Elephant in the North: E3 Lithium CEO on Finding Opportunity ‘Hunters’

With 16 million tons of measured and indicated lithium resources ready to tap in the Leduc Aquifer, E3 Lithium CEO Chris Doornbos sees a “significant elephant of an opportunity.”

Much like Imperial Oil’s Leduc exploration drive deep in the Devonian led to oil finds that transformed Alberta decades ago, Calgary-based E3 aims to unlock new sources of lithium using direct lithium extraction (DLE) technology in the Western Canadian Sedimentary Basin.

The company is working toward commercial lithium production for its Clearwater project in South-Central Alberta’s Bashaw District, while developing its own DLE technology.

Doornbos recently delivered an update on the company’s efforts as work continues on a pre-feasibility study it anticipates releasing in either second- or third quarter this year.

Expectations are the Fluor-led study will derisk the project, bolstering the company’s ability to line up offtakers, development partners and project financing. The project’s success could generate interest in the company’s other projects.

“It’s like this is an elephant. So, it attracts elephant hunters, which means we bring the larger companies of interest to this because it’s not a single project that’s small,” Doornbos said.

The scale of the project means it won’t be a simple effort to recover lithium, sign an offtake deal and sit back.

“This has the ability to be much bigger than that.”

Demand for lithium, a key ingredient in batteries for electric vehicles (EVs) and for energy storage, is forecast to continue rising as the world seeks cleaner energy sources. Companies in North America want to boost lithium supplies as countries including the U.S. seek to reduce their dependence on more adversarial foreign countries such as China.

DLE, Clearwater progress

E3 Lithium executives believe the company has enough brines to produce about 150,000 tonnes of battery-grade lithium annually—enough for about 2.2 million EVs annually. Located in an area where more than 7,000 oil and gas wells have been drilled, the company plans to drill production wells to tap saline formation water, which will then go through a two-step process. The process includes use of a third-party DLE technology and lithium processing with electrolysis and crystallization to purify the lithium-rich concentrate into lithium products.

Using DLE to extract lithium takes hours instead of months. The process is also considered more environmentally friendly than hard rock mining or use of solar evaporation ponds that require lots of land. With evaporation ponds, brine sits for several months or more as the sun evaporates most of the liquid content, ultimately leaving behind lithium in the last of a series of ponds.

“That’s usually an 18- to 24-month process depending on the rains. … In salt flats, if it rains, you reset the clock because you get water into a pond that you’re trying to get the water out of,” Doornbos said. “It doesn’t happen very often, but it does. Those weather events have a huge impact on your ability to produce.”

With DLE, pumping is nearly instantaneous to a nearby facility for processing. No freshwater will be used during the process, the company said.

The company opted to use a third-party DLE technology instead of its own, which that is still being developed. The decision was made due to potentially improved chances of securing project financing, better economics and the technology’s commerciality status, though all considered options were viable, Doornbos said. The selected technology provider and its product were not disclosed.

“We already have a pretty solid understanding of what the economics are of those, but we still need to do the engineering work,” Doornbos said, which he estimates will take two to three months to finish.”

The pre-feasibility study will be detailed, he said, enabling the company to quickly move toward the next phase of project evaluation. Doornbos emphasized the importance of being able to capture funding and incentives available today to be able to deliver the lithium that will be needed later.

“At some point, the concern of not having enough lithium will go away. I think that’s later part of the decade. But in the interim, for those companies like E3 that can get the project up and running in the shorter term, the opportunities are there,” Doornbos said.

E3 Lithium’s 2023 field pilot plant results exceeded all key performance indicators, with 94% lithium recovery and a 909 mg/L lithium grade. The milestone was reached during a year that saw the notable market entry of Exxon Mobil Corp. and continued progress by others, including Standard Lithium, toward commercial lithium production.

Looking at demand

Activity continues despite a steep drop in lithium prices that has been primarily attributed to a slowdown in the growth of EV sales in China.

