Some lithium producers are waiting to see if direct lithium extraction technology can be commercially scaled before potentially investing millions, industry participants said at the 15th Lithium Supply and Battery Raw Materials conference in Las Vegas.
Direct lithium extraction (DLE) methodology has been proven to have better and faster metal recovery rates than conventional processing, but the technology has yet to be used for mass commercial production outside China.
DLE could increase lithium recoveries from brine from about 40%-60% to a range of 70%-90% while widening the cost curve, according to an April 27 research report by Goldman Sachs. The new process does not use large evaporation ponds, decreasing land usage while dropping the recovery time to days from years. It also improves sustainability metrics by reinjecting brines once the lithium is extracted, proponents say.
Producers around the world are investing in research, and the DLE space is flooded with new startups claiming to have improved the technology to be more efficient and water-friendly. However, lithium industry participants say the sector has yet to cut through the noise and prove itself capable of widespread implementation.
"There is risk aversion," Guillaume de Souza, founder of DLE provider Adionics, told S&P Global Commodity Insights on the conference sidelines. "[Miners] are getting solicitations from many people presenting what they say is the leading technology. ... If customers already had DLE [plants] running every day, it would be easier for them to make a decision because the implementation risk would be much lower."
DLE has progressed over the decades, and vendors have been more willing to share in the financial risk.
"The [DLE] vendors at the beginning wanted money up front for the testing of the brine. They wanted millions of dollars for them to build a pilot plant, without much assurance of the process," Aldo Boitano, CEO of Chilean junior miner CleanTech Lithium Ltd., told Commodity Insights. "Fast forward 20 years, the price scaled down, and the business models changed to, 'I have the pilot plant and I rented it to you, or you have a payment plan, or I offer you the pilot plant in exchange for equity because I have the key to success.'"
Although DLE is barely gaining steam in the industry as a whole, the technology was implemented under a hybrid model with evaporation ponds more than 20 years ago by Livent Corp. at its Salar del Hombre Muerto mine, also known as Fenix. Three mines have since reached production, all in China and all led by resin manufacturer Sunresin New Materials Co. Ltd.
"This is a very proven process in China," Gary Zhang, overseas director at Sunresin, told Commodity Insights. "[Outside China] there are just some doubts from the public because no one wants to take the risk. No one wants to be the first to do it."
Zhang said the technology has not yet spread because of low lithium prices before 2021 and the COVID-19 pandemic.
"People were not investing millions of dollars just by seeing a few pictures [during lockdown]. It was very difficult to persuade people to invest," Zhang said.
Several pilot plants are operating in Argentina, Chile and the US. In Nevada's Clayton Valley region, Lilac Solutions Inc. outlined plans in mid-2019 to pilot its DLE technology with Cypress Development Corp., which is mining lithium clay deposits in the area. Cypress Development changed its name to Century Lithium Corp. in January.
Oil and gas service provider Schlumberger Ltd., recently renamed SLB, has partnered with Pure Energy Minerals Ltd. to develop a DLE pilot plant. The operation, also in Clayton Valley, secured all of its permits in March. And in early May, a technology-focused Koch Industries Inc. subsidiary agreed to partner with Standard Lithium Ltd. to further develop a comprehensive DLE solution. Standard Lithium operates a pilot plant in Arkansas.
DLE fits North America
Industry participants said the DLE technology would be best utilized in North America, where the use of evaporation ponds for brine deposits is less than optimal due to limited space and less arid climates.
"Chile, Argentina or Bolivia have the choice to use DLE. The brine they have is too good, much better than in China. But when you go to North America, they have to use DLE," Zhang said.
As the US pushes to localize its supply chain for electric vehicles, lithium exploration budgets have steadily increased in recent years. Lithium exploration in the US totaled $93.5 million in 2022, jumping 351.7% compared to 2017, data from S&P Global Market Intelligence shows.
"One of the first places DLE should be cracked, in my view, is North America because they've got access to fresh water and power. In the lithium triangle, you may have one but not the other," said Juan Pablo Vargas de la Vega, managing director of Galan Lithium Ltd., a junior miner with operations in Australia and Argentina.
Goldman Sachs expects DLE to be implemented in both Chile and Argentina between 2025 and 2030.
Water use questions
DLE's fresh water use has come into question, as some forms of the technology may require more fresh water than traditional evaporation methods, but DLE manufacturers say the issue is being addressed with water recycling systems.
"As we produce pure lithium carbonate, we can recycle and recover the water very easily. That means that 95% of the water we use in our process is recycled within the process," Adionics's de Souza said.
While DLE manufacturers were adamant that risk aversion is holding back the sector, Dominic Wells, research director at market intelligence platform Project Blue, said lithium producers had cause for skepticism.
"You would expect people to take capital risk because the listing price is so high," Wells said. "If you look at the DLE space in recent years, you've got projects that struggle to come online because they have run into capital cost blowouts, for example, or they just can't make the technological scale."
Junior explorers and miners that have fully integrated the technology into their business plans are no strangers to the risks.
"Our big project may or may not make it," Todd Fayram, senior vice president of metallurgy at Century Lithium, told Commodity Insights. "We're pretty sure we can produce at a really low cost. But, there's still lots of things that can happen between now and then."
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