Lithium players fight to break through and meet demand for electric cars
Last updated: 2023/09/03 at 11:26
MiningPublished September 3, 2023
On the outskirts of El Dorado — the heart of Arkansas' 1920s oil boom — a company backed by Koch Industries Inc. is seeking to dramatically accelerate the extraction of a critical battery metal to wean the world off fuels fossils, while proving the naysayers wrong in the process. .
Standard Lithium Ltd. works on the breakthrough inside a white warehouse near a huge chemical plant run by the German company Lanxess AG which supplies the facility with brackish sewage. A cluster of pipes and tanks in the demonstration plant transforms brine into a lithium compound in days instead of the year or more that traditional recovery methods take.
The company is one of dozens working to commercialize technology to extract lithium directly from brine, paving the way for a new source to supplement hard rock mines and massive lithium basins. evaporation that currently provide battery metal to the world. The outcome of these efforts is expected to shape the future of the sector, bringing either the promise of plentiful supply or setbacks that irk investors for years.
These advances are collectively known as direct lithium extraction, or DLE. They promise to be cheaper, faster and more environmentally friendly than traditional lithium production in South America, which holds about half of the world's reserves of the silver-white metal. DLE would also unlock new supplies in North America, including recovering the metal from salt water produced by oil drilling.
“This is an evolutionary step in the lithium industry,” Robert Mintak, CEO of Standard Lithium, said in an interview. “If we want to have a supply chain that can meet the demands of the lithium industry, DLE will be one of the necessary tools. »
Throughout the global electric vehicle supply chain, this new way of extracting lithium is being touted as the solution to increasing production while protecting the environment. Billions of dollars are flowing into what Goldman Sachs Group calls “potentially game-changing technology,” not unlike the disruptive impact of shale on the oil industry.
However, some producers and industry experts are cautious. Despite the growth in testing and development, these techniques remain relatively unproven on a large scale and could take years to perfect. After all, Texas entrepreneur George Mitchell experimented with hydraulic fracturing for decades before finding the right method to economically extract shale gas.
Lithium prices hit record highs last year as growing demand from the electric vehicle boom led to tighter markets. Prices have since fallen amid a steady flow of new production from Australia, but remain high thanks to an optimistic outlook for electric vehicle growth. An expected deficit from 2025 has startups, mining companies and even big oil companies looking for new ways to expand supply.
After years of intense testing and development, the world is on the verge of knowing if DLE works on a commercial scale.
Oil and gas heavyweights like Exxon Mobil Corp. are creating companies to extract lithium from oil field brine. The Rio Tinto group, the world's second largest miner, is testing extraction methods in Argentina, where it is developing a lithium project. Meanwhile, Koch and Chinese electric vehicle giant BYD Co. are already commercializing DLE technologies.
A handful of commercial projects are under construction, including Eramet SA's Centenario plant in Argentina, which aims to be fully operational by mid-2025. In China, Sunresin New Materials Co. already operates such plants.
Much of this buzz can be attributed to the growing attention to environmental and social issues in the mining sector.
For years, desert mines in northern Chile operated by SQM and Albemarle Corp. were considered the cleanest and simplest way to produce this metal. They pump large quantities of brine under a salt pan, which is then stored in giant ponds for over a year. As the water evaporates, the resulting concentrate is processed in nearby factories and sent to Chinese and Korean battery manufacturers.
As simple as it is cost effective, this process uses far less fresh water, chemicals and energy than hard rock mining as practiced in Australia, the main producer. But the evaporation method means billions of gallons of brine are vaporized into one of the driest places on Earth, which some say poses a threat to wildlife, like the flamingos that inhabit this landscape. similar to that of Mars.
DLE aims to address these issues by using equipment such as filters and membranes to directly remove lithium and allow what remains to be returned to underground brine lakes. The process is much faster and uses less space than evaporation ponds. All of this would reduce the impact on fragile desert ecosystems – a solution acceptable to automakers and their investors as well as local communities and governments.
Bolivia and Chile impose the DLE to exploit their lithium wealth, an important measure given that the former has the largest potential deposits in the world and the latter the most economically exploitable reserves.
Goldman Sachs estimates that if 20-40% of brine projects in Latin America used DLE, it could increase the region's lithium production by around 35% from 2028, an 8% increase in supply. worldwide.
Yet the effects of brine re-injection have not been properly studied, and the efficiency of DLE plants must be weighed against the need for more fresh water and energy than evaporation. The Salar Blanco project in Chile, for example, estimates that it will use three to eight times more fresh water.
“The future of DLE technologies is still uncertain and long-term feasibility needs to be assessed,” SQM said in a written response to questions from Bloomberg. The world's second-largest producer is currently negotiating a new contract under Chile's recently announced public-private model, which includes a requirement for more sustainable practices.
Joe Lowry, the veteran industry consultant nicknamed Mr. Lithium, sees DLE as a technique for unlocking new sources in North America. But in South America it should be seen as a way to improve rather than replace the evaporation method, he said, estimating that less than 15% of global production will come from DLE over the next decade.
Meanwhile, several oil companies are supporting efforts to recover lithium from petroleum brines. Occidental Petroleum Corp. said it was exploring lithium extraction from brines, while Imperial Oil Ltd. owns a 5% stake in Canadian mining company E3 Lithium Ltd., which is testing DLE technology in Canada's oil sector.
Koch, the fuel-to-fertilizer giant, sees direct extraction as a way to help fuel a market expected to quintuple by 2030 as adoption of electric vehicles accelerates. DLE is an "easy button, if you will, for the lithium industry to be able to generate a huge amount of supply in areas where it probably couldn't otherwise," said Garrett Krall, director of strategic initiatives at Koch Engineered Solutions.
Koch's technology is on full display at Standard Lithium's demonstration plant in El Dorado. Koch has even invested $100 million in the Canadian company, which plans to begin building a commercial DLE facility at the Arkansas site in early 2025. CEO Mintak says he expects full production by 2026.
For DLE skeptics, some small companies have become lightning rods for questions about technology. Short seller Blue Orca Capital expressed doubts about the viability of Standard Lithium's technology in November 2021. About two months later, Hindenburg Research disclosed a short position in the stock in a report criticizing the Vancouver-based company . Standard Lithium has called these reports false and misleading.
In an industrial park in the suburbs of Santiago, Summit Nanotech Corp. is preparing a facility to test brine from northern Chile. The Calgary-based company is using a patented material to absorb the metal and is investigating methods of re-injection, applying knowledge gleaned from Alberta's oil fields. Direct mining seems inevitable given the large footprint of evaporation ponds and the community opposition they elicit, said director of geosciences Stefan Walter.
"It's going to take time," he said. “It's going to be difficult, it's going to require a lot of capital. But all new innovative technologies are a bit like that.
MINES.CD & Bloomberg
