Combined with the right geographic characteristics and expertise, lithium brine projects are worth considering as an investment opportunity, especially if located in the USA due the US focus on the complete battery supply chain.
This is particularly true given the lithium market’s recent focus on the geopolitics of supply and mounting production costs and declining lithium prices as well as a desire to capture the entire battery supply chain within one country. In fact, lower prices currently potentially create more upside for investors if they are considering counter cyclical investments, as the prevailing view is that lithium will be required for decades to come.
Although lithium supply still lags behind, McKinsey’s outlook is optimistic. The organisation predicts that in addition to increasing the conventional lithium supply, the key to scaling the lithium industry to demand lies with direct lithium extraction (DLE). Through DLE, mining companies can simultaneously reduce production costs and decrease their environmental footprint.
By 2030, DLE lithium could account for more than 10 percent of supply, according to McKinsey.
Pegmatitic lithium deposits, also known as hard-rock lithium deposits, are formed from coarse-grained, igneous magmatic rock. Lithium in these deposits is most commonly found in spodumene but can also occur in minerals such as lepidolite, petalite and amblygonite. Hard-rock lithium extraction is typically done via conventional open pit or underground mining.
The end result is a process that has minimal impact on the environment compared to other techniques. Once a brine deposit is depleted, the mining company can tear down its infrastructure and return the area almost entirely to its natural state. This is an important consideration for a resource so tied to sustainability.
Given the prominence of lithium brine assets and the sharp downturn in alternative lithium production methods, it should come as little surprise that there are numerous companies primed for commercial lithium brine production. Below, we’ve listed three of the most promising for investors to keep an eye on.
Formed from a recent merger between Livent and Allkem, Arcadium Lithium is one of the biggest players in not just DLE, but lithium production as a whole. Prior to the merger, Livent had already been using its own form of DLE for several decades, with multiple holdings throughout Argentina. Allkem, meanwhile, owned and operated the world-class Olaroz lithium carbonate project in Argentina, as well as several spodumene projects in Canada and Australia.
The vertically integrated company began trading on the NYSE on January 4 of this year.
Based in Australia, QX Resources’ primary focus is on the exploration and development of battery minerals.
Volt Lithium’s most significant resource is the Rainbow Lake project. Situated in a depleted Alberta oilfield, the world-class deposit spans roughly 430,000 acres. The project also benefits from an extensive pre-existing infrastructure.
The sharp decline in lithium prices over the past year came as both a shock to investors and a blow to the economic viability of traditional hard-rock lithium deposits. Lithium brine projects offer a more economical and sustainable alternative, with projects operating at low costs and high margins. As such, mining companies with brine resources are well-positioned in the current market, representing a promising potential investment.
This INNSpired article was written according to INN editorial standards to educate investors.
INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.
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