Aussie Nick Wakim is behind Phoenix Lithium’s lithium project
Little-known Australian entrepreneur Nick Wakim says he’s on the verge of clinching funding for his $14.2bn dream to build one of the biggest lithium plants in the world.
Meet the little-known Australian entrepreneur on the verge of clinching funding that he says will fulfil an initial $US9bn ($14.2bn) dream to build North America’s largest source of lithium.
Nick Wakim, 56, is the founder and majority owner of the privately held Phoenix Lithium, which has employed Macquarie Capital to find a partner and capital to build a $US2bn processing plant in southern California that he says will be extracting and recovering about 64,000 tonnes of battery grade lithium carbonate annually from 2030 onwards.
The entire project is worth a lot more, Wakim claims.
Phoenix’s East Brawley is the world’s fourth or fifth-biggest lithium resource, Wakim says, and worth billions of dollars right now – and potentially tens of billions when it is at full-scale production.
Few people are even aware of it, its sheer scale and the fact that a small private Australian company with only nine employees is behind it.
That is all about to change.
In his first major interview, Melbourne-born Wakim reveals his and Phoenix’s big plans for East Brawley, how he found it – after a previous attempt to build a water desalination technology business and before then a career in merchant banking in the Middle East – and the intense competition from big companies around the world to partner with his company on East Brawley or even potentially buy it out.
“When we’re talking to groups now, they’re quite shocked because they look at the size of this resource, and they’re like, where did this come from?,” Wakim tells The Weekend Australian in an exclusive interview.
“People are shocked and surprised and then [say]: ‘is this for real?’”
Wakim insists it is.
“Our NPV (net present value) on the project is $US9bn. But at full scale production it’d be $US15bn or $US20bn business.”
If he is right, it all means Wakim, who has already made headlines this year by buying two Toorak mansions in Melbourne for a combined $73m and a rural Victorian property for $30m, could already be Australia’s latest billionaire.
And East Brawley would be one of the biggest private projects undertaken by an Australian company, at home or overseas.
In Australian dollars, Wakim’s projection is for East Brawley to potentially be worth $24bn to $31bn.
Phoenix says East Brawley has 12.4 million tonnes total mineral resource of lithium carbonate equivalent found on 23,000 acres of surface and mineral rights leases, and its average grade sits at 437 milligrams of the commodity per litre.
The project has an initial mine life of 27 years and there are plans for a water neutral process with no open-pit mining or evaporation ponds and powered by renewable energy and steam.
That total resource is, Phoenix says, on a global scale behind only Chile’s SQM and its Salar de Atacama project, Lithium Americas’ Caucharí-Olaroz project in Argentina and ASX-listed Allkem’s own Olaroz project nearby, and Canadian firm’s E3 Lithium’s Clearwater in Alberta.
Those other projects are owned by stockmarket-listed companies, whereas Phoenix is privately owned.
Clearwater is the only other project of significant scale in North America, and Phoenix claims East Brawley is, for example, bigger than Rio Tinto’s Rincon project in Argentina that it paid $1.2bn to acquire in late 2021.
Rio is building a 3000-tonne-a-year lithium starter plant at Rincon, which has a 11.8 million tonne total mineral resource of lithium carbonate equivalent and reserves of almost 2 million tonnes of contained lithium carbonate equivalent (LCE), sufficient for a 40-year mine life.
Wakim says Phoenix has reserves of almost 1.9 million tonnes of LCE. Phoenix’s grading of 437mg per litre is also higher than Rincon’s 325mg per litre.
Lithium has emerged as a hot commodity in recent years given its importance in the energy transition taking place around the world. It helps to store energy in modern batteries that power consumer electronics and, of particularly growing importance, electric vehicles.
Lithium prices have fallen about 70 per cent this year though, albeit from record highs, mostly driven by a slowing in the growth of demand in China for fully electric vehicles.
Analysts have described the price fall from huge rallies in mid 2021 through to the end of 2022 as a case of “irrational” exuberance for battery-related metals, though Rio Tinto said this week that longer-term market fundamentals for lithium remain strong as “[EV] adoption continues to rise on supportive government policies and supply shortfalls”.
Meanwhile, Boston Consulting Group has estimated US demand for lithium batteries to increase by nearly six times and be worth $US52bn a year by 2030.
Investor appetite for and interest in the commodity generally remains high, and lithium stocks have been surging on the ASX.
This week alone saw the battle for Liontown Resources, which has a lithium project planned in Western Australia’s Kathleen Valley, peak when New York-listed Albemarle withdrew a $6.6bn takeover bid after billionaire Gina Rinehart built a 19.9 per cent stake in Liontown.
Albermarle is the world’s biggest lithium producer and its share price fell 15 per cent this week amid analyst concerns that lithium supply could exceed demand next year and 2025, putting pressure on profit margins for all lithium suppliers.
Wakim claims his company has far bigger potential than the ASX-listed lithium plays and can ride out commodity price falls.
“If you look at other companies, if you look at Liontown, we’re much larger. With respect, our project dwarfs all these projects here. We’re a little earlier stage, but the size of the project, the position of the project, the clean and green nature of it, when you couple all these things together it‘s probably the only project in the world that has all those elements,” he claims.
“And as you can imagine, there‘s going to be a lot of groups that are very interested to either partner with us or provide capital.
“The position now is to look at the right partner to take the project and commercialise the project.”
Phoenix has engaged Macquarie Capital to conduct a global search for a strategic partner.
While Wakim is reluctant to comment on the process, he says there has been strong interest.
