The Quest for Clean Lithium

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• The electric vehicle revolution is driving a surge in demand for lithium, but traditional mining methods raise serious environmental concerns.
• Innovative approaches are emerging to diversify lithium sources and minimize environmental impact.
• Ernest Scheyder shares insights about lithium mining and the potential benefits and challenges of alternatives to lithium mining.

When we think about powering the future with clean energy, images of sleek electric vehicles and sprawling solar farms often come to mind. But behind these symbols of a sustainable future lies a critical, and often overlooked, element: lithium. This lightweight metal is the key ingredient in rechargeable batteries that power everything from smartphones to electric grids, making it indispensable for the global transition to renewable energy.

But as the demand for lithium skyrockets, so do concerns about the environmental footprint of its extraction. Traditional lithium mining, with its massive open pits, vast water consumption, and potential for habitat destruction, has many wondering: is swapping gasoline for batteries truly a win for the planet?

“As we think about where we want to go green and how we're going to go green," says award-winning journalist Ernest Scheyder, "I think these [supply chain and environmental concerns] have to be part of the collective discussions.”

Ernest has spent years immersed in this complex world and is currently a senior correspondent at Reuters. His book, "The War Below," chronicles the global battle for critical minerals like lithium, pulling back the curtain on the often contentious struggle between economic needs and environmental concerns.

However, Ernest's work also reveals a glimmer of hope in the form of alternative lithium extraction methods — technologies that promise to minimize environmental damage without compromising production. "There's no free lunch," says Ernest, succinctly capturing the inherent trade-offs involved in any large-scale resource extraction. But the quest for cleaner lithium is gaining momentum.

Kevin Coldiron and I invited Ernest to Top Traders Unplugged for a thought-provoking conversation about the challenges and opportunities of lithium extraction in the age of clean energy. We talked about new technologies, environmental concerns, the role of indigenous communities, and the future of a sustainable lithium supply chain.

Here are a few highlights from our conversation on the alternatives to lithium mining and their potential benefits and challenges.

Alternatives to conventional lithium mining

Direct lithium extraction

Imagine a giant, high-tech water filter selectively extracting lithium ions from underground brine reservoirs — that's essentially what Direct Lithium Extraction (DLE) aims to achieve. This innovative method bypasses the need for large, open-pit mines and sprawling evaporation ponds, offering a potentially more sustainable approach to lithium extraction.

Instead of relying on solar evaporation, DLE uses specialized absorbent materials or membranes to capture lithium from brines pumped to the surface. This process has several key advantages:

• DLE significantly reduces water usage compared to traditional evaporation ponds, a critical consideration in arid regions where lithium-rich brines are often found.
• DLE requires a much smaller surface footprint than conventional mining, minimizing habitat destruction and visual impact.
• By eliminating the lengthy evaporation process, DLE has the potential to shorten production times, allowing for a quicker response to growing lithium demand.

However, Ernest cautions against viewing DLE as a silver bullet. "As of today," he says, "no direct lithium extraction technology has worked yet at commercial scale without the use of those evaporation ponds.”

The challenges, as Ernest highlights, are multifaceted. Firstly, the brines, often found at temperatures exceeding 400 degrees Fahrenheit, are incredibly corrosive. "Just that super hot brine," Ernest recounts, "one scientist I talked to for the book called it 'a nasty mix of a soup.'" Such extreme conditions demand specialized materials and engineering designs to ensure equipment durability.

Secondly, the complex chemical composition of brines poses a hurdle. Selectively extracting lithium without capturing other unwanted elements requires sophisticated filtration techniques. This is still an active area of research and development.

Despite these hurdles, several companies are pursuing DLE technology. Ernest notes that giants like Berkshire Hathaway, ExxonMobil, and Albemarle are all investing in this area, driven by the promise of tapping into new lithium resources and contributing to a more sustainable future.

"If it [DLE] could be made to work," he says, "it could unlock vast supplies of lithium across the world." However, Ernest emphasizes the importance of a realistic outlook. The potential is undoubtedly there, but the path to widespread commercialization is still paved with technical challenges.

Enhanced brine extraction with reduced environmental impact

While DLE offers a potentially revolutionary approach, researchers and companies are also exploring ways to improve the efficiency and sustainability of conventional brine extraction methods. These innovations aim to reduce the reliance on large, open-air evaporation ponds, which, as Ernest points out, have come under scrutiny for their high water consumption, especially in already arid regions. "You're basically taking a water source out of the ground in a very arid climate," Ernest explains, "so that doesn't necessarily endear [the companies] to the local community."

