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Joe McDonald
Published June 28, 2023 • read for 4 minutes
FILE – Mountains and a lime plant are reflected in a brine evaporation pond at Albemarle Corp.’s Silver Peak lithium plant, on Oct. 6, 2022, in Silver Peak, Nev. Threatened by a possible shortage of lithium for electric car batteries, automakers are racing to bring in supplies of the once-obscure “white gold” in a politically and environmentally fraught competition from China to Nevada to Chile. Photo by John Locher /THE ASSOCIATED PRESS
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BEIJING (AP) — Threatened by potential lithium shortages for electric car batteries, automakers are racing to bring in supplies of the once-obscure “white gold” in a politically and environmentally fraught competition from China to Nevada to Chile.
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General Motor Co. and the parent company of the Chinese BYD Auto Ltd. went straight to the source and bought stakes in lithium miners, a rare move in an industry that relies on third-party suppliers for copper and other raw materials. Others invest in lithium refining or undertake to recycle the silver-white metal from used batteries.
A shortage of lithium supplies would hamper plans to boost sales to tens of millions of electric vehicles per year. It fuels political conflicts over resources and complaints about the environmental costs of extracting them.
“We’re already running that risk” that we can’t get enough, GM’s chief financial officer, Paul A. Jacobson, said at a Deutsche Bank conference in mid-June.
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“We need to have partnerships with people who can get us the lithium in the form we need,” Jacobson said.
Ford Motor Co. has signed contracts extending 11 years into the future with lithium suppliers on two continents. Volkswagen AG and Honda Motor Co. try to reduce their need for freshly mined ore by establishing recycling companies.
Global lithium production is on track to triple this decade, but sales of electric SUVs, sports cars and sedans, which rose 55% last year, threaten to surpass that. Each battery requires about eight kilograms of lithium, plus cobalt, nickel and other metals.
“There will be a shortage of EV batteries,” said Joshua Cobb, senior automotive analyst at BMI.
Adding to the uncertainty, lithium has emerged as another conflict in tense US-China relations.
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Beijing, Washington and other governments view the supply of metal for electric vehicles as a strategic issue and are tightening access controls. Canada last year ordered three Chinese companies to sell lithium mining assets for safety reasons.
Other governments, including Indonesia, Chile and Zimbabwe, are trying to maximize their returns on deposits of lithium, cobalt and nickel by requiring miners to invest in refining and processing before they can export.
GM buys direct access to lithium by investing $650 million in the Canadian developer of a mine in Nevada, the largest US resource. In return, GM says it gets enough for 1 million vehicles a year.
Conservationists and American Indians are asking a federal court to block development of the Nevada mine, which the Biden administration has embraced as part of its clean energy agenda. Opponents say it can poison water supplies and soil and contaminate breeding grounds for birds.
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Despite rising production, the industry could face shortages of lithium and cobalt as early as 2025 if not enough investment is made in production, said Leonardo Paoli and Timur Gul of the International Energy Agency.
“Supply-side bottlenecks are becoming a real challenge,” Paoli and Gul said in a report last year.
According to GlobalData’s Alastair Bedwell, automakers may be pouring their own money into reassuring “notoriously risk-averse” miners. He said miners are reluctant to “go all out” on lithium until they are confident the industry will not switch to batteries made with other metals.
Even if they do, developing lithium resources is a process that takes years.
Global lithium resources are estimated at 80 million tons by the US Geological Survey.
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Bolivias are the largest with 21 million tons, followed by Australia with 17 million and Chile with 9 million.
Annual production is projected to reach 1.5 million tons by 2030. But if electric car sales continue to grow at double-digit annual rates, demand is expected to increase to 3 million tons.
According to EV Volumes, a research firm, electric car sales are booming in 2021, more than doubling from the previous year to 6.8 million. Last year’s turnover rose to 10.5 million.
China accounted for 60% of last year’s sales, two-thirds of production and three-quarters of battery production.
President Joe Biden last year announced an official goal to make half of all new cars sold in the United States electric or otherwise emission-free by 2030.
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As sales rise, so do official concerns, especially in Washington and Beijing, about access to lithium and other minerals and the potential for strategic competition.
Volkswagen’s battery unit, PowerCo, signed an agreement with Canada last August to develop suppliers of “critical raw materials” such as lithium, cobalt and nickel.
German Chancellor Olaf Scholz welcomed cooperation with “good friends” on “raw material security” in a statement.
The Chinese government has accused the United States, Canada, Japan and other governments of exploiting fake security vulnerabilities to hurt Chinese competitors in electric cars, smartphones, clean energy and other emerging technologies.
Other governments welcome Chinese investment. China’s largest lithium producer, Ganfeng Lithium Co., bought Argentina’s Lithea Inc. last year. for $962 million.
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About two-thirds of the world’s lithium comes from mines. That includes breaking rock and using acids to extract metals. It leaves behind toxic mounds of chemically laced residue.
The rest is extracted from salt lakes or salt flats. That can require huge evaporation ponds.
The industry is working on technology to extract lithium from hot springs and clay deposits with less impact on the environment.
As they ramp up supplies, automakers face another bottleneck: lack of refining capacity to purify raw lithium into battery material.
Tesla Inc. builds a refinery in Texas. Others, including BMW AG, buy stakes in refineries.
As for GM, “I don’t know” if it will build its own refinery, Jacobson said.
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