Lithium is the new gold: how global race to extract it faster can change geopolitical balances

Direct lithium extraction (DLE) promises to be a cheaper, faster and more environmentally friendly way than traditional lithium production.

On the outskirts of El Dorado, the heart of Arkansas’ 1920s oil boom, a Koch Industries-backed company is trying to dramatically accelerate the extraction of lithium. This is a battery metal essential to ridding the world of fossil fuels-while proving critics wrong.

At Standard Lithium’s demonstration plant – that’s the name of the company working on the potential breakthrough – a group of pipes and tanks transforms brine into a lithium compound in a matter of days, rather than the year or more it takes to perform the same operation with traditional recovery methods.

Standard Lithium is one of dozens of companies rushing to commercialize technology to extract lithium directly from brine, ushering in a new source to supplement the hard rock mines and huge evaporation ponds that currently supply the world with battery metal.

The result of these efforts is set to shape the future of the industry, bringing the promise of abundant supply or setbacks that will affect investors for years to come.

DLE, the new Lithium extraction technique

The technique-known as direct lithium extraction (DLE) – promises to be a cheaper, faster and more environmentally friendly way than traditional lithium production in South America, which holds about half of the world’s reserves of the silvery-white metal.

DLE would also unlock new supplies in North America, including the recovery of lithium from salt water produced by oil drilling. “It is an evolutionary step in the lithium industry,” said Standard Lithium CEO Robert Mintakm. Adding that, “If we want to have a supply chain that can meet the demands of the lithium industry, the DLE will be one of the tools.”

All along the global electric vehicle supply chain, this new way of extracting lithium is being touted as the solution to increase production while protecting the environment. Billions of dollars are pouring into what Goldman Sachs calls “a potentially revolutionary technology.” In a way similar to the revolution that shale has been in the oil industry.

However, some producers and industry experts are skeptical. Despite the boom in testing and development, DLE techniques are relatively unproven on a large scale and their refinement could take years.

Rising Lithium prices

Lithium prices last year soared to record highs as growth in demand from the boom in electric cars led to shrinking markets.

Prices have since fallen amid a steady flow of new production from Australia. Although they remain high thanks to optimistic prospects for electric vehicle growth.

A projected shortfall starting in 2025 is prompting startups, miners and even big oil companies to look for new ways to expand supply.

DLE testing around the world

After years of intensive testing and development work, the world is about to find out whether DLE works on a commercial scale.

Oil and gas giants such as Exxon Mobil are setting up operations to extract lithium from oilfield brine. The Rio Tinto Group – the world’s second largest mining company – is testing extraction methods in Argentina, where it is developing a project.

Meanwhile, Koch and Chinese electric vehicle giant BYD are already commercializing their DLE technologies. Some commercial projects are in the works, including Eramet’s Centenario plant in Argentina, which aims to be fully operational by mid-2025.

In China, Sunresin New Materials already operates such plants. Much of the enthusiasm about DLE can be attributed to the increasing scrutiny of environmental and social issues in the mining sector.

Read also: Lithium mine discovered in the U.S. makes markets rattle

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