One promising avenue involves the use of specialized membranes and absorbent materials to selectively extract lithium from brines. These technologies allow for a more targeted and efficient extraction process, potentially minimizing the need for vast evaporation ponds. Ernest, in our conversation, highlighted the ongoing research in this field, noting the potential for these advancements to significantly reduce water usage and waste generation. He also emphasized the industry's awareness of the need for more sustainable practices: "Increasingly you start to see some mining companies, when they build processing facilities, they are building in recycling plans for 10, 20, 30 percent of the production."

Another area of innovation focuses on optimizing the evaporation process itself. Researchers are exploring techniques to enhance evaporation rates while minimizing water loss and land disturbance. This could involve using covered evaporation ponds to reduce water loss through evaporation, or exploring new materials that enhance lithium concentration in the brine, shortening the overall processing time.

Some companies are even experimenting with closed-loop systems for brine extraction. These systems aim to recycle the water used in the extraction process, minimizing overall water consumption and reducing the discharge of potentially contaminated wastewater. Ernest points out that this aligns with the broader push for a circular economy in the industry, where "old electronics can be completely recycled and then used to make new ones, so we don't have to have mining anymore."

While these enhanced brine extraction methods may not be as radical as DLE, they offer a more incremental path towards a more sustainable lithium supply chain. By improving the efficiency and reducing the environmental footprint of existing techniques, these innovations can play a significant role in meeting the growing demand for lithium while mitigating its impact on water resources and fragile ecosystems.

Lithium extraction from clay deposits

While brine extraction methods dominate the current lithium landscape, a relatively new source is gaining attention: clay deposits. These vast clay deposits, particularly in the United States, are now being eyed as a potentially more sustainable source of lithium.

"Another region in the United States that's got a lot of lithium is the Smackover Formation," Ernest explained during our conversation, "which is an underground reservoir that goes from parts of Texas, through Louisiana, through Arkansas into parts of Mississippi and Southern Florida." These clay deposits, formed over millions of years, contain lithium trapped within their mineral structure.

Extracting lithium from clay offers several potential environmental advantages compared to traditional hard-rock mining or brine extraction. Firstly, it can be less invasive. Unlike conventional methods that require digging massive open pits, clay-based extraction can involve smaller surface footprints, minimizing habitat disruption and visual impact.

Secondly, while the exact water requirements depend on the specific extraction technology used, clay deposits generally require less water than brine extraction methods, especially those relying on large evaporation ponds.

Finally, clay-based extraction could potentially tap into previously uneconomical lithium resources. As Ernest noted, "It had been a huge oil-producing region for a long time. It's got a lot of brine there still in these underground reservoirs ... but they also contain a lot of lithium."

This opens up the possibility of co-extracting lithium alongside oil and gas production, making use of existing infrastructure and potentially reducing the overall environmental impact.

However, extracting lithium from clay is not without its challenges. Developing efficient and cost-effective technologies to liberate the lithium from the clay matrix is a key area of research and development. Additionally, the processing of clay-based lithium resources may require different approaches compared to traditional sources, requiring further innovation and investment.

Despite these challenges, the potential of clay deposits as a more sustainable lithium source has attracted considerable interest. Several companies and research institutions are actively exploring and developing clay-based extraction technologies, driven by the need to diversify lithium sources and reduce the environmental impact of this critical mineral.

Charting a sustainable course for lithium

While conventional lithium mining has raised valid concerns about its environmental impact, the exploration of alternative extraction methods offers a glimmer of hope. DLE, with its promise of reduced water consumption and land disturbance, represents a potential paradigm shift.

Meanwhile, advancements in brine processing techniques offer a more incremental yet impactful approach to minimizing the footprint of existing operations. And the emergence of clay deposits as a viable lithium source opens up exciting possibilities for diversifying supply and reducing reliance on more environmentally intensive methods. The path forward requires a collective effort, embracing innovation, responsible practices, and informed decision-making.

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This is based on an episode of Top Traders Unplugged, a bi-weekly podcast with the most interesting and experienced investors, economists, traders and thought leaders in the world. Sign up to our Newsletter or Subscribe on your preferred podcast platform so that you don’t miss out on future episodes.