American lithium companies in pursuit of new resources are pursuing direct lithium extraction technology in order to develop domestic supplies.
New developments in direct lithium extraction technology have the potential to unlock resources in the United States that can combat growing environmental concerns and increase domestic supply chain security post-COVID-19.
As the world comes to grips with the immense challenges of the COVID-19 crisis, analysts say it’s still too early to accurately predict the overall impact the pandemic will have on the global auto sector and ongoing lithium demand. Industry commentators including Chris Berry of House Mountain Partners are currently revising their 2020 forecasts. “My sense is that we don’t see a full recovery in the lithium sector until the end of 2021,” Berry said in an interview with Investing News Network (INN).
Long-term projections for electric vehicle take-up are set to grow from 1.1 million in 2017 to 30 million by 2030 according to Bloomberg NEF. While China is leading the way with the largest global EV industry growth, North American and European OEMs have invested in multi-billion-dollar EV rollouts in a bid to catch up.
“Globally, OEMs have committed hundreds of billions of dollars to electrify their fleets in the coming decade,” said Berry. “This is too large a sum to walk away from.”
Benchmark Mineral Intelligence (BMI) is now tracking 115 lithium battery megafactories that are expected to supply EV batteries to the auto sector. “Four years ago, we only had Tesla’s (NASDAQ:TSLA) gigafactory. And now we are, as we keep saying, in the midst of the global battery arms race,” the firm’s Managing Director Simon Moores told INN.
US behind in global EV battery production
Despite China’s EV growth rate underwhelming projections in 2019, the world’s leading EV and battery manufacturer added 564GWh of pipeline capacity in 2019 to a global total of 2068.3GWh – or the equivalent of 40 million EVs by 2028, according to a report from BMI. China accounted for 69 percent of total capacity while Europe increased its share to 17 percent, yet North America lagged behind at 8 percent despite new plants from Korean manufacturer SK Innovation (KRX:096770), Chinese producer Farasis and expected expansions at Tesla and LG Chem (OTC Pink:LGCLF,KRX:003550). China is now home to 88 of the 115 lithium-ion battery megafactories in the pipeline between now and 2029.
On the raw material supply side, the US federal government, through its Executive Order 13817 recognized the need to support lithium development as a critical mineral in the United States, however, much of the nation’s domestic resources have yet to be realized at a commercial scale. With advancements in extraction technologies, lithium-rich geothermal brines in California are showing the potential to become next-generation lithium mega-resources.
Direct lithium extraction unlocking US resources
In California, southeast of Palm Springs, the Salton Sea hosts North America’s largest known lithium resource. Driven by the growing focus on domestic lithium demand, investors and developers including Bill Gates and Warren Buffett have begun to focus on the massive potential that lies in California’s Imperial Valley.
California’s ‘Lithium Valley’ has been producing renewable energy since the early 1980s and is home to 11 geothermal plants. The plants themselves are designed to generate renewable, baseload electricity, however, the processing of hot brine also provides an opportunity for lithium extraction. In contrast to traditional mining methods, direct lithium extraction is a closed-loop, environmentally friendly process that returns brine, post-extraction, to its original source utilizing 100 percent renewable power and steam for processing. This method eliminates the need for evaporation ponds associated with traditional lithium brine extraction, drastically reducing the carbon footprint and amount of time required to produce battery-grade lithium compounds, while also removing the need for further chemical processing offshore.
New investment in direct lithium extraction technology
California-based clean energy resource developer Controlled Thermal Resources (CTR) selected Lilac Solutions as its technology partner and plans to deploy Lilac’s proprietary ion exchange technology at its Hell’s Kitchen Lithium and Power project. Lilac Solutions recently received US$20 million in funding from Breakthrough Energy Ventures, a $1-billion investment fund led by Bill Gates that includes notable partners such as Jeff Bezos, Jack Ma and Michael Bloomberg.
“This significant investment in Lilac’s technology creates further confidence in the sector,” said Rod Colwell, CEO of Controlled Thermal Resources. “It’s a real turning point for the US lithium industry. Lilac’s direct lithium extraction technology combined with CTR’s lithium resource will deliver a consistent and secure supply of battery-grade lithium products with the highest sustainability credentials.”
Controlled Thermal Resources’ 7,380-acre Hell’s Kitchen project in Imperial Valley has an inferred lithium resource of 2.7 million tonnes as lithium carbonate for the first half of its resource to be developed. According to the Canadian National Instrument 43-101 compliant preliminary economic assessment completed by HATCH, Lilac Solutions’ ion exchange technology has the potential to recover lithium with low capital and operational costs by leveraging the thermal energy in CTR’s resource.
“CTR positioned itself in the market as an accessible, sustainable, and highly robust, dual-income resource in a politically secure location. These four factors are now proving especially critical to battery manufacturers and the auto sector as they seek to pivot from reliance on centralized lithium and battery supply and look to regionalize at least a portion of their supply chains,” said Colwell.
“Forecast growth for battery-grade lithium compounds and renewable energy in California continues to line up with CTR’s expected Stage 1 delivery in 2023 of approximately 17,000 tonnes LCE and 140MW of renewable power.”
Considering the significant investments already made in lithium-ion battery production, countries including the United States are incentivized to secure domestic and sustainable sources of lithium. With an increased focus on the research and development of lithium extraction technologies, there is potential for innovative resource companies in the United States to access previously untapped lithium deposits, improving America’s supply chain of a critical mineral in the process.
This article was originally published by the Investing News Network in April 2020.
This INNSpired article was written according to INN editorial standards to educate investors.
INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.