Could the U.S. become lithium independent?

Oil & Gas 360 April 16, 2024

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https://www.oilandgas360.com/could-the-u-s-become-lithium-independent/

Despite having some of the world’s biggest lithium resources, the United States currently has limited capabilities to extract, refine, and produce domestically sourced lithium, typically importing nearly half of the lithium it consumes. However, the country could soon become self-sufficient in lithium, thanks to a rapidly-developing technology: direct lithium extraction (DLE).

DLE technologies are capable of extracting up to 90% of lithium in brine, much higher than ~50% extraction rates using conventional ponds. Another major benefit: they are capable of harvesting the metal in a matter of days compared to upwards of one year required to extract lithium carbonate from conventional evaporation ponds and open-pit mines. Direct lithium extraction also comes with an added ESG/sustainability bonus because they are able to recycle their fresh water and limit the use of hydrochloric acid.

Fastmarkets has forecasted that commercial-scale DLE projects could start coming online as soon as 2025 and could supply 13% of global lithium demand by 2030.

Unfortunately for lithium bulls, a flurry of new mines coming online as well as novel extraction technologies are likely to put lithium prices under extreme pressure. Goldman Sachs has forecast that lithium carbonate supply will grow at a brisk 33% annual clip, outpacing lithium demand which is expected to grow at 25% p.a.

“Our analysis suggests that DLE will widen, rather than steepen, the lithium brine cost curve with an average project likely sitting in the second or third cost quartile. With resulting additional lithium supply we also see risk that DLE implementation could extend the size and duration of lithium market surpluses/reduce deficits vs. our base case SD balance (without a pull forward of demand with new supply), where ~20-40% of LatAm brine projects implementing DLE (recovery from ~50% to ~80%) could add ~70-140ktpa LCE from 2028+, increasing GSe global raw supply by 8%,’’ according to Morgan Stanley.