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E3 Lithium (ETMC.V) and Imperial, one of Canada's largest integrated oil companies, announced their collaboration on a pilot project on Thursday aimed at feeding growing global demand for critical minerals. The companies plan to draw lithium from under Imperial's Leduc oil field using E3's proprietary technology designed to extract lithium from brine.
Under the agreement, Imperial says it will invest $6.35 million in E3 in exchange for 3.4 million warrants at a price of $1.86.
"We continue to advance the innovation and technologies needed to support the energy transition, working in collaboration with governments and industry to progress new opportunities from existing assets and sector expertise," Jason Iwanika, director of commercial business development at Imperial, stated in a press release on Thursday.
Lithium is a key raw material for electric vehicles and energy storage systems. Earlier this year, S&P Global Commodity Insights warned that a lack of investment in new supply could pose headwinds for net-zero plans and the transition away from fossil fuel.
The latest federal budget includes plans to spend $3.8 billion to boost domestic production of lithium, copper and other strategic minerals in a bid to become part of the global electric vehicle supply chain. The planned spending spans grants for mineral surveying, processing and recycling, as well as tax credits for digging new mines, and subsidies for infrastructure.
E3's Clearwater project at the Leduc oil field involves the drilling of Alberta's first lithium evaluation wells, according to the companies. E3 estimates the first phase of development could yield 20,000 tonnes of lithium hydroxide per year.
"Leduc No.1, Imperial's first well into this reservoir, was one of Imperial's most prolific oil discoveries in Alberta and transformed the provincial and Canadian economies, much like lithium has the potential to do," E3 CEO Chris Doornbos added in the press release.
"E3 Lithium and Imperial share an interest in the diversification of the Alberta economy, local job creation and sustainability."
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.