LONDON (Reuters) - A small Canadian miner has set out to lead the way into petrolithium production, combining oil for conventional vehicles with lithium for electric vehicles produced from oilfield waste water.
Shares in MGX Minerals (XMG.CD) have doubled this year as investors seek exposure to the predicted electric vehicle revolution that many of the conventional resource firms do not provide.
It has acquired acreage that establishes it as Canada's biggest holder of lithium brine assets with around 2 million acres' worth in North America.
Much of it is in the Paradox Basin in Utah, which could position MGX to provide lithium to Tesla's (TSLA.O) battery factory in neighboring Nevada. MGX CEO Jared Lazerson said commercial confidentiality rules meant he could not comment on whether any agreements had been signed.
"I would love MGX to be the company that brought the oil and gas industry into the lithium space and the EV space, to allow the oil and gas industry to support EV and not be so worried or concerned," Lazerson told Reuters in a telephone interview.
Lithium is not rare and some analysts say high prices will prove a bubble as more production comes online. Processing capacity, however, can be an issue and auto makers are locking in contracts with suppliers.
Lazerson says MGX's advantage as the car industry wakes up to its need for lithium for battery-powered electric vehicles is that it can bring on production quickly and at a relatively low capital cost using brine wastewater in oilfields. Economics are favorable as lithium production effectively boosts the oil price.
More than half of the Earth's identified sources of lithium are in the "lithium triangle" of high-altitude lakes and salt flats that straddles Chile, Argentina and Bolivia.
The lithium from there is low cost because it relies on a roughly 18-month process of evaporation using the sun for energy, but bringing on new volumes requires advance planning.
Alternatively, lithium comes from hard rock, for instance in Australia, but that can involve large amounts of waste rock and be energy-intensive.
Lazerson says pilot projects using oilfield brine have been successful and the aim is to ramp up to processing 1,200 cubic meters of brine per day around the end of the year. So far it has processed up to 20 cubic meters per day.
MGX seeks to keep capital expenditure low and to maximize what Lazerson says is first-mover advantage by using small nanofiltration units that can be moved to wherever the brine is.
"I'm sure others will come along. We're trying to be the first out of the gate," he said.
Additional reporting by Nicole Mordant in Vancouver; editing by Susan Thomas