The world contains vast
quantities of lithium, an integral element in
electric vehicle batteries. And while lithium is
commonly mined from hard rock, the majority of the
world's lithium reserves are actually found in brine,
extremely salty water beneath the Earth's
surface. Extracting this metal involves evaporating
the brine in massive pools, leaving behind high
concentrations of lithium. It takes up vast swaths of
land, is inefficient, often controversial and
ecologically disruptive. But until recently, there
hasn't been much pressure to change. There was no EV revolution
happening, so there was no reason for people to
innovate. But as automakers around the
world struggle to meet extraordinarily ambitious
electric vehicle production targets, there's a growing
interest in doing things differently. The auto industry requires a
20x increase in lithium supply, and there's just no
way to achieve that type of growth with conventional
technologies. Now, many are looking
towards a suite of new, but largely unproven,
technologies called direct lithium extraction, which
promise to increase the efficiency and decrease the
negative externalities of the brine mining process
while jumpstarting the domestic lithium mining
market. Direct lithium extraction
will unlock the resources that are in the United
States and allow it to participate as part of the
supply chain for batteries. North American companies
like Lilac Solutions, EnergyX and Standard
Lithium are looking into DLE opportunities in places
like Arkansas, California's Salton Sea and Utah's Great
Salt Lake, as well as abroad in Chile, Argentina and
Bolivia. The Chilean government has
even announced that all new lithium projects in the
country will be required to utilize DLE technology. So the timing is right and
ripe for this to see the light of day very, very
soon. For all of its recent buzz,
research into direct lithium extraction from seawater
and other solutions actually began in the 1970s. But back then, traditional
methods of brine mining and hard rock mining more than
sufficed. The world didn't need DLE
for the last 50 years. Lithium's primary use was
industrial - ceramics, glass and lubricants. But with demand for EVs and
lithium-ion batteries booming, now there's a
supply crunch. Now over the last ten years,
90% of new lithium production has come from
hard rock projects. But hard rock projects are
increasingly expensive. And if you add up all the
hard rock projects, there's just not enough resource
out there to meet automaker goals. It's the brine
resources that are large enough to electrify the
vehicle industry. But the limitations of
traditional brine mining are clear. So when I first learned
about evaporation ponds, you can immediately see the
inefficiencies. One it takes up a huge land
area, right? Some of these ponds in
Chile are ten square miles. Number two, it takes a
really long time for the brine to go through the
pond sequence. So you're looking at about
18 months of lead time that it takes to produce the
lithium out of the back end. And number three is that
they have really low recovery rates, only 30 to
40% recovery rate. Instead of concentrating
lithium by evaporating brine in large pools, with direct
lithium extraction the brine is pulled directly into a
processing unit where it's put through a series of
chemical processes to separate the lithium before
being re-injected back underground. Refined,
battery-grade lithium carbonate or hydroxide can
be produced in a matter of hours, without the need to
transport concentrated brine to a separate processing
facility. And unlike evaporation
ponds, DLE technologies have the potential to recover
the vast majority of the lithium. So when you apply these
technologies, the sort of headline expectations are
somewhere between 70 to 90% yields, which has a very,
very significant impact on both the cost of production
and ultimately the level of output and the lithium
units that enter this market. But as a number of new
companies jump into this space and test out novel
technologies across a variety of brine
conditions, questions remain about how well some of
these new approaches will scale. While there are a variety of
approaches to direct lithium extraction, the oldest and
only commercially proven method involves using
adsorbents. In this process, lithium
molecules in the brine adhere to the adsorbents
and are thereby selectively removed from surrounding
impurities. This is the method used by
Livent, a Philadelphia-based supplier for Tesla and BMW
that's operated a DLE facility in Argentina since
1998. But the company still uses
evaporation ponds as a part of its process too, and
experts say that adsorption-based
technologies use a lot of fresh water, a big problem
considering many of the world's best brine
resources are in arid areas that can't afford to adopt
more water-intensive tech. So, for example, sorption,
that requires fresh water as part of that stripping
process once the lithium has been selectively removed
from the brine itself. According to Livent's most
recent sustainability report, it used 71.4 metric
