The next bottleneck in lithium-ion battery supplies isn’t cobalt, even though China has a stranglehold on the market, and it’s not nickel, either, despite nickel prices nearly doubling in the past five months. Cobalt can be partially replaced with nickel, nickel can be partially replaced with manganese, and both can be completely replaced with iron phosphate, which is cheap and plentiful.
But there’s no substitute for one crucial component of these batteries: Lithium.
Today’s lithium mines can’t hope to meet the skyrocketing demand for the next decade and beyond. Spotting an opportunity, startups like Lilac Solutions and Vulcan Energy Resources have leaped into action with new lithium extraction processes that are more efficient and potentially better for the planet.
The crunch
As automakers have fleshed out their electrification plans, they’ve caused an unprecedented rush for lithium. Over the last six months, lithium prices have gone on an epic bull run.
It started in January, when prices jumped to $37,000 per metric ton from $10,000 a month earlier, according to Benchmark Mineral Intelligence. Then it got worse in February, with spot prices rising to $52,000 per metric ton before rising again to $62,000 in March. Things have stabilized since then, but prices are still five times above the average price from 2016 to 2020.
Large companies of all stripes have been racing to secure supplies. Automakers like Ford and Tesla have signed huge contracts, and battery manufacturers and miners are rushing to secure supplies. Last year, for example, a three-way bidding war broke out for Canadian miner Millennial Lithium, which has large reserves in Argentina, and the winning bid ended up more than 40% higher than the initial offer.
Yet, those deals probably won’t be enough to fulfill the predicted demand for lithium, based on automakers’ current plans. Benchmark Mineral Intelligence is expecting demand to grow to 2.4 million metric tons in 2030 from less than 700,000 metric tons today.
Supply won’t be able to keep up given the current pace of new lithium projects.
“By the end of the decade, where we’re at now with the pipeline, we’re going to see significant deficits starting to grow,” said Daisy Jennings-Gray, a senior price analyst at Benchmark.
Last year, lithium supply fell short of demand by more than 60,000 metric tons. Jennings-Gray’s firm predicts that the deficit will be over 150,000 metric tons by 2030. To meet demand, Benchmark says that $42 billion will need to be invested in the space by the end of this decade.
Without new lithium projects coming online, it’ll likely get worse throughout the 2030s. By 2040, the International Energy Agency expects lithium demand to be 42 times higher than it is today.
“It’s an insane number,” said Jordy M. Lee, a program manager at the Payne Institute for Public Policy at the Colorado School of Mines. What’s more, it might even be too low.
“We’ve consistently underestimated how much demand for lithium-ion batteries we’re going to have in the coming years,” he said.
As the rise in demand shows no signs of abating, startups have surged into the space, pitching novel techniques to coax the volatile metal out of the earth.
New kids on the block
Today, most lithium is produced either by traditional hard rock mining or so-called evaporative processing. These methods are time tested but have their limitations.
The oldest technique is hard rock mining, which looks a lot like other kinds of mining. Heavy equipment digs rocks rich in lithium out of the ground, crushes them, roasts them, washes them with acid and then roasts them again. It’s energy intensive and can leave behind large open pits.
The other method is known as evaporative brine processing. Mineral-rich water found deep underground, known as brine, is pumped to the surface and dumped into shallow ponds, where it evaporates under the heat of the sun. What’s left is purified using various chemicals and filters.
Evaporative brine processing only recovers about half the lithium in the brine, and creating the ponds requires large tracts of land. Plus, much of it is done on salt flats high in the Andes, one of the driest places on earth.
Both methods also leave large environmental footprints, which has pushed some to look for alternatives.
The front-runners are direct lithium extraction, and its close cousin, geothermal lithium extraction. (Another process, clay lithium extraction, has been getting some attention, but it’s not quite as far along.) Both direct and geothermal lithium extraction tap underground brine and draw it to the surface, just like evaporative brine processing. But instead of dumping the brine into ponds, they use various methods to isolate the lithium before returning the remaining brine underground.
Lilac Solutions, an Oakland-based startup, is focused on one method, ion exchange, which swaps positive ions stored in an exchange material with the lithium dissolved in the brine. The process is similar to the way many home water softeners remove calcium and magnesium from tap water.
