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Roskill: concerns over water consumption exposes lithium brine producers to ESG risk

With demand for lithium set to rise over the next decade, Roskill has examined the various ESG (Environmental, Social, and Governance) concerns that downstream investors and customers face in sourcing lithium products. As sustainability has been brought to the forefront of the lithium debate, producers have sought to underscore their ESG credentials, aiming to highlight not just their financial performance, but their ESG credentials as well.

One environmental concern of the downstream sector is that of water consumption at lithium brine facilities, which operate in some of the driest areas on the planet. Brine operations use solar, chemical, and/or physical means to produce refined lithium products for use in the battery sector. These operations take large volumes of water and brine for their process and to run their operations. This consumption has led to concerns of water over-use at the extraction and refining sites, causing negative consequences for local communities, flora and fauna which rely on these limited water supplies.

Roskill’s analysis shows that 70% of lithium extracted from brine-based resources originates from areas categorized as being at “High” water risk by the World Resources Institute’s (WRI) Water Risk Atlas.


Net water and brine extraction intensity at lithium brine producers by WRI Water Risk Atlas score, 2021. Source: Roskill

The Water Risk Atlas score aggregates a number of metrics including availability of water, seasonal variability, groundwater table decline, and others, to produce an overall risk score. Given the high proportion of brine producers located in areas deemed at high risk of water over-exploitation, it is no surprise, Roskill said, that many brine producers have introduced plans to reduce water consumption at their operations, including major industry producers, SQM and Albemarle, both with operations in the Chilean Salar de Atacama.


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