Canadian mining company, MGX Minerals, has staked a claim to mineral rights on large parcels of federal land in Utah, hoping to tap lithium deposits from oil field drilling wastewater. 

Lithium extracted from drilling wastewater

MGX Minerals, a Vancouver, BC-based mining company, began buying up mineral rights to over a hundred thousand acres of federal land in Utah last year.  The company is hoping to extract lithium from spent oil wells.

According to a report by Reuters, MGX is focusing its mineral rights claims in an oil and gas drilling area known as the Paradox Basin, located in southeastern Utah.  The company’s process extracts lithium from drilling wastewater by using a proprietary filtration system initially tested in the Canadian oil patch.

In a project set up in Alberta in January 2017, MGX concentrated lithium from heavy oil waste water by using its rapid filtration process.  The results were confirmed by the Saskatchewan Research Council.

Company CEO Jared Lazerson says MGX’s pilot plant in Calgary is on track to reach commercial scale in the coming months.

With the recent boom in US crude production, there are greater volumes of drilling wastewater available for use at a time when demand for cleaner energy is on the rise.

“In this fundamental shift we are in between fossil fuels and renewable energy, we get these hybrid models,” Lazerson told Reuters while referring to his company’s technology.

Lazerson told Reuters that US officials “understand that the U.S. needs a supply of lithium and is cognizant of global competition”.  He says Utah is “one of the best places to start for lithium for North America”.

Some analysts do not share Lazerson’s enthusiasm.

“Think about drilling a hole 2,000 meters long, through rock, to hit brine in Utah, and coming up with negligible lithium,” Jon Hykawy, a battery minerals analyst at Stormcrow Capital told Reuters. “Wildcatting for water is probably not a great business model.”

However, Stephan Bogner, analyst at Rockstone Research disagrees.  “If MGX can prove commercial viability… a big rethinking may begin in the United States as to where capital should be deployed,” he said.“It would be a game-changer.”

Other analysts are concerned that the market for lithium could be oversupplied in the coming years.  On Monday, Morgan Stanley forecast a surplus in 2022 that could see prices fall to about half their current level.

But Lazerson says he has been told by companies to find “anything that has any lithium in it”.  According to Reuters, he did not offer any details on his customers.

The US Geological Survey reports global lithium consumption was up by over 13 per cent in 2017 to 41,500 tons.

Prices for lithium sit at $13,900 per metric ton. “Lithium supply security has become a top priority for technology companies in the United States and Asia,” the USGS report noted.

Chile and Australia are currently the world’s largest producers of lithium, which is used in smart phones, EVs and storage for electricity generated by wind and solar installations.  The two countries account for over half the global output of the metal.

MGX Minerals shares are up 40 per cent this year and the company was encouraged by the Trump administration’s move to encourage more production of lithium in the United States.  Lithium along with other “critical minerals” are on a list deemed important for national security.