Digging Into Less Conventional Lithium Mining Options

August 23, 20204 years ago Zachary Shahan 0 Comments

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A few weeks ago, one of our writers wrote up a story on the company Standard Lithium and its plan to get lithium for EV batteries in a new, innovative way. Tesla CEO Elon Musk responded on Twitter that he thought the approach had “a lot of potential.”

This has a lot of potential. Lithium is pretty much everywhere.

— Elon Musk (@elonmusk) July 27, 2020

Since I had already started having conversations with Howard Klein and Rodney Hooper of RK Equity to learn more about lithium mining and refining for EV batteries, Tesla’s lithium sources, and the catch-22 in the industry right now, I decided to ask them for a conversation on Standard Lithium and other potentially up and coming approaches to lithium extraction.

Howard noted in our podcast discussion that it is indeed noteworthy that Standard Lithium has advanced to a “significant demonstration plant stage.” Also, before that discussion, he wrote:

“Elon’s right to say they look promising, but as he also said, clay and brines are hard to produce high purity lithium hydroxide. Just like new battery tech breakthroughs, none have been commercialized yet so capex and opex aren’t known. And these processes tend to produce carbonate not hydroxide so need to add an extra step (cost) to make hydroxide.

“We are believers in an ‘all the above’ strategy:

- Hard rock
- Conventional brine
- Unconventional brine (geothermal, oilfield, bromine)
- Clay/sediment

“HOWEVER, Tesla biggest suppliers today, Albemarle and Ganfeng, provide his hydroxide from hard rock (from Australia to China), which, like the lithium-ion battery, is the most proven technology — most consistent, generally lower cost, generally more secure coming from Australia, which is NOT politically volatile like Bolivia or Argentina or Chile and doesn’t have water/indigenous issues.

“A third Tesla provider, Livent, makes hydroxide from Argentina brine.”

Update: Stefan Debruyne, Director Business Development at SQM, has added some more information to this matter. He notes that it is not true that it is not possible to produce battery-grade lithium hydroxide from brine. “This is a common misperception, sometimes promoted by Lithium hard rock miners, however it is simply incorrect,” he noted.

“SQM has been producing Lithium Hydroxide battery grade from Atacama brine since many years. Our current LiOH capacity is 13.5 kMT and we are expanding this year to 21.5 kMT. That’s enough to potentially supply lithium for more than 250,000 80kWh battery packs per year.”

That’s just the background, though. What I was curious about and Howard and Rodney were happy to chat about was the landscape for these unconventional options.

Regarding Standard Lithium, Howard explains that it had a joint venture with the German company Lanxess AG, “which operates a large bromine project in Arkansa, and within the bromine is lithium … so, Lanxess considers that lithium waste — or they don’t do anything with it — so Standard Lithium approached Lanxess and said, ‘we can take your waste and convert it into sellable lithium.'” One interesting thing here is that Standard Lithium doesn’t own its lithium source in this case, which is highly unusual in the lithium mining business. Therefore, the partnership allows Standard Lithium to potentially make a business on little (well, less than usual) capital investment, and Lanxess has the potential to make money on something it previously considered useless.

“The deal that they cut is that ~~Standard Lithium~~ Lanxess will finance the full buildout — on a commercial scale of the project — and for that Lanxess will get 70% of the company and Standard Lithium will get 30% of the company.” That’s the economics of that plant/deal.

“And it is interesting. But it’s not proven. There are still many steps that Standard Lithium needs to go to.” (Update: Howard accidentally said Standard Lithium would finance the buildout, but it is Lanxess that is financing it, so the quote above has been updated.)

He also explained the typical steps you go through in the mining business for a project, which are:

Resource
Preliminary economic assessment
Pre-feasibility study
Definitive feasibility study
Seek full funding

Standard Lithium is at the preliminary economic assessment stage, according to Howard. [Editor’s note: Standard Lithium has reached out to correct and reframe some matters regarding the company. The company’s statement is included at the bottom of this post.*]

As to whether it gets commercialized, Rodney and Howard couldn’t say, but Howard commented, “In general, we think that DLE technologies — this is a direct lithium extraction technology that’s being applied to a bromine, but they also apply to oil fields and geothermal — we believe that some of them will work, and they will likely contribute to supply post-2025 in some reasonable volumes.

“But it doesn’t solve at all a near-term shortage problem we see, in lithium hydroxide in particular, and that’s going to need to be met by more conventional technologies — in particular, hard rock spodumene mines converted directly to hydroxide.”

