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April 30, 2019 1:00 PM, EDT

US Trails in Lithium Mining for EV Batteries

Qilai Shen/Bloomberg News

The U.S. push to challenge China’s dominance in the production and sale of electric vehicles has at least one weak link: Most of the raw materials needed to make the batteries are dug elsewhere.

China- and U.S.-based companies have invested heavily in lithium mining projects in Chile, Australia and Argentina, some of the world’s top producing nations. But unlike the United States, Chinese companies also have invested at home, with the Asian nation producing almost eight times more lithium domestically than the United States.

The raw materials gap will be discussed at a May 2 meeting in Washington expected to draw government officials, carmakers, mining companies and consultants on the need for streamlining the U.S. permit process for new lithium projects and stockpiling purchases.

“It has been decades since a lithium refining facility has been built in the United States,” said Eric Norris, the lithium president of North Carolina-based Albemarle Corp., the world’s largest producer of the mineral. “Any new project will take time to develop, as the regulatory bodies determine required permits, potential community impact, etc.”

Boosting local production of the raw minerals would be the first step toward building out a rechargeable battery industry that so far has been concentrated in Asia. The United States controls only about 13% of the global lithium cell production capacity, with no growth expected, according to Bloomberg. China now controls about two-thirds of that industry and Bloomberg is forecasting it could grow to about 73% by 2021.

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The difference already is showing up in sales. About half of the world’s electric vehicles are sold in China, a figure that is rising. Sales jumped by 150% during the first quarter of 2018, compared with the previous year, according to Bloomberg.

“You can’t build half a million electric-vehicle battery packs without a secure supply of several critical raw materials,” said Chris Berry, a battery metals analyst at House Mountain Partners. “If the U.S. lags in the build out of lithium or cathode capacity, its supply chain dynamism and competitiveness around the new energy theme is put at risk.”

China’s Jiangxi Ganfeng Lithium Co. acquired 37.5% of the Cauchari-Olaroz lithium project in Argentina, which is set to start producing in 2021. Tianqi Lithium Corp. paid $4 billion for a 24% stake in Soc. Quimica & Minera de Chile, and the same company is part of the Talison joint venture, which controls the giant Greenbushes lithium mine in Australia.

This week’s meeting in Washington is hosted by Benchmark Mineral Intelligence, an industry consultant that specializes in the lithium-ion battery supply chain. In testimony before Congress in February, the firm’s leader, Simon Moores, warned that the U.S. current role in the supply chain was being “outflanked” by China. Moores confirmed the meeting in an e-mail. Albemarle’s Norris said he will be attending the meeting.

“There’s no reason why companies can’t raise capital and build and operate lithium mines in the U.S,” Berry said. “The permitting process can be somewhat longer in the U.S. relative to other parts of the world, but with so much focus on sustainability and transparency of the supply chain, environmental safeguards are a must.”

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But with demand for lithium set to boom from above 300,000 tons a year to a million tons by 2025, mining companies need to grow fast, and they prefer to do so in jurisdictions they know well. Albemarle, the only company producing lithium in the United States, said in a written answer to questions it is focusing on expanding current operations in Australia and Chile.

It is too early to comment on viability or timing of an expansion at Silver Peak, a mine that produces 6,000 tons of lithium carbonate per year, Albemarle’s Norris said. The company completed an exploration program at a hard rock site in Kings Mountain, but Norris described it as a long-term asset in very early stages of assessment.

No lithium mines are expected to start producing in the United States over the next three years, and no substantial lithium production is set to hit global markets within the next five years, according to Bloomberg chemicals analyst Christopher Perrella.

Still, some junior mining companies are looking to build new mines over the medium and long term. Vancouver, British Columbia-based Lithium Americas Corp. is hoping to have permits approved for its Thacker Pass project in Nevada in 2020. Construction of the mine, with an initial annual capacity of 30,000 tons, could start next year if the company can raise the $581 million needed to build it.

“The challenges are building it quick enough and attracting capital,” Chief Operating Officer Jonathan Evans said. “If you look at a three- to five-year period from now, the market for electric vehicles and stationary storage batteries will be really growing, so it’s key for the investment to come now.”