Lithium project getting feet wet near El Dorado

EL DORADO, Ark. — With a potential new lithium industry coming together in south Arkansas, Robert Mintak is putting up rather than shutting up.

“We’re speaking aggressively, but by first quarter’s end next year, we should have our demonstration lithium extraction plant in El Dorado de-risked, and proof of our concept,” said Mintak, CEO of Standard Lithium of Canada. “All eyes are on us: ‘You guys talk a good game, but does it work?’”

That’s the question Standard’s $10 million pilot plant was built to answer, testing a new method for pulling battery-grade lithium from a saltwater sea thousands of feet under the Arkansas soil. The pilot plant is the seed of a proposed joint venture with the German global chemical giant Lanxess AG, which is sharing with Standard a Union County site where Lanxess already extracts bromine from brine.

The eventual goal is to build a permanent lithium extraction plant at the site a few miles southwest of El Dorado at a cost approaching a half-billion dollars.

“We’ve designed the business plan to make it as fast into production as possible with minimum risk,” Mintak told Arkansas Business during a stop in Little Rock before heading south to see the demonstration plant’s progress. “The planned partnership with Lanxess is unique. It allowed us to avoid years of development, resource discovery and definition, permitting and further exploration work because they already have a resource and infrastructure we could piggyback on. We came to Arkansas, and fortune shined on us.”

Two contractors, Milam Construction of El Dorado and Hunt Guillot & Associates LLC of Ruston, Louisiana, are putting together the 12 pieces of the modular plant on newly poured concrete at the Lanxess site.

The brine Mintak covets was once an unwanted byproduct of oil drilling. But in the 1950s chemists testing the waters discovered bromine, prized in making flame retardants. Bromine quickly became one of Arkansas’ top three mineral resources, along with petroleum and natural gas, and the state now leads the world in bromine production.

Standard Lithium plans to start testing its process as soon as the modular plant, built in Ontario by Zeton Inc., can be assembled. Eighteen 12-by-12-by-36-foot modules have been shipped to Arkansas and are being assembled now.

After the components are connected and tested, possibly by the end of this month, Standard Lithium will start testing whether its proprietary lithium extraction method will work on an industrial scale.

“We have completed a pre-feasibility study, and a preliminary economic assessment gave us numbers that we could put out to investors,” Mintak said. “The capital cost to build the commercial plant, not the pilot plant, in three stages over five years is $437 million in U.S. dollars. The operating cost will be $4,300 to produce one ton of battery-grade lithium carbonate. Those are the numbers the preliminary economic statement gave us, plus or minus 25%-50%.”

He called those figures exciting, and said the Lanxess connection is crucial, along with Arkansas’ low electricity prices and pro-business regulatory environment. Those advantages add up to a big opportunity for new lithium technologies with the world on the cusp of a lithium battery boom, Mintak said.

But still, investors are underwhelmed. Standard Lithium’s stock price on Canada’s Toronto Stock Venture Exchange (TSX: SLL) has been stagnant in the 80-to-90-cent range since August, down from $1.35 in February, its high so far this year.

“We’re trying to get the word out to investors, and that’s my job,” Mintak said. “But we’re an unconventional operation. I don’t want to insult investors and analysts, but sometimes you have to hold them by the hand to see there’s already an existing mass commercial operation in south Arkansas producing a commodity from a brine stream proven to be rich in lithium.”

But some investors trust only what they’ve seen before, he said.

“Though you’re supplying a 21st-century economy based on ultra-high-tech lithium ion batteries, investors see a raw material supply that’s entrenched in the mid-20th century, crushing rocks and using evaporation ponds to access lithium,” he continued. “And there is really robust data on what’s in this brine, with constant testing showing consistent levels for decades.”

Mintak points to research predicting skyrocketing lithium demand as the world produces more electric vehicles, buses and energy storage projects requiring lithium batteries.

“We’re in the top of the first inning when it comes to battery storage,” he said.

New products are requiring increasing amounts of lithium carbonate for power, as well.

While an iPhone has two or three grams of lithium and tablets 20 to 30 each, electric scooters, bicycles and Segways hold 100-500 grams each.

Electric vehicles demand 50-70 kilograms of the substance, and electric buses being built by the thousands every week in China and elsewhere require even more.

All this portends a growing demand for lithium, as companies like Volkswagen, Daimler and Volvo pour billions into electric vehicle production.

“Ford introduced an electric F-150 last month; Rivian, an American company, is building an electric pickup truck, and Amazon just put $700 million into its commitment to doing final delivery to the door with all-electric vehicles,” Mintak said. “Cummins Diesel is now Cummins Electric, and they have an EV semi. Volvo has an electric semitruck that’s self-driving. All of these things take a lot of lithium.”

But the biggest demand driver may eventually be the booming power storage sector. According to a recent study by Navigant Consulting, energy storage will bolster the lithium-ion battery market while leading an international shift to a more reliable and sustainable power grid. Navigant, a market researcher, counted 2,100 major energy storage projects progressing worldwide, according to Utility Dive, an industry news source.

“The majority of investment today is in battery storage, and part of that is because lithium-ion batteries are the energy source of choice for new projects because of their falling prices,” said Ricardo Rodriguez, a Navigant research analyst.

“There’s a bit of oversupply in the market right now because some hard-rock projects have come online in Australia,” Mintak said. “But by 2025-26, there’s likely to be a growing gap in supply. If we’re successful and it takes us five years to get into production, that will be perfect timing.”

Mintak opened up on the details of Lanxess’ arrangement with Standard Lithium, which has about 10 employees. “We’re on the hook for all costs related to the process, testing, development, and the building of the pilot plant and its operational costs,” he said. “All the risk is on us, which is fair because they’re giving us access inside their fence, providing staff in a highly permitted and secure workplace. We need to prove to them that we own what we’re planning to build. Hopefully all these details will be in place by the end of the year, and then we can negotiate our final agreement with them as a joint venture.”

Lanxess would own 70 percent of the JV to Standard Lithium’s 30 percent. “We’re piggybacking off a massive investment they made when they bought Chemtura,” Mintak said.

In April 2017, Lanxess AG officially acquired Chemtura, a rival based in Philadelphia, for $2.1 billion in cash, the largest acquisition in Lanxess history. Chemtura’s Arkansas operations, including the bromine brine infrastructure, were part of the agreement.

“They have wells, pipelines, permits, people with operational skills,” Mintak said. “This is saving us millions of dollars we didn’t have to spend.”

As of early August, Standard Lithium had raised $43 million, Mintak said. “By and large that’s been directed at the project in Arkansas. The demo plant cost us about $10 million Canadian, and we’ve got another pilot plant budgeted for building in Vancouver and shipping to Arkansas later. But, all in, we’ll spend more money than we’ve raised so far, probably about $60 million Canadian, with about $20 million of that in Arkansas, and operational costs during the demonstration will be about equal to the cost of the plant, about $10 million.”