I asked Rodney and Howard to also give a kind of breakdown of how these different sources break down in terms of commercial operation/contribution today (versus just being an idea or at an early stage):

Hard rock
Conventional brine
Unconventional brine (geothermal, oilfield, bromine)
Clay/sediment

Rodney noted that hard rock and conventional brine are “in full swing,” and there is some unconventional direct lithium extraction (DLE) happening right now in Argentina, by Livent. “To some extent, it uses traditional brine ponds, but then it does a selective adsorption process in order to improve the quality of its carbonate before it ships off for reprocessing.

“The one that is still on the block to happen is sedimentary clay, but Ganfeng, which is the second largest lithium producer in the world, [has] bought into a company called Bacanora [to] give clay a run in Mexico at the Sonora project. And then you’ve got Lithium Americas in Nevada.”

Rodney also spoke for a moment about a geothermal brine company Elon Musk bid for in 2016. “If you remember, Elon Musk bid for Simbol, in 2016,” a geothermal brine near the Salton Sea in Southern California. “That project continued, and it’s now called EnergySource, and it has a definitive feasibility, I think, and it’s actually getting close to — I think it’s ready for financing and production.

“The appeal with geothermal is … you’re already pumping up the brine to generate the energy, so the lithium guys can treat it already and it’s at surface.”

I also asked Howard and Rodney if they could mention and give a short intro to a few other potentially successful companies or projects that are “on the horizon, speculative, but something to consider.” Howard noted that he does this on a monthly basis, tweeting out a market scorecard on these topics. “I publish a list of producers, funded developers, which is only one, and then a list of about 30 hopefuls, companies that are at either a very early stage of development — they could be $5 or $10 million market cap, up to $150 million market cap companies, which include a company like Standard Lithium, which has less market cap than that, but have raised $50 million, have advanced to a [preliminary economic assessment] or a pre-feasibility study level.”

*NEW*
Mr Market Scoreboard #Lithium
Decoupling from China spod/carb?
ASX cover shorts $ORE $GXY
EU ❤️ green spodumene. ~5% debt $PLS $SGMA
Enter US retail speculation on US/TSX stories $LAC $SLL $PLL $CYP ($NNO too) #Velocitility
Skeptical Instos👀on $ALB $LTHM (Aug 6) Q2 Calls pic.twitter.com/rcFrYL7iSb

— Howard Klein (@LithiumIonBull) August 1, 2020

There’s much more in the podcast, so I recommend a full listen. Also, see my previous conversations with Rodney and Howard and the stories that came out of them:

*The following is an addendum from Standard Lithium’s CEO, Robert Mintak, to provide more context and clarify the company’s position, technology, and progress.

Howard’s description of Standard Lithium as a technology company rather than a traditional mining development company is broadly correct (we are publicly traded and listed as a resource development company), his comment that we don’t have our own resource is not accurate. While we are primarily focused on the direct extraction of lithium from the 150,000 acres, 3.14 million tonnes LCE LANXESS resource we do have a large, 27,000 acres (undeveloped), lease package of our own in south Arkansas, The reason for our current focus on lithium extraction from the LANXESS leases is that these leases are already in commercial brine production in a massive way, over 5 billion gallons of brine pumped and processed for bromine extraction and then the brine is reinjected into the source aquifer annually. Our project partners LANXESS operate 3 processing facilities in the south Arkansas production fairway. All 3 plants are fully permitted for brine production, processing, and reinjection and have of course the associated infrastructure that comes with operating chemical plants; power, water, road, rail, and a skilled workforce. Just recovering lithium from their waste brine would equate to roughly 21,000 tonnes annually that is without having to do any resource development, the larger opportunity is a multiple of that.

Over the past three years, we have focused on the development of our direct lithium extraction technology “LiSTR” ( LiSTR stands for lithium – stirred tank reactor) and our next generation lithium carbonate crystallization technology “SiFT”. Because of the agreements and partnerships that we have secured in south Arkansas we have had the advantage of working from a project that is already, permitted and in commercial brine production with a fully developed and de-risked resource model and because we have had virtually unlimited access to large volumes of brine for testing work we were able to deploy the majority of the $60M CDN we have raised to date towards our processes and purification technology development.

Howard’s characterization that we are early stage and need to do follow the conventional development steps (PFS and a Feasibility study and then secure project finance) completely miscategorizes our project in the convention mining model. We have completed bench-scale, continuous pilot plant testing, and have now installed at the project location a continuous (24/7) operating industrial-scale pre-commercial demonstration plant of our direct extraction technology. The successful operation of the LiSTR plant will be the “proof of concept” that is a requirement for a final investment decision and formal joint venture agreements to be executed on our project with a staged commercial build ( most permits are already in place because of the existing operations) to follow. We are targeting for proof of concept and the formation of the JV company to happen this year (subject to a number of things outside of our control like COVID). This is a striking difference to the early development stage that Howard lumped us in.