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With a Little Help From My Friends, Part 2 - U.S. Lithium Production and Processing Projects

The world will need extraordinarily large quantities of lithium to support the development of renewable energy, batteries and electric vehicles (EVs). The problem is, much of the supply chain for lithium and many other important energy-transition minerals is either owned or controlled by China, whose strategic and economic interests are directly at odds with the U.S. and its allies. In response, the Biden administration and Congress have been taking steps to reduce our dependence on Chinese supplies by providing financial incentives to encourage the development of more domestic mineral production and processing capacity. But that development can only happen if the projects can clear the often-daunting regulatory and legal hurdles they almost always face. In today’s RBN blog, we discuss a few of the leading U.S. projects being planned and the challenges they face in moving forward.

If you think it’s tough getting a new natural gas pipeline project permitted and built in many parts of the U.S., consider the hurdles you’d have to clear in developing a new, open-pit lithium mine, a sprawling set of brine-evaporation ponds, or a plant to produce lithium carbonate or lithium hydroxide ­— both of which can be used to make cathodes for EV batteries. We get it — many of us would object to a major industrial operation being built next door or even down the road from where we live. At the same time, however, the transition to a lower-carbon economy is full of aesthetic and environmental trade-offs. Can we deal with seeing scores of wind turbines on a ranch along the interstate, or in the distance off the shoreline? What about a 1,000-acre solar farm on what used to be a cornfield? Or a new electric-transmission line through a forest? Those trade-offs are easy, at least when you compare them with what you might call the “necessary-but-nasty” aspects of the energy transition, with open-pit mines, arrays of football-field-size evaporation ponds, and mineral-processing plants being prime examples.

As we said in Part 1, China — and Chinese companies — many years ago saw the trend toward EVs coming and moved to secure the supply of lithium, manganese, cobalt, nickel and other key minerals from producers in China and around the world through investments and long-term deals; develop mineral-processing facilities and battery manufacturing plants within China; and build out China’s EV industry by subsidizing EV sales on its home turf. It’s been estimated that, as a result of these efforts, China accounted for as many as 80% of the EV batteries produced last year. The concern among U.S. policymakers is that allowing a highly competitive, often-hostile nation like China to dominate the manufacture of commodities critical to the U.S. economy isn’t a good long-term plan and can leave us vulnerable to supply and/or price disruptions or, in a worst-case scenario, subject to foreign coercion that may compromise our own strategic goals.

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