The climate provisions of the Inflation Reduction Act put the US back on track for significant emissions reductions, potentially reducing greenhouse gas production by 40% of 2005 levels.
But one miner warned that when it comes to the transport sector, domestic resources for lithium, the most critical mineral used to make electric vehicles, may not be enough to meet some of the more ambitious targets. The Biden administration, for example, aims to reduce the sale of gas-powered vehicles to 50% of all new purchases by 2030.
“Yes, we will [eventually] they have enough, but not until that moment,” Keith Phillips, CEO of Piedmont Lithium ( PLL ), said in an interview on Yahoo Finance Live (video above). “There will be a real problem to get the material. We don’t have enough in the world to go around that much [lithium] production in the world by 2035”.
With the average electric car battery requiring around 8-10 kg of metal, lithium remains a critical material for the transition to zero-emission vehicles. Rising demand has caused the price of lithium carbonate to nearly double this year alone, and the IEA predicts that demand will grow 40-fold over the next two decades, with the majority of that supply coming from outside the U.S.
This has complicated the climate goals set by the Biden administration. The president has called for half of all new vehicles sold by 2030 to be electric, setting aside billions of dollars in the Inflation Reduction Act (IRA) to incentivize drivers to make the switch.
But those same tax credits come with requirements that parts and components be largely sourced from North America, prompting some EV makers to push the targets on the grounds that they are unrealistic.
Piedmont Lithium is looking to cash in on demand, as one of the few US-based lithium miners. On Thursday, the mining company announced plans to open a lithium processing operation in Tennessee, with construction to begin in 2023.
Once fully operational, the plant will process 30,000 metric tons of lithium per year. The company is also planning another plant in North Carolina, which will allow the company to supply lithium for 1 million electric vehicles annually.
“The world has changed,” Phillips said. “We are now in an era where everyone will want an electric car. Car companies can’t make them fast enough, and people are now looking for the lithium they need to put the batteries in these electric cars.”
While automakers such as General Motors ( GM ) have rushed to secure partnerships with domestic mining operations in anticipation of demand, the Albemarle ( ALB ) Silver Peak mine in Nevada remains the only operational lithium mine with significant output.
Phillips said a slow permitting process has delayed approvals for new manufacturing facilities. Meanwhile, China continued to dominate the industry, refining more than half of the total lithium supply, while Australia and Chile remain the world’s largest producers.
“The projects are allowed [in Australia] in less than a year,” Phillips explained. “Here, it’s two, four, six, seven, eight years, which is a problem, especially in a business that’s booming so quickly.”
The White House has moved to speed up the process by invoking the Defense Production Act to boost production of minerals vital to making electric vehicles, including lithium and cobalt. The IRA also established the Advanced Manufacturing Investment Tax Credit for domestic manufacturing.
But with demand for electric vehicles far outstripping supply and new mining operations running on a five- to 10-year timeline before coming online, Phillips said that, as it stands, the U.S. can’t meet its clean energy goals with the priority of domestic supply.
“Energy security is a national issue,” Phillips said. “I think you’re going to see companies that are thinking about battery plants in different parts of the world or lithium conversion plants coming to America because that investment tax credit is going to be very valuable. … The market opportunity is huge.”
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita
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