Today's guest is Dave Snydacker, Founder and CEO of Lilac Solutions. Lilac's mission is to scale global lithium production to support the electric vehicle industry and energy transition.

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At what point did the idea for Lilac start, and how did that come about?

In grad school, I worked on batteries. I joined the Wolverton Group at Northwestern, which is, was an awesome experience. We had, like, six or seven people working on advanced batteries with funding from the Department of Energy, and from Ford Motor Company, and so most of my time there I was working to improve the performance of batteries and to improve the durability of batteries. So, working on new cathode materials, new anode materials, and electrolyte materials, the main components inside the battery that stores energy and help the battery function. That was my core focus.

And I also spent a lot of time at Northwestern working with student groups. So, one of the things that I realized, when you spend a lot of time in higher education, as I did, is that professors are really good at giving you the basics, at getting you up to the technical state of the art, but in the coursework, you're not going to get exposure to what is happening two years from now, five years from now. Usually, that's not something you can get in the coursework. So, I got together with a bunch of other students at Northwestern, other PhDs, undergrads, business students, and we formed a new student group, which centered around technology seminars. So, we would get together every week and somebody would present on a different aspect of the new clean energy economy. And it was in that seminar series where I made some of my best friends, but also learned a tremendous amount about how my engineering skills could be applied to the industry, looking forward. And Lilac really came out of that experience.

So, I was leading a couple of seminars on battery manufacturing and on electric vehicles, and I started getting these repeated questions about the battery supply chain. People would say, "Okay. So, you're going to get us off of oil and on to lithium, but aren't we just going to trade the oil cartel for a new lithium cartel?" Or, they'd ask, "Is there really enough lithium? Are we going to run out of lithium?" And initially, I would sort of laugh, and say, "Oh, well. You know, any economist will tell you that if prices go up, new supply will come on, and the problem will be fixed, so don't worry about it."

But then, I started to try to answer the question in a bit more detail than that and realized there were way more question marks than there were answers, and that lithium supply, in particular, was a huge challenge for the electric vehicle industry, and a big opportunity. And so, started working in lithium extraction.

What were some of the challenges that you observed, and what were some of the open questions that kept you awake at night about the lithium supply chain?

The challenges were twofold. First, the total lithium reserves, and reserves are the body of raw materials in the earth that are economically feasible. And there were only, maybe 5 or 10 major deposits globally that were capable of producing lithium economically. And, you know, 5 to 10 projects were not going to be enough to build a global EV supply chain. So, the kind of, the size of the reserve was number one.

And then, number two, there were some new resources, some bigger resources, spread across a larger number of sites, that was interesting, but the technology needed to upgrade those speculative resources into economic reserves was lacking. And the work that had been done to develop technology for that purpose was pretty narrow and had not been very fruitful. So, it was on the resource size, and on the production technologies, where I saw some serious concerns and a great opportunity.

When you saw that there were other potential resources that could be accessible, but the tech was lacking, what did the landscape look like in terms of those resources, and how was the tech lacking?

The landscape, I always envisioned as a pyramid. For people who have studied oil and gas, or mineral resources, there's this classic pyramid where at the top you have a small number of sites with a very high-grade resource, and as you go down the base of the pyramid, you get to lower concentrations of lithium, but a much larger resource base with more sites that can be developed. So, outside of the existing production, which was three or four brine projects, there were dozens of sites with large amounts of lithium, but at a lower concentration, where conventional technology would not be applicable. And it's those sites that seemed like the frontier for lithium. That was going to be the answer to how we solve this problem and brought online the new production needed for electric vehicles.

What was it about the existing tech that inhibited it from being a viable enabler for these lower-concentration projects?

The primary problem with the conventional technology was its inability to ramp production, and that's related to its limitation to high-grade resources, the fact that you can't use it at many new projects, and it's also related to the low recoveries. So most of the lithium that they pump out of the ground is not recovered, and so that was also a challenge for that technology.

And so, as you dug in and started uncovering these insights, then what?

The big moment for me was realizing there was a category of technology called, ion exchange, which could use oxide materials to extract lithium. And my Ph.D. was focused on designing new oxide materials to absorb and release lithium in a battery. That's how a battery works. You have these oxide powders in the cathode that absorb and release lithium every time you charge and discharge. What I realized is, I could use that concept and apply it to a new mining process for extracting lithium from the saltwater deposits. And that was really the moment where I realized that, that my skill set could actually make a big impact on lithium production.

Have there been technology solutions that have been tried before Lilac came up with this ion exchange?

There's a rich history of engineers working on this problem. The most prominent is the Livent story. So, there's a company called, Livent. It's a US-based company with an Argentine-based resource, and almost 30 years ago, they brought online a new project in Argentina using innovative technology. And I have great respect for their team and, and what they did there. They used an aluminum-based absorbent bead. The problem is, that bead has only worked for higher-grade lithium resources. The applicability to lower-grade lithium resources, or resources with higher impurities, has been extremely challenging.

