Lithium brine or hard rock: Which one is better for investors in 2023?

Nick Sundich Nick Sundich, June 14, 2023

Lithium brine or hard rock are the two main choices for lithium companies. But which of the two is more optimal for the company and its shareholders?

In this article, we answer this question.

 

 

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Lithium brine or hard rock?

When it comes to deciding between lithium brine or hard rock for mining companies (from their perspective), there are a few key factors to consider.

Lithium brine extraction involves pumping large amounts of water underground and then processing that water to extract the lithium. This method is relatively low cost since it requires less complex machinery and fewer personnel than hard rock extraction.

The main downside of using lithium brine is that the concentration of lithium is very low, meaning more resources are required to extract a given amount of the metal. Additionally, since this process involves pumping large amounts of water, there can be environmental impacts due to the potential for contamination in sensitive aquifers or ecosystems.

Hard rock extraction, on the other hand, requires heavy machinery and personnel as well as more complex processes in order to separate the ore from other rocks in the surrounding area. This makes it much more expensive than lithium brine extraction but also allows for access to higher concentrations of the metal which reduces costs over time. However, this method often results in environmental degradation due to releases from dust particles created by mining activities and toxic waste products generated by processing them into usable materials.

One thing to keep in mind is that brines are rare outside the ‘Lithium Triangle’ in South America. This is not to say you can’t invest in lithium brine stocks because many trade on the ASX. Rather, you typically have to consider jurisdictional risk of these countries regardless of what lithium brine company you choose.

 

Lithium brine is less costly, but potentially less rewarding

Overall, both methods have their advantages and disadvantages and companies must carefully weigh these factors when making a decision on which type of extraction process they should use.

While hard rock extraction has greater upfront costs associated with it, this can be offset by the higher concentrations of metal available through this method when compared with lithium brine extraction – and therefore higher prices.

On the other hand, lithium brine extraction requires less capital expenditure but doesn’t present as high potential for returns. We also note that it could result in greater environmental impacts if not done correctly.

 

Lithium brine and hard rock companies

There’s no shortage for stocks whichever options investors prefer. Examples of hard rock lithium companies include Pilbara (ASX:PLS), Sayona (ASX:SYA), Piedmont (ASX:PLL) and Liontown (ASX:LTR). Lithium brine stocks include Allkem (ASX:AKE), Lithium Energy (ASX:LEL), Galan Lithium (ASX:GLN) and Lake Resources (ASX:LKE).

But ultimately, the world needs more lithium and beggars can’t be choosers. There has to be a substantial amount of new mines entering production to keep up with forecasted demand.

The best way to make money from lithium stocks is to find a company with a project close to production, then sit back and watch its revenues come in.

 

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