Does the U.S. Have Enough Lithium to Support the Growing EV Market?

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Key Takeaways:

  • Demand for lithium from the EV industry is growing at twice the rate of lithium production. As a result, lithium prices have skyrocketed over the past 6 months — up to four times last year’s prices in tight markets. By 2025, the US could need up to 75,000 tonnes per year of lithium to supply new gigafactories.
  • The US currently produces only 1% of global lithium production — about 1,000 tonnes of lithium content. This currently comes from a single brine operation: Albemarle’s Silver Peak site in Nevada.
  • The US theoretically has enough lithium in the ground to meet the growing demand. The US Geological Survey (USGS) reported that the US has 750,000 tonnes of economically recoverable lithium in 2021. This estimate will continue to grow as new reserves are proven; as recently as 2018, the US had only 30,000 tonnes of established domestic reserves.
  • The Thacker Pass project in Nevada has received all required permits to begin construction and is the closest to bringing new US lithium production online (5,600 tonnes of lithium content in Phase 1). Because the lithium at Thacker Pass is found in clay rather than in a brine, it can be extracted quickly with relatively standard technology once facilities are constructed.
  • The heated brines pumped out of the ground for geothermal power in California’s Salton Sea region also contain significant amounts of lithium — 24,000 tonnes of lithium content passes through these plants a year by NREL’s estimate. Extracting this lithium is hard because of the wide range of other minerals present, combined with relatively low lithium concentrations and elevated temperatures. However, building out more geothermal capacity is an amazing BOGO opportunity: clean energy + lithium, and lots of it!
  • Three challenges prevent the USA from achieving lithium independence. The first is the long development times needed to bring a new resource to production (4–10+ years). The second is the low average lithium concentration of US deposits, which make them more complicated and expensive to process than Chilean brines, for instance. The third is creating a streamlined (and appropriately staffed) permitting process that ensures that environmental impacts are kept to a minimum, while enabling a predictable outcome for responsible parties.

As lithium prices continue to skyrocket and interest in onshoring increases, where does the US stand in terms of future lithium supply? Do we have any competitive advantage here, or will we be dependent on imported lithium forever? What can the US do to get ahead of future lithium supply chain challenges?

My January post covered how lithium is converted “From Rocks into Roadsters” — how lithium has traditionally been mined, and some of the challenges that exist with these practices. My colleague Gaetano Crupi’s post “Who Controls Lithium” last fall discussed how there is plenty of lithium in the world (and where it is) — we just don’t have a way to extract it and bring it to market quickly. In this post, we’ll take a closer look at the situation in the US.

First, some quick macro updates:

  1. Lithium prices have skyrocketed to over 4x what they were at the end of 2021, driven by an upsurge in EV sales at the end of 2021 and a scramble to secure supply.
Spot lithium carbonate prices in China, 5Y up to mid-May 2022 (Source: Trading Economics). Spot prices in China typically see bigger swings than other markets; but China

2. Global lithium production increased by 21% in 2021 compared to 2020, finally exceeding 2018 production levels. Australian producers brought over 15,000 tonnes of lithium capacity back online, and Chile also increased production by several thousand tonnes, per USGS data.

3. However, battery production capacity is currently growing at twice the speed of lithium raw material supply. The US alone is projected to produce 91 GWh of lithium-ion batteries in 2025, requiring over 75,000 tonnes of lithium content. (The US currently produces about 1,000 tonnes.)

Source: cienergigune

4. It takes a long time (4–10 years) to bring new mineral production online. The increase in production in 2021 was in large part existing Australian capacity ramping back up; not new mines, which take longer to respond to changes in price. Producing lithium from new brine facilities (i.e. South America) takes 2–3 years longer than hard rock sites (Australia) because recovering lithium from brines currently relies on evaporation ponds. This does not factor in timelines for environmental permitting, which in industrialized countries like the US can take a decade or more.

Average observed lead times from discovery to production for selected minerals, 2010–2019. IEA analysis based on S&P Global (2020), S&P Global (2019a) and Schodde (2017).

Well darn, this is frustrating because…

…the US has mineral resources that could conceivably produce a lot of lithium, though we don’t produce much today. There is currently only one operating lithium mine in the US: Albemarle’s Silver Peak site in Nevada’s Clayton Valley. Silver Peak produces about 6,000 tons per year of lithium carbonate from brine [2], or just 1% of the world’s lithium.