So, in the last 30 years, a lot of other new entrants have tried to adapt this technology to lower-grade resources, and have repeatedly failed. So, that was the context by which Lilac came in. There'd been a lot of iterations around this one absorbent technology that had just not gained traction, and we were coming in with a new approach. Now we weren't the first company to do ion exchange. There had been some academic work 20, 30 years ago, showing that certain oxide materials could work for lithium recovery, but the problem was in the performance of those materials. Clearly, new, better materials were needed to do that ion-exchange reaction and that's where we focused.

For your first on-site pilot, what's the scope of that pilot, and what are you and the customer hoping to learn and prove?

For every new mining project, you've got to go on-site and show that the process works in that environment, with that particular resource chemistry, before you can complete the engineering and build a project. So, that's the case in lithium, as well, so we did our first pilot in the western US, and this was with a very challenging brinery source, very, very high impurities, which would normally make lithium recovery impossible, or certainly, uneconomic. And we showed that the technology can maintain its performance, not only as we scale up, but also as we deploy out into the field. We did that in the middle of COVID, a very challenging year in 2020, but we were lucky to have our first pilot in the US, rather than in South America during that COVID period, and had some really good learnings on how to prepare for on-site deployment, how to gear up those teams, and how to react to changing conditions on the ground.

And I would assume, and correct me if I'm wrong, that the risks from going from zero to one, let's say, are quite different than the risks of going from, one to 50, or 100, or 1000. So, can you talk a bit about looking forward? With that first pilot under your belt, what are the big risks, and what are the big proof points that need to happen between now and more wide-scale adoption?

Our focus now is to deploy pilots to a larger number of project sites across the US and South America. With this first pilot behind us, most of the projects we're working on now are a much lower degree of technical difficulty, so we've got a high degree of confidence we'll be successful. But still, of course, there are risks. There are risks to timelines. Permitting is very important in the mining sector. Project development can take a very long time. So, we need to make sure we are maintaining a really positive environmental profile, which allows for permitting to advance quickly, and we also need to make sure we can quickly and cost-effectively ramp up the production of our ion exchange beads.

So, we're already in a really good position, there. We have pilot scale, bead production here in Oakland, and we're looking to build a large bead factory in the western US. So, we'll probably be making some announcements there in the next couple of months. Ramping up that bead production is critical since those beads are the core aspect of the ion exchange process.

This is more of a general question, but when you think about building this type of capital-intensive business, how do you think about the different sources of financing? It sounds like you've done a lot with equity. Have you done much with grant financing, or project finance, or even philanthropic capital in the early stages, for that matter? And in hindsight, would you do anything differently than the decisions that you made to date?

So, we didn't get much grant funding. Most of the Federal grant funding in the battery space was more focused on battery technology. But we did have a wonderful base of support in the philanthropic community, and in the impact investment community, in particular. We worked with Prime Impact Fund very early on, and Matthew Nordan joined our board back in 2018. It was incredibly supportive, and a community around the Prime Impact Fund, the Prime Coalition, really rallied around Lilac to support us at, at the very early stages, which was incredible. And then led to Breakthrough Energy Ventures leading our Series A.

So, mission-focused, not philanthropic, but mission-focused venture capital, and over the last 12 months, we've really seen the whole financial community pivot towards supporting climate solutions, which has been absolutely amazing.

And switching gears, we've talked about the economics of lithium mining, we've also talked about the importance of lithium mining to power the electric vehicle revolution, and other important uses. What about the ethics of lithium mining? I hear a lot of criticism about the ethics of lithium mining, and I'm curious. In your view, what are the primary criticisms that you see, and which of them are warranted, and which of them might be either misinformed or overblown?

This is something that certainly attracts a lot of attention, and I think there's a whole, you know, basically, class of pundits out there who like to have a sort of gotcha take on the battery supply chain, and say, "Oh, well, you know, you're moving away from oil, but it's not a solution, because there's still environmental impact."

The reality is that lithium production today is already much, much better for the global environment, in terms of CO2, as compared to gasoline. There are some local impacts, though, and those local impacts are important. It is extremely important that local communities feel respected and consulted, and feel like they are benefiting from development in their area, in their community. And so, it's important that when projects are developed they have a limited impact on land and water, and that's, that's front of mind for us as we look at these projects.

The major environmental benefit for Lilac is the reduction in the physical footprint at the surface, so today, the evaporation ponds require, you know, up to approximately 10,000 acres, whereas our projects are tens of acres. And so, that reduction in physical footprint is important, particularly for communities where tourism is important, or where there's a spiritual connection to the land.

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