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Oct 30, 2024

Does Arkansas Hold the Answer to Our Lithium Needs? - Securities.io

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Lithium has quickly become a very important commodity, largely due to the rise of EVs and renewable energy and its associated massive demand for lithium-ion batteries. The demand is expected to persist in growing exponentially until 2030, making the current 1,189,000 MT lithium carbonate equivalent (LCE) demand look small in comparison.

Source: Statista

While lithium-ion might one day become a somewhat obsolete technology, lithium will likely stay an important part of battery chemistry, especially if lithium-metal solid-state batteries become mainstream.

This demand growth has led to volatile lithium prices, with shortages creating big price spikes followed by crashes.

Source: Carbon Credit

It has also made securing lithium supply a strategic concern, especially as more and more industries come to rely on steady lithium battery supply, from electric utilities to automakers.

Currently, most of the world's batteries and refined lithium come from China. The mineral itself is primarily mined in the “lithium triangle” (Chile, Argentina, Bolivia), China, and Australia.

Source: Progress in Natural Science

Lithium production has been rather slow in North America despite large resources. These resources have now been revealed to be even larger, with massive lithium deposits discovered in Arkansas. This discovery was made by researchers at the US Geological Survey, Arkansas Department of Energy and Environment, and published in Science Advances under the title “Evaluation of the lithium resource in the Smackover Formation brines of southern Arkansas using machine learning”.

The lithium triangle is this border zone in South America between 3 countries that contains massive amounts of lithium-rich brines, from which a large percentage of the world's lithium comes.

The USA appears to have its own lithium triangle at the intersection of Arkansas, Texas, and Louisiana.

Source: Science Advances

And the discovery is massive, potentially doubling overnight the estimated US lithium resources.

Using these predicted lithium maps with reservoir parameters and geologic information, we calculated that there are 5.1 to 19 million tons of lithium in Smackover Formation brines in southern Arkansas, which represents 35 to 136% of the current US lithium resource estimate.

This was already known that the oil & gas deposits in the area were also rich in brines containing bromide and lithium. However, previous analyses could only give an indication of the lithium content at the brine sample location, with a wide range of results, from 0.08 to 1700 mg/liter.

So the researchers deployed an AI analysis to bring together all the known measurements and the geological data of the region. As the area has been extensively explored for oil & gas production, its underground structure is rather well documented.

In this study, we use published and newly collected brine lithium concentration data to train a machine-learning model and create a spatially continuous map of predicted lithium in Smackover Formation brines across southern Arkansas using geologic, geochemical, and temperature explanatory variables.

This analysis pointed out that one site, the Smackover Formation, was much more promising than the others.

Source: Science Advances

The AI-driven analysis was able to determine the most important predictive factor leading to the presence of lithium or not:

Source: Science Advances

Depending on the lowest and highest estimates for brine volume and lithium concentration, the total amount available in the Smackover Formation could be:

Source: Science Advances

Some of these brines have already been brought to the surface, as a result of exploitation for bromine production, or as a byproduct of oil & gas production.

In total, approximately 5000 tons, or less than 0.1% of the available lithium resource in the Smackover Formation, have been brought to the surface within brines as waste streams of the oil, gas, and bromine industries.

This represents a small percentage of the total resource available but still would have been enough to cover the 2022 lithium consumption of the US, illustrating the potential of this resource.

And “Big Oil” is looking at the potential to leverage its expertise in drilling in the region, with plans by Exxon for drilling a “lithium well”.

Currently, lithium is produced mostly using two different methods.

The first one is crushing lithium-rich rock, like spodumene, which is the type of lithium Australia produces.

The second is the evaporation of brine using solar energy in vast evaporation ponds. This is a very cost-efficient method, but it also consumes a lot of water, captures only 50% of the available lithium, and causes significant pollution.

A third method is now being developed: direct lithium extraction.

The commonly used lithium concentration methods rely on evaporation and/or mineral concentration. Instead, direct extraction targets the lithium atoms through a selective extraction process. This can be achieved through a few different methods:

Source: Lithium Harvest

Oilfield brines may be an important lithium resource because these brines occur globally, are otherwise considered a waste product from the oil, gas, and brine industries, and—depending on the viability of direct lithium extraction technologies—would not require a large footprint similar to the evaporative processes used to concentrate basin brines

“Evaluation of the lithium resource in the Smackover Formation brines of southern Arkansas using machine learning”.

A new method for direct extraction might also have been discovered by researchers at Monash University (Australia), published in Nature Sustainability under the title “Sustainable lithium extraction and magnesium hydroxide co-production from salt-lake brines”.