tons of fresh water per metric ton of lithium
carbonate equivalent or LCE produced. Lilac reported that in pilot
testing, it uses between 10 and 20 metric tons of fresh
water, while EnergyX says that it uses less than 20
metric tons. Sunresin, a Chinese DLE
technology provider, also uses adsorption as its
primary technology. Every significant new
lithium brine operation to come online in the past
five years has been in China, and Sunresin's DLE
tech is behind a lot of them. As of 2019, our first unit
started and they have been since then operating
without interruption. And we have a very strong
industrial track record in that area, which is
globally quite unique. Sunresin's commercial
operations are primarily brownfield projects, in
which lithium is extracted from the waste brines of
existing evaporation ponds, which were built to produce
potash salts that are used in fertilizers. That means that the lithium
containing brine is pre-concentrated in
evaporation ponds before it goes through Sunresin's DLE
process, though the company says that this step is
ultimately not necessary and that most of its newer
projects will not be tied to potash operations and will
operate without ponds. But all over the world, any
person who has a resource is talking with us. And we
have literally tested between 500 and 1,000
different brines from all over the world in the U.S.,
in Argentina, in Chile, in Bolivia, everywhere. Total lithium production
from DLE was 54,500 metric tons last year,
representing 7% of overall lithium production. This mainly comes from
Livent and Sunresin's tech. But a host of other
companies have new projects in the works and are
testing out alternative technologies, which they
say will not only eliminate evaporation ponds
altogether, but increase yields while lowering
energy and freshwater requirements, hopefully
helping to bring DLE into the mainstream. For its part, Bay Area-based
Lilac Solutions is using a technology called ion
exchange. It's currently piloting its
tech in Argentina in partnership with Australian
lithium company Lake Resources. Every ion exchange process
is based on a small bead which is selective for
certain metals. And with the Lilac ion
exchange bead we've developed a ceramic
material. This ceramic selectively
absorbs lithium from the brine while releasing a
proton. Once the lithium is
absorbed, we then flush the lithium out of the bead
using dilute acid and that produces a lithium chloride
concentrate which can be easily processed into
battery-grade chemicals. Lilac expects to have its
first commercial-scale module operating before the
end of 2024. The company is backed by
BMW and the Bill Gates fund Breakthrough Energy
Ventures, and Ford has signed a non-binding
agreement to buy lithium from its Argentina plant. Lilac also recently
received a $50 million grant from the Department of
Energy to build out domestic manufacturing capacity. The Lilac technology is
broadly applicable to a wide variety of different
brines. This includes conventional
salar type brines like you find in Chile or Argentina
or Bolivia, as well as new, more challenging brines
like you would find in the U.S. or Europe. EnergyX, which is based out
of both San Juan, Puerto Rico and Austin, Texas,
started off developing membranes to filter lithium
and now uses a combination of technologies. Step one is traditional
adsorption, followed by a method known as solvent
extraction, in which the concentrated brine is mixed
with an organic liquid. The lithium is then
transferred to the organic before it's stripped free
and concentrated. Membrane filtration is the
final stage, which removes all remaining impurities. And now you have an
integrated system which in three steps separates the
lithium, purifies it and concentrates it. So you see these, all these
loops and synergies that come out of combining these
technologies. And that is another big
differentiator and what really drives the cost of
the technology much lower compared to anybody else. EnergyX says this hybrid
approach drastically reduces fresh water use. It's building demonstration
plants with undisclosed partners in Argentina,
Chile, California, Utah and Arkansas. And we think that our direct
lithium extraction can either complement existing
ponds, because some of these companies have spent a lot
of capital building the ponds, or eventually
completely replace the ponds. Egan says the company is
aiming to have its first two demo plants up and running
by the end of this year, and the following three in
2024. Recently, the company
secured $50 million in funding from GM to help
scale its tech. Vancouver-based Standard
Lithium also has big backers. The public
company's largest investor is Koch Industries, and
it's been running a demonstration plant in
south Arkansas for the last three years, producing
lithium at a preexisting bromine plant. We don't have to put in
production or reinjection wells. We're operating on a
brine processing facility that's been running for six
decades to extract bromine. Standard Lithium also uses
both ion exchange and adsorption technologies,
