The Elements of Innovation Discovered
The Elements of Innovation Discovered
Critical Minerals Alliances 2022 - September 12, 2022
With the batteries powering the electric vehicle revolution demanding more lithium than miners can produce, the price of this lightest metal in the universe rocketed more than 1,000% over the span of two years. This has prompted automakers such as Tesla and General Motors to become more directly involved in the mining and refining of the lithium-ion battery namesake.
"Price of lithium has gone to insane levels! Tesla might actually have to get into the mining & refining directly at scale, unless costs improve," Tesla CEO Elon Musk tweeted in April. "There is no shortage of the elements, as lithium is almost everywhere on Earth, but pace of extraction/refinement is slow."
This contemplation of lithium mining coincided with the opening of Gigafactory Texas, an automotive plant near Austin that is also expected to be home to one of the world's largest lithium-ion battery factories.
This marks the fifth large battery plant built by Tesla since the 2016 opening of Gigafactory 1 in Nevada, which set the stage for the global rise of lithium battery factories built at the gigawatt-hour scale needed to keep pace with the rapid transition to electric mobility.
According to Benchmark Minerals Intelligence, a United Kingdom-based analytics firm that is considered the foremost authority on lithium battery supply chains, global lithium battery production has surged from 59 GWh per year in 2015 to 1 terawatt-hour, or 1,000 GWh, at the end of 2021.
With more than 300 such gigafactories in various stages of planning and construction, Benchmark sees even sharper rises in battery production on the horizon, as long as enough lithium and other battery materials can be fed into the supply chains.
This is a tall order for mining companies, which are already falling behind.
According to Benchmark, roughly 5 million metric tons of lithium carbonate-equivalent – an industry standard for comparing various forms of lithium produced – would be needed to supply the battery megafactories in the pipeline. This is more than ten times the 480,000 metric tons of lithium carbonate-equivalent produced globally during 2021.
Simon Moores, CEO of Benchmark Mineral Intelligence, and Morgan Bazilian, director of the Payne Institute and professor of public policy at Colorado School of Mines, believe that automakers will need to directly support mining with their financial wherewithal and political clout in order to feed the battery factories powering their EV ambitions.
"Big talk on EVs must now mean equally as big statements on mining," the battery minerals and policy experts penned in an April editorial directed at automakers.
Musk's lithium Tweet suggests that the EV trailblazer agrees.
To lure new investment to the lithium space, Musk pointed out huge profit potential of producing the battery metal at the US$78,000 price levels early in 2022.
"So, like we were talking 90% margins here. More people, please, get into the lithium business," he said in April. "Do you like minting money? Well, the lithium business is for you."
While high lithium prices are a concern for Tesla and other automakers attempting to lower the costs of manufacturing batteries to a point where the costs of electric cars and trucks are comparable to the internal combustion engine vehicles they are destined to replace, the supply and demand dynamics that this price increase indicates is the larger worry.
It is estimated that a 30 GWh factory, which is about the size of Tesla's Gigafactory in Nevada, needs roughly 5,000 metric tons of mined lithium for the 25,000 metric tons of lithium carbonate-equivalent going into the batteries each year. At this rate, the 1 TWh of battery-making capacity going into 2022 would require 165,000 metric tons of mined lithium.
This is substantially more than the 100,000 metric tons of lithium produced in 2021. And the battery makers must share this lithium with companies that use the metal to make ceramics and glass, lubricating greases, and other products.
With this demand expected to outpace supply, and larger increases in the need of lithium for batteries on the horizon, automakers are being encouraged to invest more heavily into securing the supplies of lithium and other materials needed to meet their outsized EV ambitions.
"After all, a gigafactory without secure raw materials is as useful to an OEM (original equipment manufacturer) as a grain silo," Moores and Bazilian wrote.
Automakers are increasingly forging strategic partnerships and investing in the companies mining and refining lithium for EV batteries.
General Motors, which plans to only manufacture zero-emission vehicles by 2035, was among the first automakers to be directly involved at the very front end of lithium supply chains.
In 2021, the Detroit automaker forged a strategic partnership with Controlled Thermal Resources Ltd. to source low-cost and environmentally responsible lithium from the Hell's Kitchen project at the Salton Sea Geothermal Field in Southern California.
