Livent is not known as a cutting-edge company, but it is the only one using a technology likely to define the next decade of lithium production.
This technology, called direct lithium extraction or DLE, could supercharge production by unlocking brine deposits that cannot be exploited using conventional methods, industry experts say. Lithium supply hasn’t kept pace as demand for electric vehicle batteries has soared.
Livent’s DLE method is a technical and economical success, according to its inventor, John Burba. “It is the lowest cost producer in the world,” Burba said in reference to Livent’s only active mine, Salar del Hombre Muerto, in Argentina.
The company has used this DLE method for 25 years and it will bring this expertise to its pending merger with Australia’s Allkem, a deal slated to close by year’s end. The merger would create Arcadium Lithium, which aims to be the world’s third-largest lithium producer by 2027. Livent ranks ninth.
The Philadelphia-based company is in a strong position considering the industry is expected to move toward DLE due to regulatory and market pressures. DLE has better ramp-up times and efficiency; it recovers a higher percentage of lithium, while the estimated costs fall between evaporative brine methods and hard-rock mining.
Livent’s technological advantage may not last forever. Rivals are also trying to incorporate DLE into their own operations, some of which are larger than Livent’s. Other DLE technologies have failed to scale so far.
Burba’s technique consists of circulating the brine through an absorbent material, which retains only lithium and allows for recovering it later. The waste is almost identical to the original brine, but without the metal, so it can be reinjected into the salt flat with minimal environmental impact, according to Burba. Like all DLE technologies, this one avoids using ponds to evaporate the brine’s water like in the traditional method.
There are countries pushing for DLE adoption for environmental reasons, said Burba. Chile passed an act seeking to encourage this type of technology last year. Albemarle, which operates in Chile, is building a facility in Arkansas to test its own DLE technology. SQM is under pressure from the Chilean government to move in the same direction.
Burba foresees that 80% of brine lithium will be extracted with DLE within a decade.
Livent remained the only miner using DLE because rivals had no incentives to invest in the technology, according to John Worth, Geo40’s chief executive. Geo40 is a New Zealand company that developed a DLE technique based on ion exchange, different from Livent’s. Worth said that, in the past, enough lithium could be extracted to meet demand by evaporation or hard rock mining, but those methods will be insufficient in the future. That is when DLE comes into play, allowing extraction from deposits where climatic conditions or brine chemistry make it impossible to obtain lithium by evaporation.
“If we want to decarbonize transportation, it is not enough with only some of them,” Worth said. “The market would be incredibly short.”
Faster construction and commissioning times are key to increasing supply at a pace that matches demand.
Lithium prices hit an all-time high on fears of shortages in November 2022, as many mining projects had been delayed due to pandemic disruptions. Battery manufacturers overstocked during that time, but once the shock was over they reduced purchases. This, in turn, plummeted lithium prices, dragging down the stocks of the main companies in the sector and hurting their profits.
Over the past 12 months, Livent shares sank 52.3%, a similar magnitude to Albemarle and SQM. The Global X Lithium & Battery Tech ETF, which tracks the share price of lithium miners and battery manufacturers, fell 27% over the same period.
Livent had a profitable year in 2022 on the back of high lithium prices. In a single year, it doubled revenues to $813 million and went from near-zero profits to almost $275 million. Analysts forecast year-on-year revenue growth of 12% in 2023 to $908 million and profit growth of 33% to $365 million.
The profit increase is mainly explained by a reduction in costs due to lower royalty payments in Argentina, linked to cheaper lithium prices, and better prices for inputs used in the production of butyllithium, one of the specialty materials manufactured by the company, according to the last earnings report.
In this report, Livent announced the delay of a projected expansion at its Argentine mine. It had planned to put the first stage into production this year but deferred it to 2024. Livent attributed the delays to problems with imports due to the Argentine financial crisis and the difficulty of hiring qualified labor. Livent plans to double production capacity to 40,000 tons per year in 2024 and continue expansion to 70,000 tons before the end of the decade, all through DLE.
Allkem and Livent intend to regain ground in the lithium market with the merger, which is expected to create a company with a $10.5 million market capitalization and nearly 250,000 tons of lithium carbonate equivalent per year of capacity.
The main reason for the merger was geographical and technological complementarity, according to the companies. Added to the mine using DLE in Argentina, Livent has refining plants in China, Canada, and the U.S. Allkem mines lithium from hard rock in Australia and brine in Argentina and is building a refining plant in China. Both companies are developing hard rock projects in Canada.
Allkem currently has three lithium brine projects in Argentina, one in production, one under construction, and a third in the pre-feasibility stage.
Livent’s chief executive Paul Graves, who will become head of Arcadium Lithium, highlighted that the merger will provide opportunities to share DLE expertise with Allkem. However, a spokesman for Allkem said it was still too early to say whether Livent's DLE technology would be adopted on Allkem projects.
As long as its rivals do not find a competitive alternative, Arcadium Lithium will continue as the only DLE lithium producer. At the forefront of the industry.