MELBOURNE - A lithium technology startup backed by Rio Tinto expects to finalise a funding round in the next week to raise A$29-million even as the global lithium market struggles, its Melbourne-based CEO told Reuters.

ElectraLith is developing a filtration technology that can extract lithium from brine deposits without using water or chemicals, which would be key in arid areas like Chile's Atacama desert, and needs only small amounts of energy.

"The lithium market is not great, venture capital markets aren’t great, (so) the fact we are about to close this round with an oversubscribed investor base ... for us that’s fantastic," CEO Charlie McGill told Reuters.

Several companies, including Exxon Mobil, are competing to commercialise their own direct lithium extraction (DLE) technologies in an industry that is expected to grow to more than $10-billion in annual revenue within the next decade.

DLE is expected to reshape the lithium market by speeding the production process of the metal used in EV batteries and electronics to hours or days, compared with months or longer with large evaporation ponds and open pit mines.

ElectraLith's DLE-R process, for which the company holds commercialisation rights, filters brine through two membranes that extract lithium and turn it into lithium hydroxide, before injecting the remaining brine back into the aquifer.

The group is working on how to scale the membrane for large projects while maintaining its properties, McGill said, and retains all commercial rights.

ElectraLith plans to use funds raised to build its first pilot plant at Rio Tinto’s Rincon operations in Argentina, he said, adding the project is about a year from being ready to pilot.

Two more pilot plants are set to follow. The firm is currently owned by venture capital firm IP Group, Rio Tinto and Monash University, where its membrane technology was developed under Professor Huanting Wang.

By producing lithium hydroxide without water or chemicals, ElectraLith says it can compete at around half the cost of rivals, McGill said.

"The availability of water in the regions where there are lithium mines is a major problem," he said.

In Utah, where it is working on a project with Australia-listed Mandrake Resources, water from the Colorado River basin has to flow to Las Vegas and Los Angeles.

"You can’t get a water permit," McGill said.

"So we show up and we are like, 'We don’t need water.'"