulations like in Mongolia?

They're fairly strict. You know, Mongolia being a previous Soviet satellite. Their infrastructure is vastly coal-driven, and they've been burning coal since the Industrial Revolution, if you will, for cooling and power and heating as well. But we've now seen the country sort of shift away from that traditional view of an energy source being fossil fuels. This is why Ion Energy holds an 81,000-hectare license in the lithium brine space. We were granted the very largest or the largest land package ever provided or granted or licensed to a private or public company, which tells you that the government is quite— they see this renewable wave coming along, and they're happy to help assist it. So the government of Mongolia has been quite supportive of everything that we've done, Baabai Uul being the largest land package ever granted. We also expect that in in due course that we would welcome a partnership from the Mongolian government with respect to our assets and ownership and production and development. So working with the Ministry of the Environment every quarter to ensure that we have access to land, I think speaks volumes of the Mongolian government's appetite to ensure that the environment is well looked after.

Good. And with regard to supply chain audits and inequality. I mean, have you worked in any other countries other than Mongolia within the mining industries?

Well, my chairman has had a number of years of experience, including countries such as Armenia, which are, you know, generally quite polarizing, one that's had a lot of geopolitical uprising and upsets. He's also worked in Brazil, he's worked in Portugal, he's worked in Spain, and he is sort of my sounding board, yet my mentor, but also My leader, so his access in across across the across the globe, if you will, has allowed me to learn a fair bit. I grew up in East Africa. My father mines in Zambia. He's been mining in Zambia since 1998 copper concentrates. So I understand the sort of diplomacy yet nuances of different mining jurisdictions. Mongolia for me has been one that I co-founded Ion Energy in, and it's one that has been very supportive of our mandate and our vision. Having met with numerous members of government at all levels, the support that we've seen with the value proposition that we've presented has been quite encouraging, to say the least.

It's really good to hear. It's really, it's really interesting talking to you and listening to you talk about stuff that, let's face it, most people don't know much about. We, you know, we get fed newspaper articles, we get told stuff in the media, but we're all moving very much down the electric vehicle route. I was talking earlier about how I've just bought an electric vehicle, and I think what surprised me the most was I saw an article today where electric vehicles in comparison to internal combustion vehicles, 25% of the carbon footprint over a lifecycle. And I think, and that's taking into consideration the batteries that go into those vehicles. So I think it's gratifying and optimistic. And you become optimistic by talking to you about what it is that you're doing and, and the future as well, because you do read a lot of doom and gloom about, sadly, child labor, about the poor practices that go on in the mining industry. So it's, yeah, it's really gratifying to talk to you and learn more.

Yeah, if I may, one of the sort of, you know, the child labor aspect of things, we've seen the traditional battery that uses a significant amount of cobalt now being phased out. We've recently seen Model Ys that were produced in China using what's called a lithium ferrophosphate battery. which requires no cobalt. Cobalt has generally been associated with the DRC and sort of that child labor aspect that you spoke of. So now we're moving away from your typical or traditional lithium-ion battery or the NMC battery, and we're moving towards an LFP battery, so the lithium ferrophosphate. If we're going to ship vehicles that are Model Y made in China to Norway, where Northvolt has very recently introduced one of the largest battery manufacturing facilities in Europe, it tells you that, you know, we've recognized As a community, as an industry, as sort of thought leaders, that we need to move away from things that are harmful to not only the environment but also socioeconomic advancement in multiple jurisdictions. So this LFP battery that is now being sold in Norway using the Model Y that's made in China has said to the world that we're not looking or we're not interested in using cobalt anymore. So cobalt is now something in my view, uh, that, that will slowly start to dissipate and go away from the battery metals, uh, industry. And we can focus more so on the LFP batteries, uh, going forward.

Brilliant. What are your hopes for the future for Aion?

Aion is in a position that is, uh, uh, quite fruitful. I think, you know, we started the company in 2017, uh, during a visit to Mongolia. Uh, we started to build upon a team, uh, that had experience not only in Mongolia, but we've since added individuals that have had successes in, in Argentina, in Chile. In Nevada with Tesla. We've added local scientists that allow us to really execute on the ground irrespective of the pandemic lockdowns that we've faced. We went public in August of last year at a time that, you know, most thought we were silly to do so because most of us were working at home at the time. And since then, we've been able to start exploration on our flagship license. We have been able to add to our team. We've added some real industry veterans. We've also acquired a new license. We've done maiden exploration on both our licenses, so Bava Yul and Urgakhnarin, and we await those results. And as a result of the pandemic, there's a bit of a backlog there, but we're excited about the future. So we will continue to de-risk, which has always been our mandate, understand our early resource indication, get to a space where we are trading at a a level that is quite reflective of what we believe we have, and then bring on a strategic investor that will potentially allow us to go to the next step. So take on a toehold or an ultimate majority position that'll allow Aeon and its assets to aid the Mongolian economy, the Mongolian people, but more importantly, trade at a valuation that is Relative to its, its, its goal, if you will.

That's great. I really do wish you all the best for the future with that. Thank you so much for being on today.

Thank you, Will.

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