Vulcan Energy Resources MD Francis Wedin on the tech that promises to make lithium a brighter shade of green
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As demand projections for electric vehicles and stationary storage continue to rise, so do expectations on the future expansion of the market for lithium chemicals.
The market for processed lithium could climb from around 350,000t today to 2Mt by 2030 according to pricing agency Fastmarkets, who say “the only way for demand to go is up”.
While electric vehicles have been proposed as the solution to decarbonising the world, there are concerns current methods of extracting the key ingredient in the lithium ion battery are not environmentally friendly enough, as they generate emissions in the EV supply chain.
A solution could come in the form of geothermal lithium extraction proponents, who want to extract the mineral from lithium rich brines which can also be tapped for renewable geothermal energy.
Much of that attention is focused on the Salton Sea in California, where investment has come from the US and California Governments as well as rich listers like Bill Gates and Warren Buffett’s Berkshire Hathaway.
The leading figure in the field on the ASX is Vulcan Energy Resources (ASX:VUL), which listed at 20c back in mid-2018 and is up an astonishing ~4000% since, with a market cap of $980 million.
Vulcan, which has Gina Rinehart on its share register, owns what it says is Europe’s largest lithium resource at the Zero Carbon Lithium Project in Germany’s Upper Rhine Valley.
According to the company it will do what it says on the tin, producing a carbon negative lithium product by pumping deep geothermal brines to surface, using the excess geothermal energy to power its lithium chemical process and export additional power to the grid.
The location is important as well. Europe was the world’s largest EV market in 2020 with 1.4 million sales but does not produce any of its own lithium.
According to the International Energy Agency, that could rise to between 7.1-13.3 million EVs a year by 2030, as countries such as the UK look to ban the sale of internal combustion engine vehicles by the end of the decade.
Vulcan is slated to enter production in 2024 with a DFS and pilot plant underway after a well received PFS at the start of 2021 that helped it raise $120 million in March and sign a first offtake deal with LG Energy Solutions this month.
According to that PFS, the project would produce 40,000t of lithium hydroxide a year at costs of €2,640/t, less than half of the cost of lithium chemicals produced from hard rock spodumene concentrate.
Stockhead spoke to Vulcan co-founder and managing director Francis Wedin about the company’s process and its first mover status, scepticism around geothermal lithium and why the sector is drawing interest from investors and EV companies alike.
“The resource was discovered by us, it was sort of academically known about,” Wedin says.
“The way it came to pass was really starting with Zero Carbon Lithium on a whiteboard and working backwards from there – ‘how do we achieve this?’
“Putting DLE (direct lithium extraction) and geothermal together, I come from a lithium background and I started a company with a guy called Horst Kreuter who comes from a geothermal background, so it was really putting those two worlds together.
“We tried to focus on where this could be done in the world and it was really the Upper Rhine Valley and Salton Sea in California. Obviously, we focused on Europe and the Upper Rhine Valley.
“It was academically known that the brine in the Upper Rhine Valley was lithium rich, and there was decades of research behind this.
“But I guess there was a disconnect between the geothermal industry where it was academically known and the lithium industry, which had the know how to extract that lithium.
“So the opportunity was putting those two industries together 2+2 and creating five.”
“So we pump the lithium up to surface and produce the energy from that and pump the brine through a series of columns where the brine is contacted with an absorbent.
“The lithium is then taken out of the brine in a salt form, lithium chloride, and everything else is left in the brine, the brine is then reinjected minus circa 95% of the lithium.
“The lithium is then stripped off the absorbent using a water strip, so no reagents are used, and then we end up with a dilute lithium chloride eluate.
“This is then evaporated, we use a forced evaporation process in a close lid system, so all the fluid that gets evaporated gets captured and reinjected so nothing is lost and we do that forced evaporation using the steam from the geothermal process.
“We don’t use any fossil fuels as part of that and that’s one of the things that makes us unique.
“We then end up with a very concentrated lithium chloride product that gets taken offsite to our planned chemical facility, which we’re planning for a chemical plant just outside of Frankfurt.
“We then use a chloralkali process, so effectively using green electricity to produce a lithium hydroxide product directly.”
“So all of these processes, the geothermal part, the lithium extraction part and the chloralkali, these technologies or forms of these technologies are used commercially already all over the world.
“The geothermal part of our team has been doing this for many, many years, we have a team of about 50 strong who’ve been developing these projects in Germany and worldwide, so those technologies are pretty much plug and play.
“We’ve got a direct lithium extraction team who’ve built direct lithium extraction systems before. It’s very similar to a process used by a company called Livent, one of the largest lithium companies in the world, at their brine operation in Argentina.
“The difference is we have geothermal heat to run the process instead of gas, so that is a process that is commercially used in the lithium industry.
“Then the chloralkali process has been around for about 100 years and Germany is the largest chloralkali producer in Europe.