There is about 1 tonne of lithium in every 5.3 tonnes of lithium carbonate equivalent (LCE), which is currently the most common way that lithium is measured and sold.

… and the US’s “mineral pipeline” is increasing. There are a growing number of sites in the US where lithium has been identified, and companies continue to explore for new deposits. In 2021, US lithium reserves were estimated at 750,000 tonnes of lithium content. This is a MASSIVE increase from just three years ago when the USGS reported just 35,000 tonnes of domestic lithium reserves. As early as 2017, the USGS noted increased lithium exploration activities in the US (mostly in Nevada), with 30 mining claims in the early exploration to mineral discovery stages.

These future lithium sources have different levels of confidence attached. Reserves must be proven to exist and be economically recoverable at current prices. A resource is an estimate of all lithium at a site (even if only inferred to exist), regardless of how much it will cost to produce.[3]

Here is a rundown of the locations and types of lithium resources in the USA, with estimates of when they could turn on (if available).

  • Clayton Valley, Nevada (where the Silver Peak mine is located) is the only proven continental brine deposit in the US. This site uses evaporation ponds to concentrate the brine before recovering it in an offsite refinery. There are plans to expand this mine (and other activities in the area) to supply Tesla’s NV Gigafactory project, which is expected use 2,800–4,700 tonnes of lithium/yr. Several other mining companies are developing lithium extraction projects in the area, as shown below:
Ownership map of the Clayton Valley Resource (Source: Sienna Resources Press Release)
  • Thacker Pass, Nevada is currently the largest lithium resource, with over 3 million tonnes LCE of reserves (570,000 tonnes of lithium) and 13.7 million tonnes of LCE resource. Lithium Americas is developing this site, which will produce about 5,600 tonnes per year of lithium content (30,000 tonnes LCE/yr) in Phase 1 — over five times current US lithium production. The Thacker Pass project has received all environmental permits as of Q1 2022 and could begin operations later this year. [4]
  • Rhyolite Ridge, Nevada is a lithium-boron mine that owner Ioneer claims could start production in 2024. This hard(ish) rock resource (no proven reserves) is also near Albemarle’s Silver Peak brine facility.
  • Railroad Valley, Nevada has similar geology to Clayton Valley. Several mining companies have acquired land here and are completing studies to estimate possible lithium resources, including Ameriwest and Lithion Corp.
  • King’s Mountain, North Carolina. Albemarle and Piedmont Lithium (an Australian junior mining company) both have mining claims to hard rock lithium deposits in the region west of Charlotte. Albemarle mined lithium at King’s Mountain until the 1980s, when it closed the facility and focused on cheaper sources in South America — it is considering restarting operations over much public debate. Piedmont Lithium is a newcomer, developing a mining (14,500 tonnes of lithium content per year) plus chemical processing facility to produce 22,700 tonnes per year of lithium hydroxide. The best estimate is that it could start-up later this decade. [5]
  • The Salton Sea, California. The Salton Sea is home to several geothermal plants that pull hot salty water from underground to generate energy. [6] The National Renewable Energy Lab (NREL) estimates that 24,000 tonnes of lithium per year passes through these geothermal plants (based on 2019 data). However, the low average lithium concentration (200 ppm) and dog’s breakfast of other minerals present make it difficult and expensive to extract. Still, with Salton Sea’s inferred lithium resource at 15 million tonnes of lithium, considerable private and government efforts are underway to tap this resource. [7] Notably, Controlled Thermal Resources (an Australian company) plans to develop both a geothermal power plant and lithium extraction facility, which it hopes will start producing 20,00 tonnes per year of lithium hydroxide (about 3300 TPY of lithium content) by 2024. (Source)
  • There are also unconventional sources of lithium. “Produced water” generated from oil and gas operations in the US often contains as much lithium as brines (e.g., 100 to 1,000 mg/L), and there is a lot of it: 10.6 billion liters/day in the United States as of 2017. Lithium recovery from these wastewater streams is currently uncommon due to the cost and relative difficulty. Plus while it sounds like a lot, the low end of this range only works out to about 100 kg lithium/day.
  • Seawater contains 0.2 parts per million (ppm) lithium — so dilute, it’s hard to imagine mining it for lithium directly. The waste brine from desalination plants is much more concentrated. The US currently has one operating desalination plant, Carlsbad, that processes 50 million gallons of seawater per day. If it recovered 100% of the lithium in that water, it would produce… about 16 tonnes of lithium per year.

