“We don’t have enough lithium globally to meet EV targets,” says mining CEO

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”.

A parking space reserved for electric vehicles is seen in the parking lot of a subway station in Norwalk, Calif., Monday, Aug. 29, 2022. (AP Photo/Jae C. Hong)

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.

SALAR DE ATACAMA, CHILE - AUGUST 24: Lithium mine workers inspect machinery at an evaporation pond in the Atacama Desert on August 24, 2022 in Salar de Atacama, Chile.  Charlotte, NC-based Albemarle Corporation is expanding mining operations at its Salar plant to meet growing global demand for lithium carbonate, a key ingredient in making batteries, increasingly for electric vehicles.  To extract the lithium, natural brine is pumped from beneath the salt flats into a series of evaporation ponds.  During an 18-month process, the liquid is concentrated through a series of 15 ponds, eventually turning from blue to yellow with a lithium concentration of 6 percent.  It is then transported to an Albemarle chemical plant in Antofagasta, where it is processed into battery-grade lithium carbonate powder and shipped internationally.  The evaporation process produces large quantities of salt by-product, much of which is then reprocessed and sold.  Chile is the world's second largest lithium producer, after Australia.  (Photo by John Moore/Getty Images)

SALAR DE ATACAMA, CHILE – AUGUST 24: Lithium mine workers inspect machinery at an evaporation pond in the Atacama Desert on August 24, 2022 in Salar de Atacama, Chile. (Photo by John Moore/Getty Images)

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.”

A Tesla battery is seen during a media tour of the new Tesla Motors Inc. Gigafactory Tuesday, July 26, 2016, in Sparks, Nev.  It's Tesla Motors' biggest gamble yet: a massive $5 billion factory in the Nevada desert that could nearly double global production of lithium-ion batteries by 2018. (AP Photo/Rich Pedroncelli)

A Tesla lithium-ion battery is shown during a media tour of the new Tesla Motors Inc. Gigafactory Tuesday, July 26, 2016, in Sparks, Nev. (AP Photo/Rich Pedroncelli)

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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