They used EDTA-aided loose nanofiltration (EALNF) to extract lithium. This method is able to extract both lithium and magnesium at the same time, improving the overall efficiency of the operation. Previously, magnesium has been treated as a waste of lithium extraction.

The process achieves ultrahigh Mg2+ rejection (99.85%), ultrafast Li+ flux, and unprecedented Li+/Mg2+ separation factor under industrial conditions.

Magnesium is often present in brine and can cause problems for selective extraction of lithium. This has often caused such resources to be ignored in favor of “easier” brines.

“Our technology achieves 90 percent lithium recovery, nearly double the performance of traditional methods, while dramatically reducing the time required for extraction from years to mere weeks.”

It is also less water-consuming than waiting for brine to evaporate in artificial pounds. In fact, it even produces fresh water as a byproduct, instead of consuming it. With a lot of lithium resources in water-poor regions, this could make a difference.

Lithium-ion batteries have already changed the world several times, from allowing people to carry advanced electronics everywhere to powering cars with electricity only.

They might still do so again, or other types of batteries, by allowing for a 100% renewable power grid or allowing for airplane electrification when reaching a high enough energy density.

You can invest in battery-related companies through many brokers, and you can find here, on securities.io, our recommendations for the best brokers in the USA, Canada, Australia, the UK, as well as many other countries.

If you are not interested in picking specific battery companies, you can also look into biotech ETFs like Amplify Lithium & Battery Technology ETF (BATT), Global X’s Lithium & Battery Tech ETF (LIT), or the WisdomTree Battery Solutions UCITS ETF, which will provide a more diversified exposure to capitalize on the growing lithium and battery industry.

Or you can consult our “Top 10 Battery Metals & Renewable Energy Mining Stocks”.

Rio Tinto is a giant of the mining industry (the world's second-largest), with a strong presence in iron mining, as well as copper, aluminum, gold, uranium, etc.

Rio Tinto is expanding quickly, notably with the mega iron mine project of Simandou in Guinea and the Oyu Tolgoi copper mine, the largest project in the history of Mongolia.

Rio Tinto is expected to provide 25% of growth volumes in global copper supply in the next 5 years.

Recently it has made a massive entry into the lithium mining sector, with the acquisition of lithium giant Arcadium Lithium, itself the result of the merger in 2023 of large lithium producers Allkem and Livent, making it the 3rd largest lithium producer in the world.

Source: Arcadium

The merger created a company in all lithium production and processing steps. Arcadium has expansion plans in place to more than double capacity by the end of 2028

Regarding this acquisition, what has been described as “Rio Tinto's real prize” is Arcadium's direct lithium extraction (DLE) technology. Arcadium has actually been working on DLE since 1996, in combination with evaporation pounds, and recently made significant progress in making it commercially viable as a stand-alone extraction method.

Notably, Livent acquired ILiAD Technologies in 2023.

“ILiAD Technology Platform combines a superior lithium selective adsorbent with continuous countercurrent bed processing”

“Livent is the world's foremost practitioner and largest user of DLE-based production processes, and we are thrilled that they have recognized the advantages that ILiAD brings to the future of DLE.

It seems that the long-term expertise of Arcadium with DLE, and the “vast range of lithium laden brines under a wide variety of conditions” of ILiAD were a prime reason for Rio Tinto's decision to acquire Arcadium, on top of its low valuation due to the cyclical nature of lithium markets.

Arcadium also developed LIOVIX, a form of printable lithium foil that could be used to boost battery performances, reduce manufacturing costs, and reduce lithium use.

Source: Arcadium

Arcadium's acquisition firmly put Rio Tinto in the camp of mining industry innovators after its innovation in copper extraction through its venture Nuton. Nuton's new technology allows for a much higher rate of copper recovery from mined ore.

Rio Tinto's aluminum production is low-carbon, thanks to hydropower being used to refine bauxite into alumina and then aluminum.

Rio Tinto also invested in other lithium projects, recently acquiring the Ricon project in Argentina and the controversial Jadar lithium project in Serbia (potentially the largest lithium project in Europe).

Due to its recent acquisitions and new projects, Rio Tinto should increasingly be seen as an iron miner at the core, with an increasingly green profile and strong growth in all the metals required by the energy transition, especially copper, low-carbon aluminum, and lithium.

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Jonathan is a former biochemist researcher who worked in genetic analysis and clinical trials. He is now a stock analyst and finance writer with a focus on innovation, market cycles and geopolitics in his publication 'The Eurasian Century".

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