Separation Anxiety
“The cure for anything is salt water: sweat, tears, or the sea.” – Karen Blixen
A huge swath of humanity’s economic activity involves separating complex natural mixtures into their individual components and then recombining some of them in a controlled way to create manufactured articles. Pure materials are far more ordered than mixtures, and an unavoidable entropic energy penalty must be paid to isolate individuals from the molecular crowd. In practice, there are no perfectly efficient processes, and the total energy required vastly exceeds this minimum threshold. The final bill depends on the quality of the starting materials, the number of steps involved in the purification process, and the desired purity of the finished products.
Consider zinc mining. A good ore might contain 5-10% zinc, along with other metals such as iron and lead. Separating these metals involves extracting the ore from the surrounding environment, milling it into a fine powder, treating it with various chemicals, and drying it to produce zinc concentrate, a material that typically has about 50-60% zinc. Each of these steps involves a significant amount of energy. Converting that concentrate into zinc metal requires smelting, which uses still more energetically intense processes to further eliminate undesired contaminates, ultimately resulting in purities in excess of 99%. The largest industrial use of zinc metal is in the galvanizing process, where zinc is applied as a protective coating to steel or iron to prevent corrosion, thereby reuniting it with many of the metals it was originally associated with in nature (albeit in a far more organized way). Such are the cycles of modern industrial chemistry.
Given the intense focus on the production of electric vehicles (EVs), whether the world can mine a sufficient amount of the necessary battery materials to meet anticipated demand is an open question. A modern EV lithium-ion battery contains about 8-10 kilograms of the all-important metal, and if growth projections are to be met, significant new supply needs to be brought online soon.
There are two main methods of commercial lithium production in operation today: hard rock mining and evaporation ponds. The former is predominantly used in Australia and generates spodumene, which contains about 6% lithium. Virtually all the spodumene produced in the world is sent to China for further processing, although Albemarle recently announced plans to build a new processing facility in the US.
The latter is led by Latin America, where a unique set of environmental conditions allow for the economical extraction of lithium from beneath ancient dry lake beds. While typical ocean saltwater contains just 0.00002% lithium, brine pumped up from under salt flats in Bolivia, Chile, and Argentina can contain as much as 0.3% of the stuff. Normally, the energy penalty imposed for fishing out such a dilute component from a mixture like this would be prohibitive, but the arid conditions in the so-called “lithium triangle” present an innovative solution. Over a period of 10-24 months, free energy from the sun is used in combination with chemical treatments to concentrate the brine to 6% lithium, a level suitable for subsequent processing to battery-grade material.
There are several drawbacks to this approach. As that striking picture demonstrates, evaporating brine requires an immense area of land—testimony to the massive amount of energy needed to get the job done—and the resulting blight plus environmental damage is not inconsequential. The process is susceptible to variations in the weather, and unexpected rainfall can set back the evaporation process by months. Given the extended cycle times involved, evaporation pond operators cannot effectively respond to changes in market demand, an issue that recently manifested during the Covid-19 lockdowns. At last, the economic viability of this approach is limited to these unique geographies, where nearly ideal weather coincides with reasonably accessible, lithium-rich brine.
With the passage of the Inflation Reduction Act in the US, a firehose of cash is gushing at all things “green.” The resulting drive to unlock new sources of lithium has spawned dozens of startups seeking to develop breakthrough separation technologies suitable for the task. Public and private money is flooding into the field of direct lithium extraction (DLE), and like all investment bubbles, separating the potential winners from the hucksters can be challenging. What are investors to make of this unfolding mania? Are breakthroughs truly on the horizon? If so, who will likely be the main beneficiaries? Let’s develop a framework of analysis together.