It has also been previously reported that parties looking at the project are from across the lithium supply chain, including offtake, marketing and capital providers, as well as big companies in North America with midstream operational experience.
“We are JORC (the professional code of practice in Australasia that sets minimum standards for the reporting of mineral exploration results) compliant,” says Wakim.
“So once we basically validated the resource we have done all the things that a major company would do,” he adds, before listing off the geophysical surveying, permitting, well field engineering, well assessment and resource defining that Phoenix has undertaken over the last two-and-a-half years.
“Even though we‘re a small company, we’re attacking this like a tier-one global major. So this has been done in exactly the right way that you would want to deliver a multibillion dollar project,” Wakim says.
Phoenix plans a two-phase rollout, with its first commercial production of lithium coming in three years time via a scaled-down version of its full plant that will initially produce 1400 metric tonnes of battery grade lithium carbonate annually.
“That will create some revenue for our shareholders and give us a very good model from which to go into full-scale production, which will come online in 2030,” Wakim says.
That time frame, he claims, should alleviate concerns about going into full production at a time when both demand for and the price of lithium could be subdued.
“We come into production right at the time when the major deficit in the lithium supply is projected,” Wakim says. “So we think we are coming online at the right time and companies are going to be looking at this from a strategic position.”
The Phoenix founder also points to the increasing demand for lithium in the US driven in part by tax incentives from President Joe Biden’s Inflation Reduction Act, which has also helped with the push to onshore processing and refining of lithium for local EV and battery factories.
It all makes a project like East Brawley a case of “right place, right time,” Wakim claims.
Situated about two hours’ drive east of San Diego in California’s Imperial Valley, where a quarter of the rural population farm lucerne (alfalfa), lettuce, carrots and other food crops, East Brawley and its surrounds are part of a region dotted with geothermal electricity plants.
California is also the home of, or at least close proximity to factories or plants for car manufacturers like Tesla and Ford, and other firms that are part of the manufacturing supply chain.
This has also sparked a land rush for lithium operations powered by clean energy near California’s inland Salton Sea, where many companies are extracting lithium from the region’s geothermal brine.
The mineral-rich brine had already been brought to the surface by geothermal electric plants, which have been in the region for the best part of 40 years, and then returned to the earth. Now, companies are extracting lithium from the brine and the huge estimates of lithium at Salton Sea have generated excitement some have compared to the gold rush of the 1840s.
Wakim says Brawley East is about 15 to 20 minutes from Salton Sea “as the crow flies”, but has previously been ignored by other companies or not taken seriously enough by geothermal firms already in the area.
“There’s 10 geothermal power plants at Salton Sea and every man and his dog has been going there,” says Wakim. “So there are all these geothermal power companies going there and trying to tag on minerals development onto their core expertise.
“But we’re a pure-play lithium company and not geothermal, so we’re able to look at things in a different lens. And I think these are the things that make or break projects, to not follow the crowd. You’ve got to have the vision.”
Wakim has however pivoted from his original vision of Phoenix, which he formed after what he says was the best past of three decades of merchant banking and deal-making in the Middle East.
Born in Melbourne to parents of Lebanese background, Wakim moved with his family overseas at a young age and grew up in Chicago and later Oxford, England.
His father was an entrepreneur who ran businesses and did deals in the Middle East, including, Wakim says, helping set up the huge Al-Safi Dairy Farm with the Saudi Royal Family in the 1970s, the largest in the world.
Wakim followed in his father’s entrepreneurial footsteps, running a financial services group, then advising on mergers and acquisitions, corporate advisory work and other deals.
He says he helped the Saudi government strike a trade deal with the Keating government in Australia in the early to mid 1990s for live sheep exports and would later advise companies, including Macquarie, who wanted to establish operations in what would become flourishing Gulf States – often taking equity stakes in local joint ventures.
In 2009, Wakim set up what was then called Phoenix Water – a company that aimed to develop a proprietary water desalination technology spun out of an Australian start-up and aimed at the Middle East where there were low freshwater supplies but the highest use of freshwater per capita in the world.
“So whilst we were taking this very salty saline water and creating distilled water, it also creates a mineral,” Wakim explains. “That‘s where I started to think, ‘well, hang on, we’re developing this to create water. Well, what if I reverse that to see if I create minerals?”
Wakim researched and became fixated on the future opportunities for lithium, saying he even knocked back a $20m revolving credit facility from the Clean Energy Finance Corporation earmarked for the water strategy to pursue a lithium dream.
“My board did think I’d lost my marbles,” he admits.
By 2012 he started investing in some lithium stocks and travelling the world looking at potential projects and investment opportunities.
“We went to Perth and we went to South America. We went to the Atacama [desert] and we did the rounds around America and landed on there.”
Initially, Phoenix pursued a project in Nevada before moving south to California where Wakim first looked at the Salton Sea before heading to East Brawley, attracted by industrial giant Berkshire Hathaway having operations there.
Phoenix has been operating in East Brawley since 2015, raised about $10m in seed funding from mostly Australian investors two years ago to undertake the initial scoping studies and preparatory work – Wakim says the company has only spent about half of the funds so far – and has now reached the crucial stage of raising capital.
“It is a very important project. It’s globally relevant. It’s a multibillion dollar project, and it is a privately-financed company. So it’s a very unique situation that you have a resource of the size it’s not either listed or already monetised commercially by a major [mining or production company],” he says.
“Our intention at this stage just is to stay private. But that’ll be dependent on where we go in this next phase of capital. And it’s not about money. The money will come. It’s finding the right strategic partnership to really exploit this to its best potential.”
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