A Taupō company has made a breakthrough in extracting near battery-grade lithium from geothermal fluid which its says could be a gamechanger.

Geo40 chief executive John Worth said the earth mineral was highly prized, with battery-grade lithium selling for US$10,000 (NZ$15,600) a tonne.

Lithium, normally mined from hard rock, is used to produce lithium ion batteries, the technology that underpins electric vehicles. The batteries could one day be the answer to storing wind and solar power, he said.

SUPPLIED Geo40 says it is consistently producing lithium carbonate at laboratory scale.

​Geo40 was founded in 2010 to find ways to extract valuable minerals from geothermal fluid.

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The commercial demonstration plant at Contact Energy's Ohaaki geothermal power station was originally built to extract silica, a mineral abundant in geothermal brines, but which blocks up pipes, Worth said.

Silica had to be removed before the lithium in geothermal brines could be extracted, he said.

Geo40 has been extracting silica for a some time, but the leap forward to lithium extraction was providing new commercial potential for the firm, he said.

"We have the technology to successfully extract lithium in an environmentally sustainable way and will now focus on commercialising lithium extraction from geothermal fluid, aimed at the fast-growing electric vehicle battery market."

Geo40 plans to eventually extract other highly valued minerals such as caesium, he said.

Michael Dodge/Getty Electric vehicles are run on lithium ion batteries.

Geo40 had built a healthy business commercialising silica. Production from the demonstration plant was sold to local and foreign buyers, Worth said.

But the firm is about to undergo a massive expansion.

The company recently received a $15m grant from the Government's Provincial Growth Fund allowing it to develop its core silica business as well as high-value minerals.

A $20m large-scale commercial extraction plant was under construction and due to be commissioned by early 2021. The plant would produce an estimated 5000 tonnes of silica a year, Worth said.

SUPPLIED John Worth, chief executive of Geo40 says extracting high-value minerals from geothermal liquid in commercial quantities would be a gamechanger.

A lithium module would be added to the existing demonstration plant. Commercial quantities of battery-grade lithium could be sold in 12 to 18 months, he said.

"The march towards a renewable future is entirely predicated on the lithium ion battery ... It's environmentally quite challenging to mine hundreds of millions of tonnes of hard rock and then extract the lithium," Worth said.

With geothermal fluid the hard work of dissolving the lithium from the rock has already been done, he said.

There were other firms chasing the same thing. The challenge for Geo40 faced was to be first in the global race and do it cost effectively, which was looking promising, he said.

SUPPLIED Geo40 plans to increase lithium production to be used in lithium ion batteries, says chief executive John Worth.

With large geothermal lithium deposits all over the world, "If we can get the process right, here in little old New Zealand, it suddenly looks very interesting globally".

Geo40 was expected to break even in the near future and was set to make a profit once the plant was commissioned and larger quantities of silica could be sold.

The company is in the process of a private capital raising.