The Peter Zeihan Podcast Series - Counting (Lithium) Chickens Before They Hatch || Peter Zeihan

Episode Date: November 12, 2024

Some new advancements in AI and geology have revealed a massive lithium deposit in Arkansas's Smackover Formation (great name by the way). While this is good news, we still have a lot of work to do before this lithium sees the light of day.Join the Patreon here: https://www.patreon.com/PeterZeihan Full Newsletter: https://mailchi.mp/zeihan/counting-lithium-chickens-before-they-hatch

Hey everybody, Peter Zine here, coming to you from Port Smith, New Hampshire, which is not only disturbingly pleasant. I mean, it's kind of surreal, but there are more good food options within a two-block radius than in the entire Denver Metro, which kind of pisses me off. Anywho, I'm here near Market Square, and today we're going to talk about the new, well, it's not all that new, but the popularization of the lithium deposit that was found in Arkansas. Now, like I said, it's not new. This is called the Smackover Formation, which, is a great name. I want to buy a drink for whoever named it. Anyway, it's been producing bromide for the better part of a century. So the geology is reasonably well known. What has happened is one of the breakthroughs with AI as being able to look at the geology from new angles and correlate it with updates in understanding for mining and geology that have come in the decades since.

And they think that there's more than enough lithium there to supply global supplies for like a factor of nine or something ridiculous. Now, I don't want to overstate this because just because the lithium is there doesn't mean it can be harvested. For example, 90% of the oil in the world that we are aware of will never be able to produce. It's too deep. It's too technically challenging. The bits are too small, whatever it happens to be. But in the case of the smackover, and specifically the Arkansas part of it, there's already production in this zone that has been for decades, just not for lithium.

Quick review of lithium production. There are two types. You've got rock formations and rock mining. which is what dominates in Australia. It's a little bit more expensive than the other method because you actually have to pull the ore out of the ground and grind it up and process it to extract the lithium from everything else. But it is a relatively quick way of doing it, even if it is involved.

It's rock mining. So, you know, you're going to have all the tailings, you're going to have all the processing issues and all the add-iton costs. It's energy-intensive, all that good stuff. Second, you have brine mining, which is what they have in Chile. There there's a subsurface water source that is rich in dissolved lithium.

You pull the liquid out, you pour it into an evaporation pond, and over the next 18 months, you know, basically wait for it to concentrate. So it's cheaper than rock mining in Australia, but there's a really long lag time, and you need a specific sort of surface up on top in order to do the extraction. So the Atacamaic desert in Chile, is one of the driest parts of the world, and the mines are at about 7,500 feet.

So you have a lot of sun, you've got a desert, you've got low vapor pressure, and it still takes 18 months to concentrate the brine down to something you can actually use. In the case of all, in case of Arkansas, it is a brine formation, the smackover, but you're talking about it as a state where the highest point in the entire state's like 2,500 feet,

and where the mines would be are significantly lower, and you don't have the large, flat, dry, areas. Arkansas is pretty humid. So doing traditional evaporation is just completely a no-go. And if that was the only technology in play, this wouldn't work at all. But it's not the only technology in play. There's a relatively new method for lithium extraction from brine. It's basically a direct extraction that uses chemical catalysts and similar things to extract the lithium from water. Now, the concentration in Arkansas is about 300 milligrams per liter versus 400 milligrams per liter in Chile. So the The Arkansas deposit isn't as good in terms of quality as the Chilean one,

but there's a lot of infrastructure in place already, and Exxon is the primary company that is involved. And, you know, Exxon doesn't pull things out of the ground unless it thinks it can make money. And so it has pioneered this direct extraction technology and a number of test wells already on site in Arkansas. So the only thing that has really changed is that we've had this new AI model saying that there's a lot, a lot, a lot, a lot more than we originally thought. And in the next three years, Exxon expects to have first commercial volumes.

Now, they're not telling us what, quote, commercial volumes are. So we're going to have to wait and see. But one of the things that has been a limiting factor on a lot of the green transition is batteries. And I have not made any secret on my general opposition to lithium use of transport because it's a horrible battery chemistry. It charges too slowly. It discharges too slowly. It heats up and swells. It's just a bad idea to put on something that moves.

but if you were to make a lot of small to medium-sized batteries, put them in series and just put them in a building where the heat and the swelling could be maintained or even harvested, you could use it for grid storage very, very, very easily. So this isn't going to revolutionize the world of EVVs, but it might, if it works, revolutionize the world of electricity. One of the problems we're going to have in the United States over the next 10 years is as the Chinese system vanishes from the world,

we're going to have to expand our industrial plan. That means we need at least 50% more electricity generation that we currently have. And until and unless we can build the infrastructure to link the entire country together so that anyone can generate power anywhere and send it anywhere else, which is a tall order, the easier patch is to put a lot of batteries in a lot of places. So at periods of high supply and low demand, so for example, solar shining during the day, you capture the extra and then use it at night. Everyone's asleep at night.

you burn your natural gas at night when normally you would cycle now, you just pour that energy into a power into a battery pack and then you use it during the day. You know, you could use this in any possible grid if we can produce enough lithium at a low enough cost. And I have to say, between the engineering, the technology and the geology, this does look promising. Just keep in mind, first commercial production, 2027, which means first large-scale batteries 2030. This isn't going to solve everything overnight, but it's a very promising step in the right direction.