Increasing offtake agreements between automakers and mineral suppliers and a shift toward cheaper lithium-iron-phosphate batteries for electric vehicles lends some security to long-term lithium demand, Controlled Thermal Resources Holdings Inc. CEO Rod Colwell said on the sidelines of the Giga USA 2024 conference held June 11-13 in Washington by Benchmark Mineral Intelligence.

Controlled Thermal Resources is developing the Hell's Kitchen lithium extraction and geothermal energy project in the Salton Sea region of Imperial County, California, breaking ground in January. The project has received funding from automakers, the federal government and the California Energy Commission.

S&P Global Commodity Insights spoke with Colwell about the Hell's Kitchen project, offtake agreements and future lithium demand and production by oil majors. The following interview has been edited for clarity and length.

S&P Global Commodity Insights: Controlled Thermal Resources' Hell's Kitchen project in California is expected to combine geothermal energy production and lithium extraction. How will this work, and how feasible is it to combine geothermal energy and mineral extraction activities at other major global brine deposits?

Rod Colwell: Geothermal has been out in Salton Sea for 43 years now. This particular type of geothermal is liquid dominated, meaning it's very hot. ... What we and our other two counterparts out there have done is basically cooling the brine. We remove all of the problematic minerals, which are commercial minerals like silica. ... The polymetallics, which is manganese, zinc, silver, minerals of value, we recover those. Then we've got a clean brine stream — you picture all those problematic minerals which you have to take out before you get to direct lithium extraction — we then recover lithium from that. Then once that's done, it gets re-injected back in the formation and the whole cycle sort of starts again.

There are other areas. The Salton Sea is probably the largest known liquid-dominated resource. But there's Rhine Valley in Germany, it's a lower temperature but nevertheless, there's Vulcan Energy Resources Ltd. that's doing the same thing over there.

Automakers General Motors Co. and Stellantis NV have announced multimillion-dollar investments to advance the Hell's Kitchen project and secure lithium supplies, building on a trend of automaker-miner offtake agreements. What do you think the future of such collaborations will look like as EV-driven lithium demand increases?

I would say there's two different tracks. Ford Motor Co. utilized third parties like SK On Co. Ltd. to do their procurement and buy their lithium for them. And that's fine. That's a model wherein SK On would take that lithium and make a battery cell out of that.

Our offtakers, GM and Stellantis, have taken the approach of they'll procure their own products and then have LG Energy Solution Ltd., Samsung SDI Co. Ltd. or whoever take it up to a battery cell from there. So, two very different strategies.

What are your thoughts on the sustainability of long-term lithium demand, particularly as EV battery chemistries change?

There seems to be a push to go back to lithium-iron-phosphate. It's cheaper. You're getting big ranges now, out of lithium-iron-phosphate, it's much easier to make. We wouldn't need to import nickel or cobalt or anything to make lithium-iron-phosphate batteries here on-site and we would delete a whole phase of our production to make hydroxide.

In our case, we make lithium carbonate to start with, and then we convert it to hydroxide. It seems that would be the most cost-effective and the most sustainable method. There's always going to be supply limitations, but I think for the simplicity, that would make the most sense.

Long lead times for permitting mineral projects have been highlighted as a barrier to a quicker build-out of the US mineral industry. Is there anything unique about the permitting process in the Salton Sea region?

We have our permits. We've done a full-blown environmental impact report.

Imperial County started a $5 million programmatic environmental impact report two years ago ... which means all the community outreach, all the environmental work, all of the rail infrastructure work, traffic, transport, all of that stuff that everyone talks about is done under one environmental impact report. I think that gives Lithium Valley and Imperial County a huge, huge advantage over anywhere else, because it's an over-the-counter permit, effectively.

It's so front-loaded, it gives legal cover. ... It's evolved over a couple of years. When [Gov.] Gavin Newsom came down to visit us, he cut a check to the county for $5 million dollars, and that's what's been going on.

What do you think about the investments in lithium extraction by major oil companies such as Exxon Mobil Corp. and Equinor ASA, and what does it mean for the future of the industry?

The interest from big oil makes sense. They have experience in metallurgy, they have experience in scale-up, in replication.

They're not just sort of doing a little greenwash anymore. This is real. They're investing billions of dollars and bringing in all that knowledge and know-how.

Big oil's only interested in direct lithium extraction. ... This is nothing compared to what they do [now]. It's much, much simpler than petrochemicals.

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