depending on the resource. It expects to begin
construction on a commercial-scale DLE
facility next year, in what could be a first for North
America. We have an opportunity as we
expand from Arkansas to Texas to be the largest
producing area for lithium chemicals in North America,
utilizing DLE in an area that's not under water
stress, that has a social license to operate. It has low cost power and a
highly skilled workforce. Companies like Standard
Lithium, which are leaning into the U.S. Market, stand
to benefit from Biden's Inflation Reduction Act,
which ties electric vehicle subsidies to domestic
sourcing of battery materials. Automakers can
also receive the full EV credit if they source from
countries that have free trade agreements with the
U.S., like Chile, which is going all in on DLE. All lithium production
moving forward in the country will only be
allowed to use direct lithium extraction. So what
we have figured out and patented is how to
complement our direct lithium extraction
technology into their existing pond system to try
to recover that remaining 60 to 70%. Albemarle and SQM, the only
two lithium producers in Chile, have not announced
who they will be partnering with for future projects,
though both companies have laid out plans to pipe
desalinated water from the coast to the Atacama Desert
to run facilities without depleting the region's
scarce freshwater resources. But that's bound to be both
expensive and complex. I mean, certainly it makes
sense for an industry leading nation like that to
target the application of DLE. I think the commercial
reality is going to be very, very difficult to overcome. Operating in these extreme
environments is challenging, at the level of altitude,
at the distances away from some of the kind of key
logistics centers. Bolivia is also looking to
utilize direct lithium extraction to help unlock
the country's vast, but largely undeveloped,
lithium resources. While the country was
considering technology from both EnergyX and Lilac
Solutions, the government ultimately tapped a
consortium of Chinese companies led by battery
giant CATL to spearhead DLE efforts in its salt flats. CATL is the world's largest
battery producer, and with this new $1 billion deal in
Bolivia, the company aims to use DLE to produce 25,000
metric tons of lithium by 2024. The process of going into
first production is incredibly capital
intensive. It's not the kind of core skillset of a
startup to be able to develop these resources. And so we can see the
opportunity for a company like CATL. Mills says that as the
market develops and the technology is proven at
scale, we could start to see acquisitions in the space. We have over 60 patents that
protect the IP that we've developed over the last
four years. So whether that makes an
attractive candidate for an acquisition or a
partnership, we're excited about that. But first, these new
technologies need to be proven across a range of
brine conditions, and there have already been some
struggles. California's Salton Sea is thought to
contain some of the largest lithium deposits in the
world, trapped within superheated geothermal
brines. Lilac was previously
working on a project there, in partnership with the
Australian company Controlled Thermal
Resources, but had to pull out because the brine was
so difficult to handle. That brine comes out of the
ground at 600°F, three times the boiling point of water,
and it has dissolved in it many toxic species,
including lead, arsenic and even radioactive materials. It's going to be very
challenging for project developers to bring that
type of project online. While the Salton Sea remains
a promising but tricky resource, companies from
Sunresin to Lilac are planning to bring other new
projects online as soon as next year. Mills thinks
that that timeline is slightly optimistic, but
not so far off. You're looking at
development risk of the asset itself. You're then compounding
that with technology risk, this innovative application
of technology. And so I think
realistically we're looking at a timeline of 2026 and
beyond for real commercial volumes to impact a lot of
that global production. Snydacker says that in this
decade, most new lithium supply will continue to
come from hard rock projects. But by the end of this
decade, we'll see very large-scale brine projects
coming online. And going out into the next
decade, this technology will provide a majority of new
supply. Lithium production from DLE
is projected to grow from about 54,000 metric tons
today to over 647,000 metric tons by 2032. That's forecast to be worth
about $21.6 billion. Incredible growth of the DLE
space, but when we place that in relative terms
against the rest of the global market, that only
represents around 15% of total supply. We're still
going to have to rely on traditional forms of
production for the lithium units, whether it's
evaporation ponds or hard rock mining. But for all those new
projects, we can expect to see less of this and more
of this.
Another banger from CNBC. They're really putting out some great stuff lately.
Interesting