(Bloomberg) -- A substance seen as critical to the green energy revolution, lithium, is at risk of a future supply crunch.
Even though a recent surplus of the metal has been crashing prices, demand for lithium is set to grow by almost nine times over the next 15 years in a scenario where the world meets the Paris Agreement goals for limiting global warming, according to estimates from the International Energy Agency.
Extracting lithium from the rocks and salt water where it is found can be a slow process that often harms the environment. So a race is on to develop more efficient, less damaging production methods.
One promising area of innovation is direct lithium extraction, which can slash the time it takes to remove the metal from brine from as long as 18 months to a matter of days, or even hours.
DLE remains an uncertain technology, with daunting technical challenges to be overcome before it can be rolled out at scale.
Still, its importance to lithium’s future was underscored in October, when mining giant Rio Tinto Plc unveiled a planned $6.7 billion takeover of Arcadium Lithium Plc, a company’s that’s been deploying DLE technology in Argentina.
Why is lithium so important?
Lithium is a key ingredient in the batteries that power electric vehicles and store the energy generated by wind farms and solar panels. The low mass and radius of lithium atoms ensure that lithium-ion batteries can quickly absorb and store more electricity than other batteries of the same weight. The weight aspect is crucial when it comes to EVs as a lighter car will travel further on the same charge.
The anticipated surge in demand raises the risk of future supply bottlenecks that could inflate prices of lithium and potentially slow the global shift to EVs. Hence the search for more efficient extraction methods that could open up new, commercially-viable sources of the metal.
What are the traditional ways of producing lithium?
Lithium is a soft, silvery-white metal in its pure form, extracted either from rocks or from lakes of salt water that are common in elevated expanses within mountainous regions — mostly in Latin America or in the west of China. It needs to be processed further into a fine powder — usually lithium carbonate or hydroxide — before it’s added to batteries.
Extracting lithium from rock requires several stages of processing to remove unwanted materials and get at the mineral. These include a technique known as leaching, in which the ore is bathed in sulfuric acid to extract the lithium and convert it into a salt form.
In the second method, brine found on the Earth’s surface or sucked up from underground is pumped into a series of ponds. The lithium concentration of the solution increases as the water evaporates under sunlight. Large amounts of fresh water are used to process the raw material.
What are the problems with lithium mining?
These techniques are time consuming and energy intensive, limiting the number of lithium reserves that are commercially viable. What’s more, the damage often caused to the environment is tarnishing the green image that’s an important selling point for electric vehicles.
EVs are supposed to lower the world’s carbon-dioxide emissions. But mining spodumene, a primary source of lithium, is an energy-intensive process that’s often powered by carbon-spewing fossil fuels. And there’s the risk that the sulfuric acid will leak into the local water system, posing a threat to wildlife.
After Rio Tinto proposed to build what would have been Europe’s biggest lithium mine on farmland in Serbia, the project stalled as thousands of protesters alarmed by the pollution risk took to the streets.
Brine lithium extraction often occurs in arid regions where the use of so much fresh water can be disastrous for local wildlife.
Chinese officials this year identified environmental infringements in the lithium-rich southeastern province of Jiangxi, including an accumulation of dangerous pollutants, illegal discharge of sewage, illegal water use and insufficient grassland protections and controls on energy consumption. The region remains an important lithium production hub.
What is DLE?
DLE uses new approaches to recover lithium from brine using industrial equipment rather than via the long, slow process of evaporation. Some, for example, use lithium-attracting beads. Others employ membranes that selectively filter the metal. Startups have pursued DLE for years, but the technology has only recently matured to a point at which it can potentially compete with existing methods.
Rio’s Chief Executive Officer Jakob Stausholm sees DLE as “the solution to provide the lithium that the world needs,” while acknowledging that there’s a “tremendous technology development journey ahead of us.”
Who is doing it?
There were 13 DLE projects operating as of July, according to industry consultant Benchmark Mineral Intelligence.
Eramet SA was aiming to start production at its Centenario plant in Argentina in November. Rio is developing DLE for its Rincon lithium project in the country. Arcadium can help it along as it has developed a mix of DLE and other evaporative technology in Argentina.
Other industries are also getting involved, including oil and gas companies that see overlaps between DLE and techniques they employ in, for example, shale fracking. Fuels-to-fertilizer powerhouse Koch, Inc. has invested in Standard Lithium Ltd., which plans to start building a commercial DLE facility in Arkansas in early 2025.
How could DLE impact the lithium business?
Despite a big ramp-up in lithium output in recent years, lithium “remains at a risk of a deficit,” according to BloombergNEF, as demand for batteries soars.
DLE isn’t just a quicker way to extract lithium. It also makes it possible to commercialize lower-grade brine reserves, or those found in places where evaporation rates are too low to make traditional methods viable. This could unlock new potential sources of supply — such as waste water from oilfields.
Adopting DLE could be the only way to access some important lithium sources in future, as Bolivia and Chile push companies eyeing their lithium riches to adopt DLE techniques — an approach aimed at conserving scarce water supplies.
DLE could potentially open up supplies in new regions. That could be significant at a time when building localized and diversified streams of critical minerals is increasingly a political priority in the West.
However, the technical challenges mean DLE is unlikely to quickly replace traditional methods.
BNEF sees production via DLE growing to 526,000 tonnes of lithium carbonate equivalent by 2030 from 140,000 tons in 2024. According to Benchmark Mineral Intelligence, DLE will account for 15% of total lithium supply by 2035.
Why is DLE so hard?
There are still uncertainties surrounding the technology.
Recovery rates of lithium can be low with DLE, and capital costs are high. Every source of brine is different, and that unique composition usually requires modifications in the process. The fact that each DLE project requires site-specific adjustments adds to the complexity and cost.
“Most companies can achieve lithium recovery rates of over 80% at their pilot plants due to the controlled nature of the environment,” according to BNEF. “These figures, however, drop once the plants are expanded to a commercial scale.”
DLE technologies also have varying sustainability credentials, with some consuming more energy or more fresh water than others.
Over the past three years, investors suspicious of some of the claims made for the technology have placed short bets on the shares of DLE companies in the expectation that they will decline.
--With assistance from Paul-Alain Hunt and James Attwood.
(Updates with comment from Rio in 4th section. An earlier version of this story corrected a company name in the 5th section.)
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