21 C
Belgrade
23/06/2024
Mining News

Rising Interest: Direct Lithium Extraction Firms Set to Spark Wave of M&A in Battery Supply Chain

Direct lithium extraction technology providers are expected to come under increasing investment and acquisition scrutiny from across the battery supply chain, including from oil companies moving into the sector.

Doubts over direct lithium extraction (DLE) have percolated amid cost and schedule blowouts in the deployment of some newer technologies. But pressure is growing to develop DLE as lithium brine producers in Latin America, home to over half the world’s proven mineral resources, are facing new restrictions on evaporation ponds to preserve precious water resources.

Supported by

Acquiring DLE technology will be a “case of necessity” for some incumbent lithium producers of continental brines, Adamas Intelligence lithium analyst Chris Williams said in an email interview. “Given the major brine producers have not commercially demonstrated DLE technology themselves and given the speed at which demand for lithium is growing, there is pressure to outsource processing technology to third-party vendors and/or engage in M&A with these vendors directly. This could save many years of in-house research and development.”

S&P Global Commodity Insights’ Metals and Mining Research team forecasts lithium demand to more than double by 2027, contributing to a lithium chemical shortage that year.

“I would expect to see … an explosion of acquisitions” when “there is enough data to provide adequate confidence” in the technology, said John Burba, founder and chief technology officer of International Battery Metals Ltd.

Supply chain support critical

Support from the supply chain — be it upstream or downstream, from existing producers to battery cell and electric vehicle manufacturers — is “critical” for DLE startups to commercialize their technology, Teague Egan, founder and CEO of Energy Exploration Technologies Inc., told Commodity Insights. US-based General Motors Ventures LLC and South Korea-based Posco Holdings Inc. invested in Egan’s Texan DLE startup in 2023.

In December 2023, Livent Corp., now called Arcadium Lithium PLC, acquired a minority stake in EnergySource Minerals LLC unit ILiAD Technologies LLC. ILiAD’s “efficient and flexible extraction technology can be used to recover high-purity lithium chloride from lithium-laden brine resources around the world,” including brine from salars, produced water and geothermal brine operations, it said. The agreement gives Livent the right to license ILiAD at its Hombre Muerto operation in Argentina, where commercial utilization could start as early as 2025.

“A closer look into Livent’s operational metrics reveals deficiencies in their water, energy and carbon footprint,” which could explain the deal, Adamas Intelligence said in a December 2023 note.

Burba, who was part of Livent’s design team for the DLE plant, told Commodity Insights that the company chose to still use water-intensive evaporation ponds alongside DLE to increase recovery rates.

Sociedad Química y Minera de Chile SA acquired 20% of French DLE provider Adionics in the third quarter of 2023. Given SQM wants to halve its water consumption by 2030, a “DLE technology acquisition would be the most logical option,” Adamas said in a November 2023 note.

Positive feedback loop

Oil companies keen on reducing their environmental footprint while increasing return on investment from existing field infrastructure also hope DLE technologies can feed supply concerns in the US ahead of an expected long-term deficit.

Chris Doornbos, president and CEO of E3 Lithium Ltd., said it “makes very good sense that oil and gas companies especially are looking at direct extraction for confined brine aquifers,” with which they are already “very familiar” in their own processes.

E3 Lithium said its DLE technology uses a “highly lithium-selective sorbent” and could recover over 90% of the lithium ions from brine. The company said in June 2022 that it had received an investment from Imperial Oil Ltd. to “advance a lithium-extraction pilot in Alberta, exploring the redevelopment of a historic oil field into a potential new leading source of lithium for Canada’s growing critical minerals industry.”

Equinor ASA, Occidental Petroleum Corp. and Schlumberger Ltd. are all looking at transferring their processing skills to extracting lithium from brine, sometimes from waters at oil fields, before reinjecting it underground. Chevron Corp. also said producing lithium suits its “core capabilities.”

Exxon Mobil Corp., meanwhile, is targeting up to 100,000 metric tons per year of lithium carbonate equivalent in Arkansas’ Smackover formation, a prolific petroleum source. Pantera Minerals Ltd. called Smackover “America’s new lithium superhighway,” having recently expanded its landholding there. Albemarle Corp. is also building a plant to test its own DLE technology in the region.

ExxonMobil is “evaluating many of the DLE technology solutions that are available today” as best suited to the resource, and is “working with outside parties” to find a solution appropriate for the brine chemistry, Patrick Howarth, lithium global business manager for ExxonMobil Low Carbon Solutions, told Commodity Insights in November 2023.

“If I was Exxon, I would acquire [the outside party] because you really want to have that [expertise] in-house so you can have that constant positive feedback loop to always be optimizing and improving the operation and the regeneration of the sorbent,” said Francis Wedin, executive chair of Vulcan Energy Resources Ltd.

Vulcan Energy has developed adsorption-type DLE technology in-house for its Vulcan project in Germany and plans to become a DLE technology provider, as well as a lithium producer, given interest already received from Europe due to a shortage of options outside Russia and China.

 

Source: S&P Global

Related posts

Expanding Gulf nations’ investments in Africa’s critical minerals: Economic opportunities and geopolitical challenges

David Lazarevic

The Philippines’ mining dilemma: Navigating critical minerals demand, environmental conservation and indigenous rights

David Lazarevic

Strategic approaches: US initiatives in Africa’s critical minerals sector to counterbalance Chinese influence

David Lazarevic
error: Content is protected !!