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.