U.S. Lithium Production Turns the Corner

There’s no doubt that the U.S has been behind the eight ball when it comes to the domestic production of lithium. That’s something we’ve frequently pointed out.

Fortunately, our calls for action have not gone unheeded – and it’s not a moment too soon!  As we slowly emerge from the Covid-19 pandemic, lithium prices are surging. Thankfully, U.S. policymakers and the rare earthing mining community are moving to ensure we have an ample domestic supply of this critical mineral.

What drives demand for lithium? Put simply, it’s a critical component of many battery storage types used in everything from electric vehicles (EV) to cell phone batteries to utility-scale batteries for energy storage. A wave of investment in new mines overseas created a glut of lithium supplies in past years, lowering prices. However, like many other commodities, lithium has seen decreased demand, primarily due to consumer concerns during the Covid-19 pandemic, causing the supply-and-demand balance for lithium to fall into deficit for the first time in years.

With widespread access to vaccines imminent, consumer confidence is increasing, resulting in a massive increase in demand for new EVs. Worldwide pledges to decrease carbon dioxide emissions will further increase demand, pushing lithium supplies to the brink. China’s prices for lithium carbonate, a compound of the metal, have already jumped 68% since the start of the year to an incredible $11,250 a metric ton. Battery-powered vehicles are now seen as the future of transportation, meaning that demand will continue to grow. Despite a depressed market in 2020, demand will exceed supply by roughly 10,000 metric tons this year. 

“What we have today is this really dangerous place for the growth forecasts of the EV industry,” said Paul Graves, CEO of Philadelphia-based Livent Corp., one of the largest producers in the world, with operations in North Carolina, Argentina, and China.

How can we fix the supply issues? As we’ve written before, the key is to establish a robust domestic lithium mining industry. The U.S. is heavily reliant on China and other countries for lithium imports. Only about 1% of global lithium output is mined and processed in the U.S., even though we have among the world’s largest lithium reserves.  

Fortunately, the U.S. has made progress as a leader in essential mineral production. Last month President Biden signed an executive order calling for a review of supply chains for critical materials, acknowledging that relying on overseas sources for necessary resources creates a “strategic vulnerability” to the U.S. economy.

U.S. companies are stepping up to attack this strategic vulnerability. For example, Piedmont Lithium Ltd. is preparing to open a lithium mine in North Carolina. The mine would be the first built in the U.S. in decades and would come on the heels of the Bureau of Land Management’s approval of the Thacker pass project in December. 

“We need to do it here in America,” says Taso Arima of Piedmont Lithium. “It’s part of our future. We can’t rely on overseas supply chains.”

We agree. The best approach to securing an adequate supply of lithium and other rare earth minerals is to foster a robust domestic supply. We commend U.S. policymakers and businesses for taking these vital steps to meet this challenge.