Unlike typical lithium sources that require mining or large evaporation ponds, CTR is developing a closed-loop process that directly extracts the critical battery metal from geothermal brine at Hell's Kitchen.
Almost like a self-perpetuating lithium-producing machine, the Hell's Kitchen operation will use the geothermal to power the extraction of lithium and a plant that will upgrade it to the lithium hydroxide used in EV batteries. The lithium-less brine will then be pumped back down into the ground from which it was drawn, and the excess zero-carbon electricity will be delivered to the Southern California power grid.
"Lithium is critical to battery production today and will only become more important as consumer adoption of EVs increases, and we accelerate towards our all-electric future," said Doug Parks, executive vice president of global product development, purchasing and supply chain at GM. "By securing and localizing the lithium supply chain in the U.S., we're helping ensure our ability to make powerful, affordable, high mileage EVs while also helping to mitigate environmental impact and bring more low-cost lithium to the market as a whole."
Hell's Kitchen has a total projected capacity of 1.1 gigawatts of baseload renewable electricity – enough to power more than 1 million homes – and 300,000 metric tons of lithium carbonate-equivalent (an industry standard for comparing various forms of lithium produced) per year.
This source of clean power and lithium has attracted the attention of Lars Carlstrom, a pioneering industrialist in the automotive sector who founded two companies building lithium-ion battery gigafactories in Europe – Britishvolt and Italvolt.
In April, Carlstrom announced the launch of Statevolt, which plans to build a 54 GWh battery facility in the Imperial Valley area of Southern California that will be supplied with geothermal power and lithium from Hell's Kitchen.
"We are pleased to be collaborating with CTR and its industry-leading, and highly-specialized approach to sustainable lithium production and development," said Carlstrom.
Looking to ramp up operations in stages, CTR is planning to deliver the first 49.9MW of electricity by the end of 2023 and produce the first 20,000 metric tons of lithium hydroxide in 2024.
Not to be left out, Stellantis signed a binding offtake agreement with CTR in June for up to 25,000 metric tons of battery-grade lithium hydroxide per year for the batteries going into Chrysler, Dodge, Jeep, Ram, and other electric vehicles it will produce in North America over the ten-year term of the contract.
"This definitive offtake agreement with Stellantis sets a new benchmark for the automotive industry in the United States," said Controlled Thermal Resources CEO Rod Colwell. "Securing clean lithium produced with energy from a renewable resource helps to further decarbonize the battery supply chain which in turn, delivers cleaner cars with less environmental impact."
While Hell's Kitchen lithium has become a hot commodity for manufacturing EVs in North America, it is not the only lithium-rich geothermal brine in the world.
Vulcan Energy Resources Ltd., a company developing a geothermal brine production plant at its Zero Carbon Lithium project in Germany's Upper Rhine Valley, has attracted a similar following of automakers seeking responsibly sourced lithium for their European EV models.
Late last year, Volkswagen entered into a long-term agreement to source undisclosed quantities of zero-carbon lithium hydroxide from Vulcan.
"Through this agreement, Vulcan Energy will become a major enabler of Volkswagen's world-leading target to produce carbon neutral EVs, including all raw materials in the battery supply chain," said Vulcan Energy Resource Managing Director Francis Wedin.
To secure low-carbon lithium for its Alfa Romeo, Fiat, Maserati, Opel, Peugeot, and its other European brands, Stellantis has agreed to purchase up to 99,000 metric tons of Vulcan's Zero Carbon Lithium over 10 years.
In addition, Stellantis is investing 50 million euros (US$52.7 million) into Vulcan, which will make the automaker the second-largest shareholder of the Australia-based lithium and energy company.
"Making this highly strategic investment in a leading lithium company will help us create a resilient and sustainable value chain for our European electric vehicle battery production," said Stellantis CEO Carlos Tavares.
"It is encouraging to see a leading automaker investing in local, low carbon lithium production for electric vehicles," said Wedin. "As our largest offtaker, we look forward to deepening our relationship with Stellantis as a substantial shareholder in Vulcan and our Zero Carbon Lithium business."
