What's the appeal of this 7-employee lithium processing start-up? The Gates Fund slammed tens of millions of dollars

Breakthrough Energy Ventures, a cleantech venture capital fund founded by tech tycoons such as Bill Gates, recently invested $10 million in Mangrove Lithium, a seven-person startup. For now, the company has neither revenue nor customers.

It's a niche investment, but could have a crucial impact on the fast-growing electric vehicle market, as the company aims to improve a very specific part of the lithium supply chain: converting raw lithium into battery materials.

Lithium is used in batteries for electric vehicles because it is the lightest metal with the highest charge-to-weight ratio. According to the International Energy Agency, the number of electric vehicles has grown rapidly over the past 10 years, with the global stock of electric vehicles exceeding 10 million. As demand for electric vehicles continues to grow, so will the demand for lithium.

Andrew Miller, chief operating officer of benchmark Mineral Intelligence, a market intelligence firm, expects that the growth in the number and size of batteries for electric vehicles will account for more than 90% of lithium demand by 2030. The company also expects demand for lithium carbonate to increase from about 354,000 tonnes in 2020 to 2.57 million tonnes by 2030.

Miller said that demand can be difficult to meet, not because of the limited amount of lithium, but because of the limited resources available for converting lithium into battery-grade lithium compounds. Mangrove Lithium is designed to help eliminate this bottleneck.

"Competitive technology demand for the production of battery-grade lithium compounds is high," explains Céline Büchel, principal research analyst in chemistry, minerals and mining at market research firm IHS Markit, "to meet the huge demand for battery-powered vehicles, new production capacity needs to be built." ”

Core technology

The lithium market has five segments: mining and mining; chemical processing; battery component manufacturing; battery components; and end-use production, using lithium batteries for mobile phones, laptops, electric vehicles, etc. Mangrove Lithium's technology is mainly focused on the second stage, which is chemical processing.

"We are at the heart of the whole process," said Saad Dara, CEO of Mangrove, "and we refine crude lithium into battery-grade products." ”

In 2013, Dara began the first iteration of the technique in a project while a graduate student at the University of British Columbia in Canada, where he earned his PhD in chemical and biological engineering. In 2017, Dara and his colleagues received funding from the Canadian federal government for desalination and chemical production, and turned the technology into a company originally known as Mangrove Water Technologies. The company is still working on desalination projects in Western Canada.

In 2018, a South American lithium producer was interested in whether its team could process lithium chloride, a special form of lithium extracted from the ground during the mining process, into lithium hydroxide. The survey prompted the startup to use electrochemical methods to refine lithium, which is said to be more energy efficient than traditional methods.

Mangrove Lithium, which currently has just seven employees and a small factory operating in Vancouver, will use Breakthrough's funds to build a commercial, industrial-scale plant. Dara said the company aims to have paying customers by the end of 2022.

Lan Hayton, a materials and chemical analyst at Cleantech Group, a research consultancy, said, "Lithium extraction and processing is often very inefficient. In the current lithium extraction process, you may actually only get about 50% of your lithium from brine or hard rock. ”

Dara proudly says their technology is available for about 90 percent. He also explained that the raw materials used in industrial processes and the products in chemical processing are separated, which leads to higher quality products.

"We operate in such a way that the lithium hydroxide or lithium carbonate produced does not interact with other chemicals. It does not come into contact with other substances. Therefore, it produces high-quality battery-grade products. ”

Because of this, the technology is backed by Breakthrough Energy Ventures, Bill Gates' venture capital fund.

"Our investment in Mangrove, based on our analysis of the growth of electric vehicles, the significant increase in demand for lithium, and the potential supply and cost constraints that result," said Carmichael Roberts, co-head of the Breakthrough Fund's Investment Committee.

"If Mangrove is able to successfully deploy its solution, it will mean a 40 percent reduction in the cost of battery-grade lithium hydroxide and an increase in the internal return on brine production and refining projects, enabling it to come online faster and at a lower cost." This will be a very important thing. He added.

Mangrove Lithium isn't Breakthrough's only investment in this space. In October, the company announced an investment in Lilac Solutions, a lithium extraction technology company that increased its production of lithium extracted from brine water resources.