10 Lithium Stocks Betting on Direct Lithium Extraction
Lithium demand is expected to increase significantly in the coming decades as the world turns to greener sources of energy to meet its net-zero goals. But extracting and processing lithium is not an easy task, and challenges and delays are common across projects in the industry.
Many experts believe new technologies could be a way to bring more supply online at a faster rate, with direct lithium extraction (DLE) being called the next potential game changer for the industry.
DLE refers to a variety of technologies used to extract lithium from brines. Some projects are already producing lithium using DLE methods in China and South America, and many junior miners looking into these processes to bring their projects online.
For Goldman Sachs (NYSE:GS), DLE has the potential to significantly impact the lithium industry, “with implementation on the extraction of lithium brines potentially revolutionary to production/capacity, timing and environmental impacts/permitting.’
Using filters, membranes, ceramic beads or other equipment, DLE technologies extract lithium from brines faster than traditional methods and have a lower carbon footprint. According to Fastmarkets, 13 percent of the world’s lithium will be produced using DLE by 2030.
But questions remain as to when DLE might make a difference at a commercial scale, and there are also concerns related to water usage. Currently, the only commercially proven approach to DLE has been adsorption; other methods, such as ion-exchange or solvent extraction, are still in the pre-commercial stage.
“It’s certainly part of our long-term forecasts, but it is a question of time,” he said. “We are getting closer and closer to the stage where we will see it.”
What to look for in a DLE stock?
“We have to think of them separating what is brines in salt lakes, and maybe very low-grade lithium brines in other places,” he said. “To put it simply, I don’t think we will have any supply coming from these technologies in the next five years.”
Similarly, Chris Berry of House Mountain Partners pointed out that direct lithium extraction is not a single technology.
He added that when looking at companies to invest in, the basics — such as whether the management team has ever done this before — are key. “What is their capability with respect to very complicated chemical processing? There’s some experience out there, but we need a lot more of it,’ Berry explained.
For Rodney Hooper of RK Equity, DLE is an opportunity. “The way I look at DLE opportunities has always been to value it as optionality rather than as a project,” he said. “It’s a big bid on a new technology, but it is needed, it would fit very well in the ESG narrative, so we hope that it does work. But the timelines need to be more realistic in terms of building pilot plants or projects on a stage-by-stage basis, and then seeing that they pan out.”
Which lithium companies are betting on DLE?
One of the most well-known lithium producers in the western world currently using a proprietary DLE process is Argentina-focused Livent (NYSE:LTHM). Given Chile’s recent push for more DLE, producers SQM (NYSE:SQM) and Albemarle (NYSE:ALB) are also looking into this technology. Aside from that, diversified miner Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO) invested in a DLE project in Argentina last year, and Eramet (ERA:EPA) is also developing an asset in the South American country using this technology together with China’s Tsingshan Holding Group.
Within the private sector, Controlled Thermal Resources, EnergyX, EnergySource Minerals, IBC Advanced Technologies and Cornish Lithium are some of the players in the DLE space.
1. Compass Minerals (NYSE:CMP)
Market cap: US$1.5 billion; current share price: US$37.16
Compass Minerals is a leading global provider of essential minerals, including salt, sulfate of potash and magnesium chloride. The company is pursuing the development of a sustainable lithium brine resource to support the North American battery market, and selected EnergySource Minerals as its DLE technology provider for the resource after testing multiple technologies over the course of three years.
Compass will develop its lithium resource over two phases. In phase one, the company is planning to build an approximately 11,000 metric ton (MT) battery-grade lithium carbonate facility. For phase two, it intends to build an approximately 28,000 MT battery-grade lithium hydroxide monohydrate facility. Once fully operational, Compass expects its annual production capacity to be approximately 35,000 MT of lithium carbonate equivalent.
2. Standard Lithium (TSXV:SLI)
Market cap: C$1.01 billion; current share price: C$5.93
Standard Lithium’s flagship projects, the Lanxess project and the South West Arkansas project, are located in Southern Arkansas, US, near the Louisiana state line. They are part of the Smackover formation, a geological formation that stretches across multiple US states and is a prolific source of oil. More recently, it has been looked at for its lithium brine potential.
At its DLE demonstration plant at Lanxess, the company is testing commercial lithium extraction and purification of brine. As of August, Compass had processed around 14 million gallons of lithium brine from its projects using the process and had successfully converted the product into battery-grade lithium hydroxide.
The company is also pursuing the development of other projects in East Texas’ portion of the Smackover formation, as well as approximately 45,000 acres of mineral leases located in the Mojave Desert in San Bernardino County, California.
3. Vulcan Energy Resources (ASX:VUL)
Market cap: AU$734.6 million; current share price: AU$4.39
Vulcan Energy Resources is focused on lithium production in Europe, with projects in Germany and Italy. The company says it is aiming to decarbonize lithium production by ‘producing a world-first lithium hydroxide monohydrate chemical product with carbon neutral footprint.’
