Investment Notes: Novalith

This Sydney-based company has developed a patented process for the sustainable production of high-purity lithium carbonate, an essential ingredient for lithium-ion batteries.

Co-founders Steven Vassiloudis, Christiaan Jordaan, and Dr Andrew Harris have set out to disrupt the current lithium supply chains with their LiCAL™ direct lithium extraction technology.

Investible's Climate Tech Fund participated in Novalith's US$15m (AU$23m) Series A lead by Lowercarbon Capital, alongside the Grantham Environmental Trusts’ Neglected Climate Opportunities Fund, Clean Energy Finance Corporation, and TDK Ventures. In these investment notes, we will explore the growing demand for lithium, the emerging need for minerals security, and Novalith's ability to reduce the carbon footprint of lithium refinement.

Why lithium needs to change

Lithium demand growth is expected to be one of the highest of all commodities for the next 20 years (at least 10x, potentially 40x growth according to the IEA) to support demand for lithium batteries used in vehicles and grid energy storage. This provides incredible tailwinds for technologies like Novalith's LiCAL™ extraction; a process that uses the carbonic acid in carbonated water to extract more lithium, addressing lithium refinement bottlenecks.

However, the increased demand of lithium is challenged by its role as the most significant contributor to carbon emissions of any mineral used in the battery industry, primarily due to current processing and extraction techniques. In addition to addressing a growing bottleneck in an industry with fast-growing demand, Novalith's LiCAL™ technology is fast and produces far fewer tonnes of CO2 per tonne of lithium carbonate produced when compared to traditional techniques.

Australia's role in lithium

Australia is the world's largest supplier of lithium, producing 42,000 tonnes of the commodity in 2019. This, however, is almost entirely the mined hard rock, spodumene; nearly all of which is exported to China where ~90% of global processing is managed.

The Australian Government is taking action to grow Australia into a critical minerals powerhouse through the 2022 Critical Minerals Strategy. The ambition here is to move Australia into downstream processing and retain more economic benefits and jobs in Australia, boosting the nation's sovereign capability. This includes the $200 million commitment to the Critical Minerals Accelerator Initiative to support strategically significant projects at challenging points in their development and the $2 billion Critical Minerals Facility to provide loans within the sector. The timing is ripe for Australian startups focusing on lithium and other critical minerals, like Novalith.

Additionally, the United States' Inflation Reduction Act that promises $369 billion for climate and clean energy policies includes a 10% Advanced Manufacturing production tax credit across the breadth of the lithium-ion supply chain. This bolsters the Biden administration’s National Blueprint for Lithium Batteries 2021-2030 goals which aim to support the growth of the USA’s materials-processing base to meet domestic battery manufacturing demand. As a country with a free-trade agreement with the United States, the Inflation Reduction Act allows Australian startups like Novalith to ride monumental tailwinds on their path to commercialisation.  

Novalith's low-cost, low-emission solution

While spodumene is an abundant resource, current lithium extraction techniques produce 20 tonnes of CO2 for every 1 tonne of lithium carbonate (incl. scope 3 emissions). This is process also only recovers 50-70% of the metal from the spodumene.  

Novalith's LiCAL™ technology can extract almost all of the lithium with negligible impurities (99.8% lithium) and no harmful by-products using 90% less water than the incumbents. A life-cycle assessment verified Novalith's process also reduces carbon emissions by over 54% for every tonne of lithium carbonate produced. It is 25-40% cheaper (OPEX) than current alternatives and can produce lithium hydroxide. That's an extensive list of benefits!

“It’s a massive opportunity to be able to disrupt and meaningfully contribute to something as important as electrification & decarbonisation. We are very grateful to have the support of a strong group of mission aligned investors who understand the urgency and significance of what we’re aiming to achieve,” said Steven Vassiloudis, founder and CEO of Novalith. “Our technology has the potential to significantly decarbonise the lithium supply chain as well as unlock new lithium ore reserves and opportunities, providing low cost and environmentally sustainable lithium to a world that is rapidly racing towards an electric future.”

Why do we back this team?

Initially developed within the labs of The University of Sydney, Novalith's technology has gone through numerous iterations led by Steven Vassiloudis (CEO), a chemical engineer with extensive process scale-up and pilot plant experience.  

In addition to Steven, co-founder Dr Andrew Harris (CTO), a Professor of Chemical and Biomolecular Engineering at the University of Sydney, has over 20 years of experience working at the interface of academia and industry.

Throughout the investment process, the Investible Climate Tech Fund team were impressed with the team’s pragmatic approach and the fact that this approach did not hide their huge ambitions. In addition to pursuing the spodumene markets, Novalith are developing processing capabilities to include clay feedstock, which expands potential in the US market in line with their goals to domesticate the EV supply chain.

We are excited to support the Novalith team as they seek to make Australia a leader in lithium refinement, reducing the emissions of the industry and accelerating the global decarbonisation transition.