Blue Gold: Critical Water for Critical Energy Materials

Pillsbury - Gravel2Gavel Construction & Real Estate Law

As demand increases for low-carbon technologies to power the energy transition, the acquisition of critical materials—so-called given their integral role in the transition of energy activities—is becoming increasingly important. As described in our previous post, such critical materials include rare earth elements (REE), lithium, nickel and platinum group metals. In short, the transition endeavors to reduce use of one non-renewable resource—fossil fuel—by significantly ramping up our use of other non-renewable resources. While critical material discussions have largely centered on the availability and economic extractability of the minerals themselves, Pillsbury is also counseling on the other resources needed to bring the materials to market at the scales required for our decarbonization goals.

Chief among these resources is water. The extraction, processing and manufacture of critical materials into low-carbon technologies all require significant volumes of water. For example, up to 5,000 gallons of water are needed to produce one ton of lithium. Critical materials are often found in arid climates that are already experiencing water stress (such as the “lithium triangle” of Argentina, Bolivia and Chile, and copper in Chile), or in areas experiencing conflict and challenges to water development (such as cobalt production in the Democratic Republic of the Congo). In the U.S., development potential resides largely in the water-constrained western and southwestern states, such as Arizona (copper), California (REE), New Mexico (copper, REE), Texas (REE), Utah (magnesium, lithium, platinum, palladium, vanadium, copper), and Wyoming (REE, platinum, titanium, vanadium).

Securing water to perform these processes is a threshold hurdle, and water rights schemes vary across jurisdictions. In the U.S., each state has a separate water right permitting or allocation regime, and inter-basin transfers from water-rich to water-poor areas are not always viable options legally or practically. Interstate compacts are already experiencing conflicts over usage rights and claims among member states. Adding to the complexity is that climate change—the very risk critical materials are being deployed to combat—influences the water cycle and when, where and how much precipitation falls. These challenges increase supply chain vulnerabilities for critical materials.

Compounding water availability concerns are water quality concerns. Both extraction and production can yield significant quantities of process wastewater, the treatment and discharge of which are subject to strong permitting regimes. For instance, the platinum group metals—used in hydrogen fuel cells—are more soluble than other critical materials. Permits for wastewater discharges to the environment pursuant to the federal Clean Water Act’s Section 402 (33 U.S.C. § 1342) are necessary. Further, while some generators of aqueous wastewater streams can dispose of the wastewater in public treatment works, their impact on the biological treatment processes used by such works is being evaluated.

Water is therefore a limiting factor in critical material development, both in its inputs and its outputs. To fully unleash the energy transition, advancements are needed in reuse and recycling; incremental production; and use efficiency and treatment.

  • Reuse and Recycling. To mitigate potential shortages and mitigate concern about contamination from discharges, critical materials developers are exploring opportunities for water reuse and recycling. Closed-loop recycling in the extractive, processing and manufacturing processes provides not only a reliable water resource, but contains the used water so it is not discharged into the environment. Regulatory oversight for water reuse and recycling varies by jurisdiction. As publicly announced, MP Materials, the leading producer of REE in the Western Hemisphere, has implemented tailings and concentrate dewatering methods to provide a closed-loop water resource, satisfying 95% of the company’s water demand at its Mountain Pass, Calif., mine.
  • Unconventional Extraction and Recovery. Rather than develop additional supplies using energy- and resource-intensive extraction methods, some are looking to recover critical materials from existing processes. As one such initiative, the U.S. Department of Energy announced the Critical Materials Institute is exploring methods to commercialize lithium extraction from the brine brought to the surface as part of the geothermal energy process before the brine is reinjected into the geothermal resource.
  • Use Efficiency and Treatment. According to testimony to the U.S. Senate Committee on Energy and Natural Resources, studies are ongoing at West Virginia University regarding the recovery of REE from acid mine drainage—a common byproduct of the mining industry, the inadequate management of which can lead to significant exposures in the U.S. under the Comprehensive Environmental, Response, Compensation, and Liability Act (CERCLA, or Superfund, 42 U.S.C. § 9601 et seq.). Such a use of this drainage could aid in appropriate management of such waste, as its recovery is less water-intensive than conventional extraction methods. In fact, efficient REE recovery is not possible without at the same time bringing the rest of the mine water stream to levels that may, depending on the water quality effluent limits for the receiving water, help meet Clean Water Act Section 402 permit limits.

As the development of critical materials resources expands, the realities of water demand will be increasingly felt. Water stress and regulatory dictates may limit access to water resources needed for extraction, processing and manufacturing processes on the front end, and spur concerns over water quality from process wastewater have regulatory implications on the back end. As such, water supply and permitting regimes must be considered from the outset of critical material projects. Innovative methods will be needed to mitigate supply and quality issues. Those in the critical materials supply chain should seek counsel on how to effectively deploy such measures.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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