Lithium’s not so secret untapped supply source
The fact that lithium is still the material of choice in electric batteries is a remarkable thing.
Designing the latest iterations of electric vehicles (EVs) and indeed solving the world’s dependency on oil has been one of the world’s greatest scientific breakthroughs of the previous decade. Even Toyota Motor Corp., a long-time evangelist of hydrogen fuel cell technology, announced last year that it is fast-tracking EVs using lithium-ion batteries.
But what about disrupting the lithium supply chain from within? Everyone in the industry knows that the lithium supply chain has had three distinct phases since the material started to get extracted from the ground earlier last century.
The first phase was a limited lithium supply from mining spodumene pegmatites, a practice that was disrupted in the 1990s when Chilean companies started getting lithium carbonate from evaporating the salt lake brines of the Atacama Desert. Phase 3 was spurred by the evolution of the li-ion battery in electrical components and mobile phones, creating enough demand to make rock mining feasible again. But what else is out there that could create a fourth phase?
There is one untapped resource that stands out in studies published in the handbook of the U.S. Geological Survey. Lithium found in bromine brines extracted from major oil and gas production regions in the U.S. such as Arkansas and North Dakota. The Smackover oilfield brine in Arkansas, known as the biggest source of lithium contained in these brines, could contain 1 million metric tons of lithium reserves, about a third of the reserves of the massive Atacama Salt Lake in Chile.
Arkansas supplies about a half of the world’s supply of bromine from oilfield brines, selling the chemical around the world to make flame retardant material and agricultural chemicals. The leftover tail brine, which could contain as much as 400 milligrams per liter of lithium, is re-injected underground. Annual brine production averaged 42.6 million cubic meters a year between 2010 and 2016, according to the Arkansas Oil and Gas Commission.
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To make this puzzle even more interesting, Albemarle Corp., the world’s largest lithium producer, competes head to head with Germany’s Lanxess and Tetra Technologies as one of the world’s largest bromine suppliers. The big question is, why is Albemarle spending large amounts of capital developing lithium reserves in Australia and Chile when it has a massive lithium resource contained in one of its own industrial feedstocks?
Albemarle announced back in 2011 that it had developed a proprietary technology to extract lithium from bromine brines at its Magnolia, Arkansas facility. The Baton Rouge, Louisiana-based giant has been surprisingly coy about this development ever since.
Albemarle is not alone anymore in developing this new horizon lithium resource. Standard Lithium Ltd. (TSXV: SLL | OTCQX: STLHF), a company formed by former executives of Pure Energy Minerals, have entered into an agreement with Tetra Technologies to create a pilot plant to experiment with the company’s tail brine feedstock in Arkansas. Pure Energy, with a project near the Clayton Valley lithium mine in Nevada, developed a proprietary new processing technology under the leadership of Standard Lithium CEO Robert Mintak, leading to a deal with Tesla Motors Corp.
Discovering a way of extracting lithium from bromine brine would be a massive win for any company that has the scientific expertise to accomplish this feat. Any such company would avoid all the huge capex and hassle in permitting, and developing a new greenfield site, be it from a salt lake operation or hard rock mine. This lithium is contained in an existing industrial feedstock in one of the most established industrial hubs of the USA. Look out for more on posts on this topic.
Matt Craze has covered commodity markets for more than 20 years, working as a researcher at CRU International, and for over 10 years as a ... <Read more about Matt Craze>