The company has developed proprietary ceramic ion-exchange beads, which it says are more durable than competitors’. It’s an important consideration, Lilac CEO David Snydacker said. “These materials are undergoing extreme swings and extreme chemistries. They’re going into brines that are extremely salty, like five times saltier than the ocean. Those are very corrosive fluids. And they’re going from that into an acidic environment, because with ion exchange, you use acid to flush the lithium out.”
Though the beads are technically a consumable material in the process, the longer they last, the cheaper it is for a company to extract lithium from brines. “We manufacture the beads in-house, and we also design and build the process equipment that the beads are loaded into, which are custom designed for each particular brine project,” he said, adding that Lilac’s beads are durable enough to tip projects into commercial viability.
Lilac has tested 60 brines from all over the world, he said. “We’ve really seen all the extreme cases of brine chemistry and developed solutions for essentially all of those brines. So now, when we get a new brine project, we’re able to evaluate the new brine against our experience of more than 60 brines, and we’ve already done the work to develop the solution.”
In a vote of confidence, last month, Ford said that it would buy 25,000 metric tons of lithium per year from a project operated by Lake Resources in Argentina that uses Lilac’s technology.
Most of the brines Lilac works with are drawn from the ground at room temperature, which allows the company to tap a wide range of reserves. But they can also use brines from geothermal sources, which are found at hot spots in the Earth’s crust. In an earlier test of its technology, the company extracted lithium from brines at a pilot plant attached to a decades-old Berkshire Hathaway Energy geothermal power plant.
Heat seekers
For geothermal power plants, the ability to harvest lithium at their existing operations could become a lucrative side gig. But using geothermal brines for direct lithium extraction has other benefits, too: The heat from geothermal sources can be used to power portions of the lithium extraction process itself, reducing energy and capital costs.
That’s what Vulcan Energy Resources is planning to do with a 4.8 MW geothermal power plant near Frankfurt it acquired in December. CEO Francis Wedin explained the process: “Instead of re-injecting the brine back into the reservoir after you’ve taken the heat out, as is currently done in our operations, what we’re going to be doing is building lithium extraction plants. Then, we’ll take the lithium out of the brine, drive that process using the heat from the geothermal and use some more from the geothermal to concentrate that lithium chloride stream further.”
Vulcan will then take the remaining thermal energy and produce power, or sell the heat directly under a district heating scheme. Both have the potential to displace fossil fuels from the grid. “We’ve designed this process from the ground up to be zero fossil fuels and net-zero carbon,” he said.
The company is buying commercially available materials known as sorbents. Unlike the ion exchange process, which swaps hydrogen ions from the material with lithium ions in the brine, an adsorption process captures entire lithium chloride molecules on the surface of the material. The lithium chloride is then washed off using water before being processed further. It all requires a fair amount of heat, which is where the geothermal nature of the brine comes in handy.
Currently, Vulcan is aiming to produce 40,000 metric tons of lithium carbonate equivalent per year (the industry standard measure). “Given our recent off-take agreements with automakers in Europe, we’re basically fully sold out on those production plans, so we’re looking to actually increase our production plants further,” Wedin said.
Looking for more lithium
While these faster processes won’t make up for last year’s shortfall, direct and geothermal lithium extraction have the potential to contribute a significant portion of future supply.
Wedin said the Upper Rhine region, where Vulcan is based, could hold 16 million metric tons of lithium carbonate equivalent. And the Salton Sea region in Southern California could hold as much as 6 million metric tons, though scientists are currently working to refine those estimates. Figuring out how much lithium is dissolved in which brines will help investors determine where to send their money.
Ultimately, how much money is invested will depend on what happens to lithium prices. While the sudden spike of the last six months may end up being an outlier, Benchmark expects prices over the next decade to stabilize somewhere between $15,000 and $35,000 per metric ton, far higher than the average price over the last decade. That could make many direct and geothermal lithium extraction projects profitable.
But it remains to be seen how many of those projects will succeed. Many of the feasibility forecasts for direct and geothermal lithium extraction are based on laboratory or small-scale tests, and it’s possible that geology will throw a few curveballs — no two brines are exactly alike, after all.
Regardless, the need for more lithium suggests that eventually, one or more approaches will succeed.
“There will be a disrupter in the lithium industry,” Jennings-Gray said. “There’s certainly going to be some sort of technological breakthrough that hopefully will start to solve the issue that we’re starting to see with supply lagging so far behind demand from the EV industry. But where that breakthrough will come from at the moment is unknown.”