Governments worldwide are racing to secure their supply of lithium as the global demand for lithium rapidly increases. The demand coincides with the boom in electric vehicle (EV) manufacturing and the uptake of billions of electrical devices, all requiring lithium-ion batteries. But the U.S. may have a strategic position in the lithium market, with access to national lithium reserves that are not available in all areas of the world.
As the Biden administration fosters relationships with other energy powers to ensure the future of U.S. lithium supply chains, it is also investing heavily in the national supply of “white gold.”
Increasing Demand for Lithium
The International Energy Agency (IEA) anticipates the global demand for lithium will increase by around 90% over the next two decades. Batteries for EVs will be the main market driver, having overtaken electronic devices. Ensuring a stable supply of critical metals and minerals, such as lithium, is seen by the IEA as key to a successful green transition, helping consumers move away from the fossil fuels that currently power transportation.
At present, there are not enough mining operations underway worldwide to provide the lithium needed to meet the growing global demand, which has sent prices soaring over the last year. Lithium reserves worldwide are thought to total over 14 million tonnes.
The amount of lithium required to meet current goals is estimated at somewhere between 0.5 and 1.3 million tonnes, and extraction peaked in 2022 at 100,000 metric tonnes. Most of the world’s lithium is sourced from the South American Lithium Triangle, which consists of mining projects in Argentina, Bolivia and Chile. But now governments around the globe are looking to expand lithium mining beyond traditional regions to ensure the future of their supply.
Lithium’s Role in the Green Energy Transition
The U.S. Department of Energy (DoE) has repeatedly highlighted the need for lithium to fuel a green transition, offering funding to national projects. In November 2022, the DoE announced a $12 million funding opportunity to advance the science of safe, cost-efficient lithium extraction and refining from geothermal brines. And in January, the DoE offered the Australian mining company, Ioneer, a $700 million loan to construct a lithium carbonate plant at a lithium mine in Nevada, providing it can secure the relevant permits.
However, there are several environmental concerns around developing new mining operations at a time when the U.S. is supposed to be more cautious about its environmental actions. At present, there is only one active lithium mine in the U.S., located in Nevada. It provides just 1% of the world’s lithium. President Biden has regularly discussed the possibility of increasing the national lithium mining capacity by approving new mining projects, which has been met with praise by EV manufacturers and mining companies. However, the communities living in lithium-rich areas are concerned about the impact of new mining activities on the environment and local populations.
Several communities across the U.S. have complained about the failure of mining companies to include residents in their decision-making during past projects, making them fear new developments. Meanwhile, indigenous communities fear being displaced or having their ancestral lands destroyed. Others worry about the potential impact of new mining projects on the environment and whether developments will align with recent U.S. climate policy advances.
Private Sourcing Grows for Lithium
But it’s not just the government that’s looking to ensure its lithium sources, as private companies launch lithium strategies and pump huge amounts of money into the metal and minerals industry. In January, General Motors (GM) announced it would be investing $650 million in a lithium company to support its electric vehicle business. Seeing lithium as a vital component for battery production, GM has decided to invest in lithium extraction from the U.S. Thacker Pass mine in Nevada. The mine is expected to provide enough lithium for GM to produce around 1 million EVs a year.
GM has been ramping up its EV production in recent years and expects to produce 400,000 EVs in North America between 2022 and quarter two of 2023. The investment will ensure GM is given exclusive access to the first phase of lithium production from the mine. Lithium production at the mine is scheduled to commence in the second half of 2026, creating around 1,000 jobs during construction and 500 when in operation.
The Chair and CEO of GM, Mary Barra, stated: “Direct sourcing critical EV raw materials and components from suppliers in North America and free-trade-agreement countries helps make our supply chain more secure, helps us manage cell costs, and creates jobs.” Meanwhile, The CEO and President of Lithium Americas President, Jonathan Evans, stated “It’s an exciting milestone, and we couldn’t ask for a better organization than General Motors to become our largest investor. ” Barra added, “GM shares our commitment to meaningfully advancing the energy transition, and I’m confident that together we can make Thacker Pass a major player in a secure, integrated North American supply chain from critical battery materials to EVs.”
The Future of Lithium
With international demand for lithium rapidly increasing, the U.S. and other world powers are looking to secure their supply to support the green transition. But this will likely require the expansion of mining activities beyond traditional lithium regions of the world. While some companies are investing in new supplies, the U.S. government appears to be at an impasse, unsure whether the development of new mining projects will help or hinder the transition to green.
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