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Skyrocketing Lithium Prices Highlight Need For New Technologies

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Concerns over the ultimate availability of adequate supplies of lithium and other minerals that are critical to the energy transition have elevated recently. On April 8, Tesla

and SpaceX CEO and founder Elon Musk tweeted that he was considering starting his own mining company in light of rising prices for lithium, which he said had reached “insane levels.”

“Tesla might actually have to get into the mining & refining directly at scale, unless costs improve,” Musk said in his tweet. “There is no shortage of the element itself, as lithium is almost everywhere on Earth, but pace of extraction/refinement is slow.”

All of that is of course true, and the reality and challenges it presents to the renewables and electric vehicles (EV) industries are coming into broader focus and recognition now. Bloomberg reported on April 28 that a 5,000-ton cargo of partly-processed lithium sold for a top bid of $5,650 per ton, 140% above the “insane” prices that prevailed when Musk issued his complaint. The next day, Reuters reported on rising demand and growing shortages of lithium and other critical minerals in Europe, saying that, as in the U.S., “Europe is running out of time to secure the metals it needs to power the energy transition.”

The urgent problem here boils down to a simple one of supply and demand. In order to meet the potentially-unrealistic goals set by the Biden administration, the EU and other globalist entities, the International Energy Agency (IEA) estimated last summer that demand for lithium would rise by 900% by 2030, and by 4,000% by 2040. Obviously, such an exponential rise in demand would of necessity have to be met by a corresponding increase in lithium supply.

But R. J. Scaringe, CEO of EV automaker Rivian, noted in mid-April that the vast majority of the supply and supply chain needed to meet that demand simply does not exist. “Put very simply, all the world’s cell production combined represents well under 10% of what we will need in 10 years,” Mr. Scaringe told reporters touring his plant in Normal, Ill. “Meaning, 90% to 95% of the supply chain does not exist.”

So, this is an entire industry that must be built and scaled up, almost from scratch. And, with China dominating the processing and global supply chain for lithium, the U.S. and other western governments have noted the importance of changing that paradigm to increase their own levels of energy security. But onshoring the mining for lithium or extraction of it from brines – by far, the most abundant form of the resource – would be highly controversial in the environmentalist community and take years to achieve. Indeed, the opening of a single new mining operation in the U.S. would likely take over a decade to accomplish.

Since I have been researching and writing about this looming supply shortage for more than a year now, the recent elevation of the urgency around the issue led me to track back with Teague Egan, founder and CEO of EnergyX, located in Tesla’s and Musk’s recently-adopted home town of Austin, Texas.

Most of the world’s lithium supply is contained in brine and the traditional evaporative process for extracting it literally takes years from cradle to grave, as Egan told me when I interviewed him and toured his facilities last August. “It’s very slow and produces very low recovery rates,” he told me at the time.

Egan and his team at EnergyX, working in a joint effort with scientists at The University of Texas, have developed a direct lithium extraction technology that includes a portfolio of electrodialysis membranes, solvent extraction and ion adsorption, which dramatically accelerates the timeline for removing the lithium from the brine and improves the recovery rates. Since our interview last August, Egan told me that his company has shipped its initial pilot setup to Bolivia, part of the so-called “Lithium Triangle” where the world’s largest known brine resource exists. “We have two more pilots that are built and that we are preparing to ship to customers in Chile and Argentina, with three more that are in the process of being built for customers and both the USA and South America,” he told me.

While much of the media reporting about lithium production focuses on the hard-rock mining process for obtaining it, Egan notes that the brine resource is not only far more abundant, but that “brine has far more ability for the introduction of technology than hard rock does. So, the ceiling is much higher. There is far more room to figure out new approaches and technologies to extract and refine these brines than there is digging up holes in the earth and doing it the hard rock way.”

That higher degree of flexibility comes with other benefits. “Brine is far less environmentally impactful than hard rock,” Egan added. “Probably even more important is that using technology on brine is far more economic. The environment is equally if not more important and that’s the reason why we’re doing all of this in the first place. So, it’s a win/win on both the environment and the economics.”

For the United States, there is also the fact that the country is home to known, abundant reserves of lithium-bearing brine. Egan points to four main areas:

  • The Great Salt Lake in Utah;
  • The state of Nevada, specifically in the Clayton Valley;
  • The Smackover region in the Texas/Arkansas region; and
  • The Salton Sea in Southern California, which some call the “Lithium Valley.”

So, the known resources are in place, but the only currently-active extraction operation is in Nevada’s Clayton Valley. As noted above, mounting new projects take years to start-up, and years more to get to first production. That is time that the energy transition doesn’t have if the goals of western governments are to be met.

Obviously, the situation cries out for new technologies, like the one offered by EnergyX, to speed up domestic lithium extraction and production. But, as Egan noted, it also increases the need for an onshoring of critical infrastructure for the processing of the lithium. “Even if the lithium is produced in the U.S., we still don’t have the capabilities to process it,” he told me. “What could be worse than extracting it over here, but still having to ship it over to China to be processed? So we need to build adequate processing facilities, not just for lithium, but for the other necessary battery materials. That’s the key part of the supply chain that’s missing.

“It’s really building a whole industry over here that we haven’t had a lot of focus on,” he concluded.

That’s exactly what it amounts to, and, as the skyrocketing prices for lithium and other key minerals illustrate, time is of the essence if this energy transition is to ever produce meaningful results.

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