The lithium market is controlled by an oligopoly, and the members have had no compelling reason to make big improvements.
Four companies control approximately 90% of the world’s lithium supply. One of those companies, Albemarle Corporation, operates the Silver Peak Mine, directly next to Pure Energy’s property. Albemarle also has a partnership with Tianqi Lithium based in China. The other two major players are SQM (from Chile) and FMC (American). These four companies have essentially dictated the pricing market for lithium. Given their oligopoly (and rising demand), they’ve no reason to make big changes to their operations.
Pure Energy has joined forces with Tenova Group’s Bateman Advanced Technologies to facilitate a change in the way lithium is produced from brine deposits. Bateman’s technology involves pumping the brine into a solvent extraction facility to selectively target the lithium-bearing salts. So far, the preliminary test results have far exceeded the efficiency and efficacy of conventional lithium brine extraction technology.
With several newer companies getting into electric vehicles and batteries, the industry dynamic has changed. For instance, GM plans to mass produce the Bolt a $35,000 electric car by 2017-2018. The only way this can be accomplished is by keeping costs low.
This supply/demand dynamic gives small, upcoming lithium producers like Pure Energy a chance to make inroads with big clients looking to pay a lower price for lithium. Importantly, with Bateman’s technology, Pure Energy should be able to produce battery-grade lithium at a much lower price than current methods – so charging a lower price shouldn’t squeeze future margins.