It is known across the world for its proud tin mining tradition but plans have been announced to try to extract a different metal from beneath Cornwall’s craggy landscape – lithium.

The presence of lithium in underground hot salty springs in Cornwall has long been known but until now the water was regarded as a nuisance because it flooded tin mines, rather than as a business opportunity.

Now that lithium is increasingly being used in batteries for electric cars and for power storage, the salty water is potentially a hugely valuable commodity that could boost the Cornish economy and create much-needed new jobs.

A company, Cornish Lithium, has been formed and has secured rights to what it believes is the largest unified mineral exploration programme in the history of Poldark country.

Jeremy Wrathall, the chief executive of Cornish Lithium, said on Thursday: “We believe the potential benefits of developing a lithium industry in Cornwall will be significant for the county and for the UK as a whole.”

Wrathall, a graduate of the Camborne School of Mines in Cornwall, said the company would explore an area of about 300 sq km centred on the traditional mining areas of Camborne, Redruth and St Day. It puts the cost of this exploration phase at £5m and is looking for investors. Negotiations are ongoing with other owners of mineral rights within Cornwall.

The idea is to drill boreholes at least 400 metres deep to access “brines” carrying lithium-rich hot water. If enough lithium is found to make the project economically viable, processing plants will be built and the metal will be extracted.

Cornish Lithium has also secured rights to geothermal energy contained in the hot springs. It is anticipated that this energy will be used to generate power to reduce processing costs and any surplus could power other local industries.

In the past in other parts of the world lithium has been extracted from brine water through evaporation in very large ponds, thousands of acres in size, which can have significant impact on water resources and ecology. Wrathall said new technology being developed in the US was much more compact and environmentally friendly.

Currently most lithium comes from South America, Australia and China. There is no centralised system for setting the value of lithium but whichever measure is used, its price has soared in recent years.

Lithium of sufficient quality to be used in batteries has surged in price on the Chinese market from about $7,000 (£5,700) a tonne in 2015 to $20,000 a tonne, according to the metals and mining analysis company CRU.

Facebook Twitter Pinterest Cornish Lithium chief Jeremy Wrathall (left) with the president of Strongbow Exploration, Richard Williams. Photograph: Cornish Lithium/PA

Cornish Lithium hopes to tap into local expertise. Prof Kip Jeffrey, the head of Camborne School of Mines, said: “Although this project is still at an early stage it is very exciting news.”

Jeffrey said Cornish miners had long known about the lithium-rich waters – they called it lithia – that seeped into tin mines. Now, Jeffrey said, an industry based on lithium could dovetail well with Cornish renewable projects.

“If successful, it will be good for the whole of Cornwall and I believe will also have wider potential implications for the whole of the UK.”

Graduates of the mines school have long had to travel abroad for jobs but Jeffrey said there was something of a mining renaissance taking place, especially in the south-west.

The Canadian company Strongbow Exploration, which is involved in the lithium scheme, recently bought the South Crofty tin mine in Pool, Cornwall. Across the border in Devon, Wolf Minerals is mining tungsten.

“In the UK people tend to think of coal when you talk about mining – a dying industry,” said Jeffrey. “But there are important and strategic resources we can access in the UK.”

It is thought the presence of high levels of lithium in the Cornish springs is a result of the interaction between highly saline water from a nearby sedimentary basin and the granite under Cornwall.

Some of the granite rocks in Cornwall are enriched in lithium and, over millions of years, it appears to have become dissolved in the waters that have interacted with the rock.

George Eustice, the MP for Camborne, Redruth and Hayle, said it was exciting news and could create a new industry and jobs.

He said: “The recognition of lithium in waters beneath areas of Cornwall represents an opportunity for a new mineral extraction industry in Britain. Lithium is a strategic mineral given its importance in modern technologies.

“If the team at Cornish Lithium is successful in developing this opportunity the UK may not have to rely on imports of this vital mineral in future.”

One of the landowners Cornish Lithium will be working with is Tregothnan Estate, which owns tracts of Cornwall. It described the development as “potentially a gamechanger” for Cornwall.

Another player in the scheme is the Cornish company Mineral Exploration Ltd, owned by “born and bred” Cornishman Simon Ward. He said mining was a huge part of Cornish identity.

“There’s a danger that soon we will have a generation who don’t even know anyone who has worked in a mine,” he said. “This is a new type of mining but it is mining. Hopefully lithium will be the new gold in them there hills.”