Following the recent surge in lithium prices, there has been a wave of attention on the opportunities and challenges related to Direct Lithium Extraction (DLE) and its role in closing the looming lithium supply and demand imbalance, including from McKinsey & Company[1] and Reuters[2].
However, what these analyses fail to recognize is “the real opportunity starts once DLE stops”, as leading South American lithium expert José de Castro, CEO of MP+, a mining technology provider, points out.
DLE, commercially used for nearly 30 years, and a complementary technology to KMX, is now garnering significant investor interest due to the looming lithium supply and demand imbalance driven by the boom in electric vehicle demand[3]. As capital floods into the DLE competitive landscape, and investor interest is focused on which of these companies might be best positioned for the unfolding multi-decade upcycle in lithium demand, some broader questions related to lithium’s role in the energy transition remain unaddressed through this disproportionate focus on DLE.
The three central questions regarding lithium’s role in the energy transition, in my view, are:
- How to meet rapidly rising demand?
- How to ensure sustainable extraction practices?
- How to ensure supply chain security?
To understand why the proliferation of DLE fails to fully address these questions, we need to look at the entire process of bringing lithium from brine to the battery, which includes:
Step 1): Lithium extraction (DLE)
Step 2): Lithium concentration (KMX)
Step 3): Refining (from natural state to battery grade)
Breaking Down the Three-Step Process from Brine to Battery-Grade Lithium
In most simple terms, there are three steps in supplying lithium from brine to battery manufacturers. First, the lithium found in low concentrations in brines must be isolated from other impurities (the DLE step). Second, the lithium must be concentrated by removing water. Third, once concentrated, it must be converted from its natural state (lithium chloride) to battery-grade lithium hydroxide or lithium carbonate.
Commoditizing DLE Will Help Meet Rising Demand
While the current influx in capital will likely create more competition in DLE, encourage miners to develop their own technology, lower costs, and help the market meet rising lithium demand, it does not address the next two questions (sustainable extraction and supply chain security).
Water Key to Sustainable Extraction Processes
As Reuters highlights, water is the central sustainability challenge for lithium development. Roughly 65% of the water in the lithium-rich Atacama Desert in South America has been lost to lithium and related mining practices[4]. Lithium projects are also increasingly coming under pressure from local opposition groups and governments with a key focus on water considerations. This trend should only exacerbate.
Supply Chain Challenges Not Related to DLE or Production Diversity
Lithium supply chain insecurity is the result of a lack of diversity in refining (not production, as is often the case in other commodities, like oil), as roughly 80% of refining capacity is in China[5]. Refining is the process by which lithium chloride is converted to battery-grade lithium once it has been concentrated.
Sustainable Extraction Supports Supply Chain Security
Importantly, as companies embrace new technologies that can concentrate lithium without losing water, less government and local pushback is to be expected, and there is a greater opportunity for lithium-rich regions to participate in the higher value lithium processing and related parts of the value-chain, versus simply rent-seeking and exploitive production practices. Naturally, this will alleviate supply chain concerns, promote prosperity, and protect local ecologies.
Recovering water that is currently lost not only ensures lithium producers are capturing more value while protecting resources but also provides an alternative water source for DLE which “uses lots of potable water,” as Reuters highlights. Utilizing water that would otherwise be lost during the critical lithium concentration step also negates the need for a desalination plant for DLE, which carries additional sets of environmental, local, and project-related risks.
Water’s Role in Unlocking Lithium for the Energy Transition
KMX is currently working with some of the most thoughtful project developers that understand de Castro’s comments, and why the opportunity starts where DLE stops.
As a lithium concentration technology provider that recovers water for reuse and is complementary to all DLE technologies, we are excited by the proliferation of DLE and benefit from the influx of capital towards an increasingly commoditized and fragmented industry.
We are even more hopeful that as the unfolding lithium development cycle gets underway, governments, companies, and the market will increasingly recognize water’s role in unlocking lithium for the energy transition.
– Zac
Zachary Sadow
CEO
KMX Technologies
[1] McKinsey & Company, 2022: https://www.mckinsey.com/industries/metals-and-mining/our-insights/lithium-mining-how-new-production-technologies-could-fuel-the-global-ev-revolution
[2] Scheyder, 2022: New lithium technology can help the world go green — if it works | Reuters
[3] Vulcan Energy Resources, 2021 (Slide 12, “Timeline of commercial development”): https://v-er.eu/wp-content/uploads/2021/11/Direct-Lithium-Extraction-technical-update-FINAL.pdf
[4] UNCTAD, 2020, https://unctad.org/news/developing-countries-pay-environmental-cost-electric-car-batteries
[5] BNEF, 2020, https://about.bnef.com/blog/china-dominates-the-lithium-ion-battery-supply-chain-but-europe-is-on-the-rise/
About KMX Technologies:
KMX Technologies is solving the most critical environmental and energy challenges of the 21st century. Through its proprietary membrane distillation technology, the company is accelerating energy storage with its direct lithium recovery enhancement processes, sustainably sources critical minerals necessary for next generation supply chains and infrastructure, and is advancing wastewater treatment.