Lake Resources NL (ASX:LKE) (OTC:LLKKF) is poised and ready to provide a premium product with environmental, social and governance (ESG) benefits to an electric vehicle (EV) market increasingly conscious of sustainable lithium supply chains.
Managing director Steve Promnitz said that recently European governments had been implementing stimulus measures for the purchasing of electric vehicles.
He said: “In Germany, they lifted the subsidy from €3,000 to €9,000 for an electric vehicle at €40,000 or under.
“So that makes, not a Tesla, but quite a premium electric vehicle available at a reasonable price.
At the same time, we’ve got the UK thinking about increasing their subsidies to £6,000 and there’s also subsidies happening in France.”
China has also extended the subsidies on their electric vehicles, which were initially planned to finish in the middle of last year and have now been extended until the end of 2022.
Promnitz said that there had also been concerns with supply chains across the world, with Europeans building battery plants and electric vehicle makers ensuing ESG reporting obligations were met.
He said: “Volkswagen, Daimler, BMW and more recently Tesla have come out with documents not just seeking more environmental and sustainably sourced products going into batteries and into cars, but also auditable supply chains.”
Trending towards sustainability
Around 24 months ago Lake recognised the trend towards sustainability, particularly around reduced water usage with salt lakes.
Promnitz said: “What happens at the moment with salt lakes is that you pump out salty water with lithium in it, you put it in an evaporation pond, it sits there for 9-18 months, all the salts are concentrated, and then you separate out the lithium from that batch of salts.
“What Lake is doing with its clean technology partner Lilac Solutions out of California, is using a well-known technology in water treatment called ion exchange and we have adapted that technology for lithium.”
Essentially, as the salty water comes out it goes into a tank, ion exchange beads lock themselves onto the lithium ions in the space of about two hours and then that water is released to go back to its source.
Promnitz said: “There’s no chemical change, there’s no evaporation, there’s no real change in the water balance, the only thing you’re taking out is the lithium which is less than 1% of the water volume.
“Because you’re only taking out the lithium, you’re producing a high purity product.
“You’re not using evaporation ponds, it’s got an extremely small environmental footprint, you’re not using mining, and you’re only using water treatment."
A 99.9% lithium carbonate product with low impurities (battery grade) can be produced by the Lilac process within several hours of extraction
The company is confident its technology is robust, having tested Kachi Project samples at lab scale for nearly two years.
Promnitz said: “We’ve done testing now on a lab-scale for quite some time and we announced the production of high purity product in early January.
“We’re now producing it out of a pilot plant and that technology has been backed by the Bill Gates led Breakthrough Energy Fund so there’s some real opportunities.”
While COVID created a three-month delay, the pilot plant module commissioning was completed last week using Kachi brines.
Promnitz said: “From this week and next week we will be producing high purity samples of lithium chloride (liquid) on a weekly basis.
“Then a few weeks after that we’ll be producing final samples of lithium carbonate ready to send to potential offtake partners.”
Promnitz said in the EV supply chain a lot of money had been spent on new electric vehicles, but there hadn’t been the same amount of investment into the cathodes and anodes that go into those batteries or into the upstream supply.
He said: “It won’t be long until the sheer volume of lithium that’s needed will emphasise the need for investment in upstream and we’re one of the only companies that’s actually positioned to benefit from that with a new clean technology which is what the EV makers and the battery makers are actually looking for.
“Of course, an uplift will lift all boats, but this more premium product that’s getting a premium price so immediately your margin is much higher than perhaps somebody who’s only producing a technical-grade or industrial-grade product.
Lake is confident that it's uniquely placed to benefit from any uplift with a premium product and ESG benefits.
Promnitz said: “We’ve got the right project because of its scalability, it’s the right technology, it has an ESG benefit, and it’s the right time in the market.
“Plus, the technology has been backed by household names who’ve made large sums of money by backing disruptive technologies.”
What the analyst says