By Ernest Scheyder
May 18 (Reuters) - Compass Minerals plans to return to the lithium market by partnering with technology startup EnergyX to extract the mineral from Utah's Great Salt Lake, a move that comes as prices for the battery metal rise alongside the broader drive to boost U.S. output.
The companies said they have signed a memorandum of understanding under which EnergyX will invest more than $400 million and use its direct lithium extraction (DLE) technology to filter the metal from the hypersaline
lake, which is estimated to contain more than 2.4 million metric tons of lithium.
Details of the agreement, which Reuters is the first to report, show how the 75% rise in lithium prices this year and U.S. President Donald Trump's push to increase domestic minerals output are drawing companies to the sector.
Amid concerns about Western shortages of lithium, General Motors-backed EnergyX is among the companies pursuing DLE, a broad classification of filtration technology comparable to household water softeners.
EnergyX is among those racing to be first to launch a commercial DLE operation, a push that includes privately held Lilac Solutions, Exxon Mobil and Standard Lithium, among others.
DEVELOPMENT TIMELINE
Compass in 2022 chose an EnergyX rival, EnergySource Minerals, to develop its Utah lithium project. This was funded in part by Koch Industries, which became the largest shareholder in the Overland Park, Kansas-based company.
Ford Motor signed up as a lithium customer.
Yet Compass said in late 2023 it was "suspending indefinitely" any spending on the lithium project after Utah officials approved a law tightening water access to the lake.
Compass took a $75 million impairment charge to officially shutter its lithium operations in 2024 and has since focused on producing salt for the transportation and food industries, as well as fertilizers.
EnergyX, which said it believes its DLE process will not affect the lake's water levels, plans to assume all the operational, financial and regulatory risk for the project, which it aims to bring online by 2030.
"EnergyX is not touching the lake. We extract the lithium and then we put the rest of the brine back," said Teague Egan, EnergyX's CEO.
EnergyX will lease equipment from Compass and access to the lake's brine, from which Compass already produces fertilizer, and also pay Compass a license fee.
Compass CEO Edward Dowling Jr. said the partnership would "support lake conservation efforts and enable Compass Minerals to further strengthen our balance sheet as we continue to prioritize our core salt and plant nutrition businesses".
Reuters reported in late 2024 that Compass was in talks with private-equity firms to sell itself due in part to the closure of the lithium division and a cash crunch.
Its share price has more than doubled in the past 18 months as its fertilizer segment rebounded and Compass culled debt.
APPEAL OF UTAH
The appeal of the Utah project for EnergyX stems in part from the high concentrations of lithium found in brine that Compass is already extracting, thus saving costs on drilling deep wells, which EnergyX is having to do in Arkansas and Chile.
The project is due to be developed in two phases, with the first producing 10,000 tons of lithium per year and the second roughly 20,000 tons a year. Egan expects the project to generate $600 million in annual revenue when fully built.
The deal is expected to be finalized in the coming months, the companies said.
GM has the right of first offer for any lithium that EnergyX produces, part of its 2023 investment in the startup.
Egan, who founded EnergyX in 2018, said he plans to lobby Utah officials to change their lithium regulations and royalty rates, which he called "preposterously high" at a sliding scale of 2.5% to 25%, depending on market prices.
Arkansas has a fixed 2.5% lithium royalty.
(Reporting by Ernest Scheyder, Editing by Veronica Brown and Alexander Smith)