“The reason we go down that process rather than the typical reagent to produce lithium carbonate and then lithium hydroxide is it’s just a cleaner and more eco-friendly way to be doing it and lower opex as well.
“Throughout the process we produce much more energy than we’d need so we’re selling the excess energy to the grid. Vulcan is a renewable energy company as well as a lithium chemicals company and that also makes us quite unique and according to our independent life cycle analysis we will actually be a carbon negative project.
“By that I mean we sell the excess energy into the grid and we’re actually decarbonising the grid and displacing brown coal.”
“Well it depends where the scepticism comes from. I think every new company has sceptics.
“But I think it needs to come from an informed space technically for it to have any relevance. We’ve got Simbol’s ex-CTO as our CTO, so there’s a lot of experience and knowledge within the company.
“I think if you speak to anybody who was technically involved in Simbol they’ll tell you the process worked and was demonstrated to work to the point where Tesla, with very little cash at the time, tried to take them over for circa half a billion dollars. That was just off the technology, not off the resource.
“We have the technological know-how and we also have the resource and the largest resource in Europe.
“This is a very different environment, this was 2014 before the last lithium mini-boom, so the reason Simbol fell over as I understand it just reading press articles is they ran out of cash, they rejected the offer from Tesla back in the day and they asked for a much higher valuation.
“That’s based off publicly available information alone. If you speak to anybody who was involved in that sort of story they’ll tell you the process worked and was demonstrated to work.”
“We’re using a process that a form of it is commercially used, it accounts for nearly 15% of global lithium production today, the direct lithium extraction.
“We’re doing it on a geothermal brine, instead of a continental brine, which comes with its own set of challenges. This has been demonstrated to work at a demonstration plant scale in the Salton Sea in California with a more complex brine, much higher in impurities, sometimes 50 times the impurities we have in the Upper Rhine Graben.
“So we’re pretty comfortable with it and our pilot plant, which is operating at the moment, demonstrates at the moment that it works as well.
“The other difference is we’re using renewable heat but that’s an advantage, so with a continental brine in the Atacama for DLE to work you need to heat it up to 60-80C and you need to use gas for that.
“Heating liquid up in cold, high altitude locations is a very energy intensive process and our brine is preheated for free essentially.
“So it’s got a lot of advantages and that’s why it’s got a very low operating cost.
“We’re not afraid of criticism, we understand the process extremely well. We’ve got some of the world’s leading experts in geothermal energy and lithium extraction in the company.
“I would say though that there’s got to be a first for everything. I think in the 90s people thought hard rock lithium was finished because of the high costs involved and people thought brines were going to be the only source going forward and look how that changed.
“So I think we need to unlock new sources of lithium and frankly I think high carbon sources of lithium will be very problematic in the future and I think customers are now very strongly signaling this.
“We’ve had a number of statements from OEMs … saying they want to buy from geothermal lithium sources.”
“Electric vehicles are still a good idea. I drive one and most people in the company do.
“We think electric vehicles produced now with current sources of raw materials are very much a good idea and they have lower carbon footprints within a few thousand kilometres of driving them out of the showroom.
“There is a fact that lithium production is currently environmentally problematic. With the hard rock side, particularly in the conversion, there is this high carbon footprint that you can’t really get around at the moment because of that carbon intensive process of refining that concentrate into a chemical product.
“Then there’s the brine side which also has a significant environmental footprint at the moment with the reagents and the transport distances and also has a very high water footprint in the second driest place on earth, which is the Atacama Desert.
“You take the hard rock, 15t of CO2 per tonne lithium hydroxide produced, that’s a lot.
“If you extrapolate that out with the amount of lithium we need to electrify the world’s vehicles that’s a lot of carbon emitted, so we think if we can avoid it we should and we think that we can, so that’s our whole reason for being.”
“I hail from Europe and I 100% agree with that statement, it is for better or for worse, probably with the exception of Scandinavia where there’s a bit more of a precedent for opening new mining projects and much lower population density, it is very difficult to open a hard rock mine in Europe.
“It is difficult to open an underground mine, which doesn’t really work with the economics for lithium, it needs to be open pit, and open pit is even harder because of the visual effect in such a densely populated part of the world.
“But this is not a mine, we published our planned footprint for the operations and it’s tiny.
“You’re building a renewable energy plant with a couple of wells drilled into the ground basically.
“They’ve got a tiny footprint and there’s a precedent for building these recently in the Upper Rhine Valley, you can go see them and touch them.
“They’re surrounded by vineyards and villages, sometimes they’re actually in the towns themselves in Germany, so they’re very well accepted by the local communities and that gives us confidence it will work.”
“Very much so and we’ve got the renewable energy funds in Europe invested in us.
“So it’s good to have those ESG focused institutions on board and more traditional resources focused institutions on the Australian side invested as well.
“Obviously it gives us confidence that the process is well understood and hopefully we’ll be well supported going forward.”