Lilac Solutions Stock: Will the Lithium Extraction Company Go Public Soon?
Global demand for lithium is projected to grow more than four and a half times to 2.1 million metric tons of lithium carbonate equivalent (LCE) in 2030 from about 0.5 million tons of LCE in 2021. Can the Bill Gates-backed Lilac Solutions deliver its lithium-extraction technology at a commercial scale to help meet that demand? And how do you invest?
Matt Johnston Updated May 26th, 2022
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Lithium is the key component in lithium-ion batteries, which power both electric cars and energy storage. However, lithium prices are skyrocketing, fueled by demand for EVs and the push by governments to transition to cleaner sources of energy.
Prices for lithium carbonate more than doubled in 2021 compared to the previous year. To increase supply, the world is searching for new ways of extracting lithium. Current extraction methods are slow, wasteful, and bad for the environment. Startups like Lilac Solutions are testing experimental technologies and attracting attention from investors.
What is Lilac Solutions?
Lilac Solutions is a lithium extraction technology startup. Founded in 2016 by its current CEO David Snydacker, Lilac’s developed a direct lithium extraction method that promises to speed up lithium production. It also aims to minimize the environmental impact of lithium extraction, all while maximizing how much lithium is extracted. Lilac aims to help scale global lithium production to support the electric vehicle (EV) industry and energy transition.
At the moment, the conventional ways of extracting lithium use either evaporation ponds or open open-pit mining, where lithium is extracted from hard rock. But there are several disadvantages to these methods.
Open-pit mines take up a lot of space, for one. They are also energy- and chemical-intensive. However, 80% of new lithium production is derived from open-pit mining, even though only 20% of global lithium resources are in hard rock deposits.
Most of the world’s lithium deposits are found in brine, i.e., natural saltwater deposits. But extracting lithium from brine using evaporation ponds is not a great solution either. Extracting lithium from ponds can take up to two years while contaminating the environment. Moreover, evaporation ponds need thousands of acres of land.
Lilac Solutions’ patented technology promises to extract lithium from brine without evaporation ponds. The process uses less land and doesn’t damage the environment. Brine is returned underground after lithium is extracted. Besides, the process is more efficient than conventional methods. Where evaporation ponds only recover about 40% of lithium from the brine resource, Lilac says its technology recovers about 80%.
The company has partnered with Controlled Thermal Resources, which is developing an integrated geothermal power plant and lithium extraction facility at California’s Salton Sea. Lilac is also working with Warren Buffet’s Berkshire Hathaway Energy.
What is the technology?
The process involves creating ion-exchange beads, which are loaded into tanks. The tanks then receive a flow of brine. The brine percolates through the beads, which absorb the lithium contained in the brine. Hydrochloric acid is then used to extract the lithium from the saturated beads. The result is lithium chloride—the “crude oil” of lithium.
Ion exchange technology has been used in water treatment and metal processing applications. This is the first time it is being used for lithium extraction, and it has not been tested at a large, commercially-viable scale before.
Is Lilac Solutions publicly traded? When will Lilac Solutions IPO?
Lilac Solutions is a private company that does not have publicly traded shares. It has not disclosed any plans to go public, which may be difficult in the current market environment.
So far, Lilac Solutions has raised a total of $174 million over six rounds of funding. Lilac collected $150 million from investors in its latest funding round, which took place in September 2021. The Series B financing round was led by Lowercarbon Capital, as well as funds and accounts advised by T. Rowe Price Associates. Other investors include Bill Gates’ Breakthrough Energy Ventures and BMW’s venture arm.
Can you buy Lilac Solutions stock?
There is currently no way to invest in Lilac Solutions directly. However, private shares may become available through a pre-IPO investing platform like EquityZen or Forge. These platforms allow investors to trade shares of a company before it has gone public.
Pre-IPO investing, however, carries substantial risks. Private companies face fewer disclosure requirements than public companies, meaning there is less transparency related to their financial and operational performance. This is why pre-IPO investing is typically only available to accredited investors.
An accredited investor is someone who meets at least one of the following three conditions:
- Has earned income over $200,000 in each of the past two years (or $300,000 with a spouse) and expects the same this year
- Has a net worth of more than $1 million (alone or with a spouse), excluding their primary residence
- Holds one of three special licenses issued by the Financial Industry Regulatory Authority (FINRA)
Publicly traded alternatives to Lilac Solutions
While you can’t easily buy shares of Lilac Solutions, there are other options within the lithium sector. One of those options, which is also developing direct lithium extraction (DLE) technology, is Standard Lithium Ltd. (SLI). However, the stock’s performance reflects investor skepticism about its technology.
Livent Corp. (LTHM) is another lithium extraction company. The lithium miner and processor is the only U.S. company currently using DLE commercially, albeit not at a scale that represents any technological breakthrough.
Several other lithium companies in which you can invest include:
- Albermarle Corp. (ALB), the world’s largest lithium miner, with mines in Chile and Australia
- Piedmont Lithium Ltd. (PLL), an emerging lithium producer
- Sigma Lithium Corp. (SGML), a Canada-based company developing a hard rock lithium deposit in Brazil
🔔 Looking for more options? Learn about investing in publicly traded lithium companies.
Author: Matt Johnston
Matt is a finance and economics writer with seven years of professional writing experience, including over five years at Investopedia. He also sometimes teaches macroeconomics at St. Stephen’s University. But his intellectual interests are not limited to the world of finance and economics—he also enjoys reading history and philosophy as well as learning new languages, both natural and programming. Matt currently lives in Montreal, Quebec.
NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.