China, DLE reheating lithium party
- 18 July 2025
Hot Chinese battery market demand and intense competition to demonstrate sustainable cost advantage among direct lithium extraction (DLE) projects are two trends keeping the party going for the commodity and for junior lithium company executives such as Chris Doornbos and Ignacio Mehech.
“Is the party permanently over for lithium?” That was a question put by Red Cloud Securities’ commodity strategist Kenneth Hoffman this week. “We believe that, no, while the party may never see the heights of either of the last two spikes the industry’s large volumes and a cost curve that could become quite steep could leave excessive profits for well-placed assets using the correct technology,” was his answer.
The Canadian investment firm says China’s battery market remains “very hot”, with the first half of 2025 showing 62.5% year-over-year growth driven mainly lithium iron phosphate, or LFP, battery sales.
“The LFP demand is being driven by stationary storage demand which for the second straight year may double from the year prior,” Hoffman said. China produced 965.3 GWh of batteries in 2024 and might approach 1.5 TWh in 2025. “Truly outstanding,” Hoffman noted.
“As China represents more than three-quarters of global supply this will lead us to assume lithium demand could approach or even exceed two million tonnes on an LCE [lithium carbonate equivalent] basis in 2025.
“This massive demand surge has likely dried up most of the lithium inventories and may be the reason for the 10.5% increase in the China lithium carbonate price. We believe the lithium market is bottoming and may see significant increases later this year and in 2026, far ahead of what consensus is thinking.
“The reason we believe is analysts are focusing too much on supply and not enough on demand, which is clearly surging.”
Chris Doornbos, CEO of Canadian-based E3 Lithium, has this month been keeping the market up to speed with progress on the company’s Clearwater project in Alberta, including the arrival on site of its 30-column DLE system plus polishing and purification units for its demonstration plant. Starting and scaling the DLE facility on brine from Clearwater, in a decades-old oil producing area in the province, is key to E3’s demonstration of the commercial bona fides of its process and plan, outlined in last year’s prefeasibility study, and ultimately project financing.
The company has outlined a 1.13 million tonne LCE proven and probable mineral reserve at Clearwater as well as million of LCE tonnes in resources in Alberta and Saskatchewan.
Doornbos said on a recent webcast repurposing of an historic oil producing aquifer to lithium production potentially bequeathed E3 significant infrastructure and reservoir skillset advantages as it moved forward with its objective to “develop a [new] industry in Alberta”.
“If we’re successful in developing this industry we unlock the full thing,” he said. “This is Canada’s lithium jurisdiction, in Alberta and Saskatchewan. We will produce the majority of Canada’s lithium, a significant amount of the United States’ lithium and potentially a lot of Europe’s lithium, just from western Canada. That potential is unlocked with the success of the first project that gets built. So we’re the tip of the spear.
“One of the big advantages that E3 Lithium has is we will produce a battery grade lithium salt at our facility in Alberta. That is not the case for the majority of lithium today: 70-80% of the lithium produced across the world is shipped to China for processing. This is a made-in-Canada story.”
Doornbos said the “macro conversation” on lithium remained very topical: “It’s an interesting time to be working in this industry and an interesting time in general.
“Separating all the noise that’s coming from the US administration from the actual policies and actions is important to discern what is likely to happen in future. I still believe we’re moving towards fixing the price paradox that we have right now [by] incentivising the price to get projects developed through policies actually geared towards … Pan North American development of a robust critical minerals supply chain.”
E3’s latest investor presentation refers to 132% forecast growth in global lithium demand by 2030, driven largely by “increased battery pack sizes and EV sales”, and 10% compound annual growth in demand for the metal between this year and 2040.
Red Cloud Securities’ Hoffman said Chinese battery pack design changes were allowing 50-to-130% more battery capacity of a pack versus older technology. “Chinese EVs now boast up to 140 kWh packs [with commercial packs up to 200 kWh] versus an average of 70 kWh for large-format Western brands,” he said.
“Chinese stationary storage units are seeing the same improvements, from Tesla’s 3.9 MWh Mega Pack to CATL’s just released 9 MWh TENER Stack. The multiplying impact of larger packs, lower costs, and strong demand will spike lithium demand far above what most analysts see. To be fair, most analysts have vastly underestimated demand for batteries for years as they could not anticipate technology evolution. We too could be wrong if new innovations in other batteries take place, however, we believe this could be after 2035.”
Hoffman says predominantly South American brines constituting a major source of the world’s lithium have historically been a slow, low-yield and potentially environmentally damaging means of supplying raw lithium.
“DLE offers the ability to take as much as 99.9% of the lithium out of a brine stream, processing can take mere days, and the spent brine can be re-injected into the brine fields, hopefully securing a water balance in the brine field while reducing the subsidence of freshwater tables into the brine regions,” he said.
Ignacio Mehech, the former Chile country manager for Albemarle who joined CleanTech as CEO in April this year, believes DLE has a big part to play in the future of the country’s mining industry.
“Many people speak about direct lithium extraction, or DLE, but not many companies have proven the process or gone downstream from the process,” he said on a webinar.
“What CleanTech has done is pretty unique – installing a pilot plant in Chile, running the pilot plant and going all the way down to lithium carbonate with a US partner. That is all very impressive and not many companies can speak about it.
“I believe lithium is very important for this country’s future and CleanTech is in a unique position to become, potentially, the newest entrant as an operator.”
The London-listed company, which wants to add an Australian Stock Exchange listing this year, is working with DuPont Water Solutions to apply new DuPont nanofiltration membrane technology to remove impurities and maximise lithium recovery via its DLE process. Recent trials had produced encouraging results, Mehech said earlier this month.
“Calcium and magnesium are among the most difficult impurities to remove in the lithium extraction process and DuPont's nanofiltration technology has demonstrated excellent rejection rates while maintaining high lithium recovery,” he said.
“This supports our approach to sustainable lithium production and signals the potential for reduced capital and operating costs as we progress towards commercialisation."
The experienced mining executive said he remained “very optimistic” about long-term lithium demand.
“I expect prices to improve with that stronger demand by the end of the decade and that’s precisely when our project should be online,” he said.
