You have a choice to make. You can use traditional natural gas for your lithium refining processes, or you can run the same processes with electrically heated systems.

Could the right decision really come down to geopolitics and the energy crisis?

Prior to the war in Ukraine, the arguments for adding electrically heated kilns and systems to lithium refining processes came down to decarbonizing the supply chain, improving the working environment, reducing NOx pollution and adding the control and automation possible with variable electric heating.

Energy security has become a priority

But things have changed. What sounded like marginal concerns in 2021 are now top of mind for regulators and investors. Plant owners and operators around the world are taking stock of their options following an energy market shock on a scale last seen in the 1970s.

Benchmark gas prices for Europe, for example, have surged to all-time highs. By summer 2022, prices were five times the level of January 2021. At the time of writing, futures markets showed a curve of anticipated delivered prices at unprecedented levels through the end of 2023.

The Ukraine situation has affected the energy sector as a whole.

“In the 1970s it was the oil crisis,” Fatih Birol, Executive Director of the International Energy Agency, told a panel at this year’s Davos meeting in Switzerland. “Now we have an oil crisis, a natural gas crisis, a coal crisis – all prices are skyrocketing, and energy security is a priority for many governments.”

Because natural gas is used so heavily in power generation, the Ukraine crisis has also led to a steep rise in electricity prices.

The increasing cost of gas

If you’re commissioning a lithium hydroxide or lithium carbonate plant, possibly in a jurisdiction covered by carbon markets or susceptible to carbon tariffs, then you’ll want to consider that the cost of emitting carbon dioxide has risen as well. That raises the cost of actually using natural gas.

Add to this US President Joe Biden’s nearly USD 400 billion climate-change-related Inflation Reduction Act of 2022. The law offers massive incentives to scale up renewable generation. But it is also casting a long shadow over the prospects for investment flowing into new fossil fuel exploration, potentially keeping natural gas prices inflated.

Electric heating is the better long-term choice

Sachin Pimpalnerkar, Global Product Manager, Kanthal“These kinds of considerations really are up for discussion now,” says Kanthal Global Product Manager Sachin Pimpalnerkar.

“Currently, even with these high prices, some of the economics for transitioning to electrically powered drying can be marginal,” he says. “But refiners who feel they are exposed to carbon market incentives, or who face demands from their customers to decarbonize the supply chain, will pay careful attention.”

Even if we put environmental considerations to one side, the long-term arguments are in favor of electric heating.

“Even if we put environmental considerations to one side,” he says, “the long-term arguments are in favor of electric heating.”

Supports permitting and siting flexibility

Another factor worth considering is that electric heating makes the siting of plants easier as NOx emissions are eliminated in the electric kiln technology.

In environmentally conscious jurisdictions, authorities will resist permitting a new gas-fired kiln near population centers, where its emissions will add to existing pollution emitted by diesel vehicles or vessels entering city ports. Cities in many countries already surpass mandated emissions levels for NOx.

On the other hand, the levels of greenhouse gas emissions (CO2) from battery manufacturing, where cathodes and anodes are thought to account for some 40 percent of emissions, provide a reason to actually site plants in these kinds of developed economies. That’s because often it is these countries that have come furthest in developing low-carbon power generation.

Overall, battery manufacturing relies overwhelmingly on electricity, and the carbon intensity of generating the electricity varies greatly. Chinese power generation, for example, was estimated in 2017 to generate 20 times the carbon emissions of Sweden and three times those of Brazil. The impact on overall CO2 emissions from battery manufacturing was calculated against a baseline site at minus 60 percent for a Swedish facility, compared with plus 30 percent to plus 70 percent for a factory located in China, Poland or India.

As some manufacturers consider integrating manufacturing, these relative environmental benefits may create a cumulative case to switch from gas to electrically heated processes.

“Environmental considerations tend to support siting plants where the carbon intensity of electricity is low,” Pimpalnerkar says. “Interestingly, this is also where new mineral deposits are being discovered and where the electric car industry finds a market that’s being boosted by tax cuts for electric cars and heightened awareness of environmental issues.”