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US direct lithium extraction (DLE) technology provider Lilac Solutions and global physical trading house Traxys are prioritizing a build out of the US domestic lithium supply chain, the companies told Fastmarkets in an exclusive joint interview.
Lilac signed a binding 10-year offtake agreement with Traxys North America on January 12 to supply 5,000 tonnes per year of lithium carbonate from its planned Great Salt Lake facility in the US state of Utah, according to the companies.
The agreement represents 100% of Lilac’s planned Phase 1 production capacity in Utah and is “take-or-pay,” with agreed pricing mechanisms linked to market indices, the companies said.
“Formalizing this long-term offtake agreement is a key step toward achieving the final investment decision,” Lilac Solutions chief executive officer Raef Sully told Fastmarkets during the Future Minerals Forum in Riyadh, Saudi Arabia, on January 14, adding that Lilac is close to securing the full financing required.
“Lilac and Traxys have a shared vision for a robust US lithium supply chain — Lilac is developing a US-based project and we’re looking to supply the domestic supply chain with battery-grade lithium carbonate from it,” Martim Facada, managing director lithium trading at Traxys, said.
“We’re getting interest from diverse clients domestically and overseas — and Traxys, as a supplier to battery makers and other [original equipment manufacturers], we’re confident that we will be able to sell Lilac’s product easily,” Facada said.
Currently, lithium major Albemarle’s Silver Peak brine field site in Nevada is the only active lithium resource in the US.
However, lithium carbonate has been produced in Utah previously, with Salt Lake City, Utah-based magnesium and lithium carbonate producer US Magnesium producing lithium from brine using DLE technology.
The company filed for Chapter 11 bankruptcy protection in September, having previously idled its lithium production in November 2024 due to “deteriorating market conditions.”
“Lilac is very interested in building domestic supply,” Sully said. “We recognize that could take time — there is cell manufacturing, CAM and pCAM [cathode active material and precursor cathode active material] manufacturing underway, and we may have the lithium before those other things are available.”
“And if that’s the case, we might have sales outside the US, so it depends how quickly the supply chain in the US develops,” Facada added. “There are certain projects at the energy storage level in the US that will benefit from Lilac’s lithium carbonate, in particular if the CAM was made in the US.”
Fastmarkets’ research team has raised its global energy storage systems (ESS) shipment forecast for 2026 by more than 60%, to 750 gigawatt hours from 460 GWh previously, with similar growth expected in 2027, underpinned by the construction of AI data centers and the trend of global energy transition.
Lilac is focused on providing a DLE solution that does not depend on Chinese suppliers, with Sully citing the importance of supply diversification as well as concerns regarding recent Chinese technology export restrictions.
“If you’re going to do an aluminium adsorption DLE project, you probably are buying your resin from China. We have a supply chain that is completely non-Chinese — the ingredients that go into our ion exchange media manufacturing are sourced from the US or aligned countries,” Sully added.
“We make the ion exchange beads in Fernley [Nevada, US], and that facility to make the beads at commercial scale has just been completed,” Sully added.
The facility will initially produce 200 tpy of ion exchange media (IXM), sufficient to support up to 100,000 tpy of lithium carbonate equivalent (LCE) production globally, according to Lilac.
Sorption-based DLE is a process where lithium ions are selectively captured from a liquid solution onto insoluble materials known as sorbents. This can happen through either aluminium-based adsorption (without involving ion exchange) or ion exchange, according to a June 2024 International Lithium Association report.
DLE projects by non-Chinese lithium majors, in commercial operation or at an advanced stage, tend to focus on the adsorption process. This includes Rio Tinto’s Fénix and Rincon sites, as well as Eramet’s Centenario plant, all of which are located in Argentina.
“The only real option for DLE that doesn’t have a large Chinese component in the supply chain is us,” Sully said.
Depending on timelines for permit approvals by Utah state regulators as well as the closing of funding, construction of the commercial facility could begin in June 2026, with completion targeted by the end of 2027, according to Sully.
This would be followed by a production ramp-up period of six to 12 months in 2028 to work through “teething problems.”
The biggest challenge for Lilac, according to Sully, has been the “resistance to adopt a new technology without proof at commercial scale — and proof at commercial scale requires raising a substantial amount of money.”
“The market has been very tough to raise that financing in the last couple of years — that’s been the hurdle, but this [Traxys] offtake agreement helps make people understand it’s real,” Sully said.
“Proving the technology and execution of a project are two of the challenges of every project, so if we do it at 5,000 tonnes per year, we should be able to proceed to Phase 2 of the project or replicate this model elsewhere,” Facada added.
Lilac Solutions’ long-term strategic focus remains on being a technology provider rather than a supplier, Sully said, with their Utah project viewed as a showcase to demonstrate the commercial viability of their technology.
The Utah project follows testing of Lilac’s technology in other regions with different geological qualities. This includes a recent pilot plant in Germany with Neptune Energy, where battery-grade lithium carbonate was produced, as well as others in Chile and Argentina.
“You need to make sure that the material is qualified, and Traxys will help us market the lithium carbonate, whether it is technical grade or battery grade. But we’re very confident that we’ll be able to make battery grade from the start and that the amount of technical grade that we produce will decrease,” Sully said.
“We’re really focused on proving that our technology provides a potential lithium supplier or a project developer an opportunity to operate in the first quartile [of the cost curve] — certainly well below where the hard rock production cost is,” Sully said. “If you look at where the market bottomed out in the last 12 months for battery-grade lithium carbonate, we expect to be well below that cost.”
Fastmarkets’ daily benchmark assessment of lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices cif China, Japan & Korea reached over a four-year low of $8.05 per kg at the midpoint over June 13-26, 2025.
The assessment was $18.00-22.00 per kg on Wednesday January 21, up sharply from $13.00-16.00 per kg at the start of 2026 on January 2, amid higher lithium prices in China’s domestic market and a more bullish demand outlook, especially for the battery energy storage system (BESS) market.
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