To this end, Vulcan is developing the Zero Carbon lithium project in Germany’s Upper Rhine Valley using a proprietary alumina-based adsorbent process. Vulcan draws on naturally occurring, renewable geothermal energy to power the lithium extraction process, and the process also creates a renewable energy by-product. This extraction method also uses significantly less water than traditional extraction methods and has a small footprint, according to the company.
Vulcan has signed lithium supply deals with Netherlands-based Stellantis (NYSE:STLA), Renault (EPA:RNO) and Volkswagen (OTC Pink:VLKAF,FWB:VOW). Aside from signing supply deals with automakers, Vulcan has inked agreements with battery materials maker Umicore (EBR:UMI) and South Korea’s LG Energy Solutions.
4. Lake Resources (ASX:LKE)
Market cap: AU$334.27 million; current share price: AU$0.23
Lake Resources is a lithium developer using state-of-the-art ion-exchange extraction technology for the production of sustainable, high-purity lithium from its flagship Kachi project in Catamarca, Argentina.
Lake’s technology partner is California-based Lilac Solutions, which says its technology protects the environment while accelerating project development, increasing recovery and yielding a high-purity product.
5. International Battery Metals (CSE:IBAT)
Market cap: C$232.59 million; current share price: C$1.05
International Battery Metals is a DLE technology company that says it has ‘developed and patented the world’s fastest, scalable lithium-processing technologies and has pioneered the only patented technology able to achieve commercial-scale lithium production in just 18 months.’
The company’s proprietary modular DLE technology quickly and efficiently recovers more lithium from brine than traditional methods, with recoveries of 68 percent, and is more environmentally friendly than traditional methods as well.
6. Anson Resources (ASX:ASN)
Market cap: AU$191.14 million; current share price: AU$0.15
Anson Resources (ASX:ASN), via its subsidiary A1 Lithium, is developing the Paradox lithium project in Utah, US.
The company has partnered with Sunresin, a Chinese company offering DLE lithium technology, to use its proprietary DLE process at Paradox. This technology is currently producing 73,000 MT per year of lithium carbonate at nine projects.
7. E3 Lithium (TSXV:ETL)
Market cap: C$167.4 million; current share price: C$2.56
E3 Lithium is developing the Clearwater lithium project with the goal of producing high-purity, battery-grade lithium products. E3 plans to process brine from Clearwater using its DLE ion-exchange technology, which it is scaling towards commercialization.
The company’s technology uses a proprietary sorbent designed to be highly selective toward lithium ions, allowing it to ‘quickly and efficiently reduces large volumes of low-grade brine into a high-grade lithium concentrate in one step, simultaneously removing nearly all impurities.’ More specifically, it achieves over 90 percent recoveries and reduces impurities by over 98 percent.
8. CleanTech Lithium (LSE:CTL)
Market cap: 56.2 million pounds; current share price: C$2.49
CleanTech Lithium is an exploration and development company focused on lithium projects in Chile. CleanTech Lithium has three prospective lithium projects: Laguna Verde, Francisco Basin and Llamara. CleanTech Lithium is committed to using renewable power for processing, and it is using DLE in part to reduce the environmental impact of its lithium production.
The company says the DLE method, which is being provided by Sunresin, offers short development lead times and low upfront capital expenditure, as well as no extensive site construction and no evaporation pond development. This means there is no water depletion from the aquifer or harm to the local environment.
9. Arizona Lithium (ASX:AZL)
Market cap: AU$88.37 million; current share price: AU$0.03
Arizona Lithium is an exploration company headquartered in Australia and engaged in the development of North American lithium projects, with its Big Sandy lithium project in Arizona and Lordsburg lithium project in New Mexico. Additionally, at the end of 2022, Arizona Lithium acquired Prairie Lithium, a lithium exploration and technology company. The acquisition brought the Prairie lithium project in Saskatchewan, Canada, and the company’s DLE technology, into Arizona Lithium’s portfolio.
In November, the company plans to commence operations at a pilot DLE test plant at the Prairie project, using Prairie’s proprietary lithium extraction technology. The DLE method employs an ion-exchange material to selectively extract lithium from brine using equipment that is expected to be readily available at commercial scale.
10. LithiumBank Resources (TSXV:LBNK)
Market cap: C$51.96 million; current share price: C$1.23
LithiumBank (TSXV:LBNK,OTCQX:LBNKF) is a development company focused on lithium-enriched brine projects in Western Canada — including its Boardwalk lithium project in Alberta — where it says low-carbon-impact, rapid DLE technology can be deployed.
The company has partnered with Conductive Energy to use its ion-exchange DLE process at Boardwalk asset. Conductive’s ion-exchange materials extract lithium from brine resources to produce lithium chloride, which is then processed using Conductive’s electrolytic refining process to create battery-grade lithium.
Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.