All of this is to say —the US theoretically has enough lithium in the ground (and groundwater) to meet growing demand, without going to crazy lengths (mining produced water, seawater). However, we don’t have the time to build mining capacity (let alone lithium refining or battery production capacity) fast enough to not be dependent on overseas supply. As discussed in previous posts, there won’t be a sufficient volume of recycled batteries available to offset new supply until the late 2020s.

There are also technical challenges facing would-be US producers. Known lithium deposits in the US are also likely to cost more to extract than lithium from other parts of the world, without advances in mining practices. The concentration of lithium in the Clayton Valley brine basin is significantly lower than the lithium content of the Salar de Atacama, and other Chilean brines. Similarly, the clays in the region contain less lithium than the major hard rock deposits in Australia, so more tons of earth need to be processed to produce the same amount of lithium. Geothermal brines have their own challenges due to the wide range of minerals (some of them toxic) in the brines in addition to lithium.

Perhaps the biggest challenge of all is navigating the environmental trade-offs and rampant NIMBYism in the US. I am firmly on team “let’s extract minerals in countries with strong environmental controls and stable democracies”.

Of the projects above, only Thacker Pass has received the required environmental permits and has the green light to begin construction. Phase 1 will produce the equivalent of 1–2 gigafactories-worth of domestic lithium (assuming there is a refining facility in the US that can purify it to battery grade). If CTR or another facility at the Salton Sea cracks the code for economically extracting lithium from geothermal brines in the next three years, that could be another 24k tonnes of lithium content. Both of these wins would get the US less than half the way there, if we actually produce 91 GWh of lithium-ion batteries in 2025 (75,000 tonnes of lithium content needed).

These challenges create opportunities for technology developers. A silver lining to the spike in lithium prices and the grim supply vs. demand projections for the next decade is that many previously marginal projects are now in the black, and some companies are willing to consider new technologies. While this won’t be enough to eliminate our dependence on imported lithium, it will help enable some domestic supply — particularly from geothermal sources. We will explore some of these technologies in the next post in this series!

A rare creek roughly 12 miles north of Wells, Nevada (own work)

References

  1. Albemarle is reportedly investing $50mm to double the capacity of this site by 2025. (S&P Global) At 6000 tonnes of LCE per year, the facility currently makes less than one-fifth of the lithium that the Tesla/Panasonic battery Gigafactory outside Reno uses in a year.
  2. The Silver Peak site uses evaporation ponds to concentrate the brine before recovering it in an offsite factory. The expansion of this mine is connected to Tesla’s NV Gigafactory project (which will use 15,000–25,000 mt lithium carbonate equivalent (LCE)/yr).
  3. Reserve Base. That part of an identified resource that meets specified minimum physical and chemical criteria related to current mining and production practices, including those for grade, quality, thickness, and depth. The reserve base is the in-place demonstrated (measured plus indicated) resource from which reserves are estimated. Reserves: the part of the reserve base that could be economically extracted or produced at the time of determination. The term “reserves” need not signify that extraction facilities are in place and operative. See the USGS 2022 Mineral Commodity Summary Appendices for more info and definitions.)
  4. Ultimately Thacker Passs could produce up to 11,300 tonnes of lithium per year (60,000 tonnes LCE/yr). Thacker Pass would be an open pit-style mine, where lithium would be leached out of the sediment (dirt). (Description of mining tech for Thacker Pass, and a less technical but more complete description that includes water usage.) This is very different from the brine extraction methods that are used at Silver Peak and in South America, and would actually be the first time “claystone” is commercially mined.
  5. Piedmont Lithium expects to make a final investment decision on the King’s Mountain project in 2022. Though the mine wouldn’t enter production for several years, Tesla has already secured an offtake from XX. Piedmont lithium plans to turn lithium concentrate directly into lithium hydroxide, without going through lithium carbonate. (Source) In November 2020, Piedmont received its construction air permit, and permit for mining and chemical plant operations at Kings Mountain. The life of PL’s mine per the latest feasibility study is 11 years.
  6. Eleven geothermal power plants are currently operating in the Salton Sea Known Geothermal Resource Area (KGRA) — ten owned by CalEnergy, and one by EnergySource.
  7. Methods for extracting lithium and other metals from the Salton Sea have been researched since the 1970s. (NREL 2021) For a brief period from 2002–2004, CalEnergy extracted high purity zinc from geothermal fluid before the project was shut down due to poor economics. Previous efforts to economically extract lithium from geothermal brines have failed, including a well-publicized campaign by Simbol. Caution advised!

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