What happened

Shares of Compass Minerals International (CMP -4.38%) shot up this morning and gained as much as 17.9% as of 9:40 a.m. EDT. The otherwise boring company that primarily deals in salt and plant nutrients has made a discovery that has the potential to turn its fortunes around.

So what

On July 13, Compass Minerals announced the discovery of a lithium brine resource with nearly 2.4 million metric tons of lithium carbonate equivalent (LCE) at its solar evaporation site in Ogden, Utah. That's huge, given that the total identified lithium resources in the U.S. stand at around 7.9 million tons, according to the World Bank. Brine, or seawater with a high concentration of lithium carbonate, is the primary source of lithium.

Compass Minerals also revealed it is in the final stages of finalizing a partner for lithium extraction, and is already testing options to convert resources to lithium hydroxide used in lithium-ion batteries.

A person charging an electric car at an EV-charging station.

Image source: Getty Images.

CEO Kevin S. Crutchfield said, "In a market hungry for domestically sourced lithium produced with minimal environmental impact, we believe a sustainable and readily available lithium resource like we have defined at our operations on the Great Salt Lake could be a true differentiator for our company."

Management's excitement isn't unwarranted. Compass Minerals expects to produce 20,000 to 25,000 metric tons LCE of battery-grade lithium annually. Demand for lithium-ion batteries has soared alongside demand for electric vehicles with global electric car sales surging 41% in 2020 even as the overall car market was hit by the COVID-19 pandemic, according to the International Energy Agency (IEA). The world's largest lithium producer, Albemarle, projects demand for battery-grade lithium to grow at a compound annual rate of 47% between 2020 and 2025.

Now what

Investors must now keep an eye on the company's strategy to unlock value from the lithium project. It could require heavy capital investment and compel management to divest more non-core assets to raise funds even as it strives to pare down debt, similar to its recent sale of specialty plant nutrition business in South America for roughly $432 million.

Lithium is a promising growth story and could be a game changer for Compass Minerals, especially as its discovery comes at a time when President Joe Biden is planning to quadruple clean energy's electricity share in the U.S. by 2030.