Cleantech Lithium (LON: CTL) shares are a new addition to the London market. The IPO was just over a month back, in March. The Cleantech share price hasn’t done well since then, down 15 to 20%, then back up that 6% this morning.
Cleantech aims to produce clean and green lithium. This requires using a new and different technology from the two major sources currently employed – requires, that is, by the definitions being used here.
Our two major sources of lithium currently are from spodumene mining or brine evaporation. Spodumene means hard rock mining and all the associated environmental damage from that. Brines seem cleaner, as the major method of extraction is simple evaporation ponds. However, there’s increasing concern that extraction of that salty water from desert environments then means the aquifer is replenished with the limited fresh water available. That is, while the brins themselves are useless for anything else, their extraction still leads to fresh waste shortages.
So, given the current ESG fashions, there’s a desire to find a new extraction method. As it happens membrane technology has advanced a great deal in recent years – largely driven by desires for desalination. The aim there is to gain fresh water at the output. But the same idea can, obviously, be reversed and used to extract the salts to be used as salts. It’s the same process just being looked at in another way.
This is really the technological frontier in lithium extraction, membrane technology to allow the extraction from brines without using evaporation. There are considerable advances too – it’s generally agreed that extraction from brins that are 100 ppm (parts per million) lithium is now possible – whether it’s economic is the thing still to be proven.
KMX Technologies has something that at least looks like it will work at doing this. Cleantech Lithium is going to work with them to show that it does – or does not, of course. This is the cutting edge of the relevant technologies, and those don’t always work out in an economic manner.
One thing to note is that if this tech does indeed work, then that doesn’t mean that Cleantech is home and dry. For if it does work in one place, then it will also in others – meaning that there will be more potential sources of lithium in the future. Given likely future demand, this may or may not be a problem for the future lithium price.
The other concern is that Cleantech is working in Chile. Currently, there’s a constitutional convention going on there, and there’s some worry that they might change mining laws entirely. The current disposition of rights and permits was made in the wake of the Pinochet takeover and that might not stand in the future.
Cleantech Lithium definitely – currently – has access to lithium-containing brines. This has value in and of itself. How much value depends upon those triple unknowns. Will this new extraction tech from KMX really work, what are mining rights going to be changed to in Chile, if they’re changed at all, and what’s that future lithium price going to be?
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Tim Worstall is a freelance writer specialising in economics and the financial markets.