Data from Statista show the average lithium carbonate price dropped to $46,000 per metric ton in 2023, down from $68,100 in 2022.

Analysts at Wood Mackenzie said the market is facing a transition as demand slows due to not only subdued EV sales but also a maturing market and the rise of cathode chemistries such as lithium iron phosphate, which requires less lithium than high-nickel cathode chemistries.

“Global plug-in EV sales are projected to rise by 33% this year, a significant drop from the average annual growth rate of 71% observed between 2021 and 2023,” Allan Pedersen, principal analyst for lithium at Wood Mackenzie, said in a statement last month. “Lower government incentives and inadequate charging infrastructure are expected to curtail EV sales in 2024. This shift in the EV market will have implications for lithium demand.”

The firm said new resource projects will face commissioning challenges: brine companies challenged by resource variability, mining companies challenged by the ore body and ore concentration; and refining challenged to meet production and quality needs.

“As we move into 2024, we predict that delays and slow project development will be announced as companies seek to preserve cash,” said Pedersen. “Meanwhile, M&A activity may increase as lithium majors look for growth opportunities and mining majors consider entering the lithium space.”

Doornbos acknowledged the pricing slowdown, calling it “not necessarily surprising” given “commodities go through cycles.” But he pointed to the growing presence of battery plants and the capacity buildout across North America.

“The battery companies are still looking for lithium as hard as they were prior to the last couple of months,” he said.

Forecasts tracking EV sales have been dialed back but growth is still projected. S&P Global Mobility, for example, forecast global sales of battery EV passenger cars to reach 13.3 million units in 2024, with about 16.2% of global passenger vehicle sale market share. That would be down from an estimated 9.6 million battery EVs sold in 2023, though it would represent a gain on last year’s 12% market share.

BloombergNEF in December said it forecasts about 16.7 million battery EV and plug-in hybrid vehicles to be sold globally in 2024, up 20% from 2023 but 4% lower than what it estimated in its Long-Term Electric Vehicle Outlook released in June.

‘Gift that keeps giving’

“What we’re seeing is that in the sort of 2026-2027 and onward, that price is still predicted to be significantly higher, over triple what we are today, and settles down at around sort of the $30,000 per ton mark into long term,” Doornbos said, later referring to depleting stockpiles of lithium in China. “Right now, the market is very volatile. You bring in a bunch of supply in the market, the price drops.”

Looking at expected startup dates for battery factories across North America with federal funding secured, he said lithium demand is coming.

“All of that means that the demand for all of these minerals—lithium being just one of them, but the critical one because it’s in all the battery chemistries—hasn’t really come onstream yet, and it doesn’t take that long to build a Gigafactory,” he said.

For E3, the potential for lithium development expands beyond the Bashaw District, where the Clearwater project is being developed, and the nearby Exshaw and Rocky areas. The Nisku Aquifer is also promising. In January, E3 Lithium said sampling results showed lithium concentrations as high as 87 mg/L.

Sitting above the Leduc reservoir, the Nisku is a thinner and smaller aquifer but it has the same high porosity and permeability as the Leduc, though not as much volume, Doornbos said. Still, there is opportunity for the company to produce from both, pulling a page from the oil and gas playbook.

“A lot of times they’ll produce oil from both the Nisku and the Leduc and combine the two from one well,” Doornbos said cautioning an engineering team would have to examine the potential. Co-producing from the two aquifers is a possibility. Producing from the Leduc, shutting in production of the Leduc and then opening up the Nisku is another option. “You don’t have to drill another well. You could produce water out of the Nisku for some time, and the cost to do that is significantly less than drilling a new well somewhere else” with existing infrastructure reducing capital costs.

“What it really shows is that this Devonian sequence of rocks in Alberta are just the gift that keeps giving as it relates to lithium,” Doornbos said. “They’re such a prolific source of this critical mineral, and from my perspective, it just means that there’s absolutely no doubt that we’re going to get a project operating that’s going to produce lithium in this province because of this opportunity.”