In the United Kingdom, Cornish Lithium Ltd. is developing environmentally sound technologies to directly extract lithium from its United Downs project in the United Kingdom's Cornwall region.
This, along with the company's Trelavour hardrock lithium project also in the Cornwall region, has attracted the attention of TechMet Ltd., a company founded in 2017 by South African mining magnate Brian Menell to develop assets that produce metals for which global demand is expected to vastly outweigh supply as the world moves to clean energy technologies.
Toward this objective, TechMet has agreed to invest up to US$24 million into Cornish Lithium, including an initial US$12 million investment in shares of the company.
"We have been extremely impressed by the innovative and talented Cornish Lithium team, which has made considerable progress over the past few years," said Menell, chairman and CEO of TechMet. "We are excited to be supporting the next phase of development and building a long-term partnership with Cornish Lithium, which could become a cornerstone of the UK's battery metal supply chain as well as having very positive implications for Cornwall's local economy."
While geothermal as a low-cost and low-carbon source of lithium has attracted a lot of attention over the past year, traditional brine and hardrock mines currently dominate global lithium production.
While the U.S. has plentiful supplies of both, there are no hardrock mines and only one brine operation currently producing domestic lithium at commercial scale.
Looking for domestic sources of lithium for its American gigafactories, Tesla cut a deal last year to buy future lithium from Piedmont Lithium Ltd.'s project in North Carolina, a U.S. state that once supplied most of the world's lithium and remains rich in the battery metal.
According to a 2021 calculation, Piedmont's North Carolina project hosts 18.3 million metric tons of proven and probable reserves averaging 1.1% (422,000 metric tons) lithium oxide.
Piedmont envisions its coming North Carolina mine and processing facility will produce 30,000 metric tons of battery-grade lithium hydroxide per year.
The company's plans to produce battery-grade lithium in North Carolina have run into local opposition that has delayed development.
Piedmont's first lithium hydroxide output, however, is expected to come from its recently announced second U.S. lithium hydroxide facility that will process lithium from other sources. The company is currently advancing lithium mine projects in Quebec and Ghana in partnerships with Sayona Mining and Atlantic Lithium, respectively.
Piedmont Lithium President and CEO Keith Phillips says that by removing the headwinds involved with also permitting a mine, the timeline for the alternate lithium hydroxide facility is expected to be much shorter.
"We think this should be funded and in construction by early next year and production by the end of 2024 or early 2025," he said.
With uncertainty as to when Piedmont's lithium hydroxide producing plans will come to fruition, Tesla and other North American EV manufacturers are looking to Nevada as a potential lithium source.
Currently, Albemarle Corp.'s Silver Peak Mine in the Silver State is the only large-scale lithium producer in North America.
Not a mine in the traditional sense, Albemarle pumps brine from Nevada's Clayton Valley basin into ponds where the water is evaporated off to produce a lithium concentrate.
Last year, Albemarle announced that it is investing upwards of US$50 million to double Silver Peak production capacity to 10,000 metric tons of lithium-carbonate-equivalent per year.
"This investment in domestic capacity shows that we are committed to looking at the many ways in which Silver Peak can provide domestic support for the growing EV market," said Eric Norris, Albemarle's president for lithium.
The evaporation ponds such as those at Silver Peak cover thousands of acres, and it takes between 12 to 18 months of evaporation to produce concentrates that can be refined into battery-grade lithium.
There are others, however, that are developing innovative technologies capable of producing the enormous quantities of lithium needed from Nevada brines much faster and with a much smaller footprint.
This includes a partnership between energy powerhouses Schlumberger and Panasonic to validate and optimize differentiated direct lithium extraction technology.
Schlumberger, best known for delivering technological solutions to the oil and gas sector, recently formed Schlumberger New Energy, a division focused on low-carbon and carbon-neutral energy technologies.
The lithium brine business, which involves drilling wells to extract the brine, is a perfect fit for leveraging Schlumberger's century of experience in oil and gas drilling and reservoir management.
One of Schlumberger New Energy's first projects in the United States is NeoLith Energy, a venture to utilize direct extraction to produce battery-grade lithium from brines in Nevada's Clayton Valley.
"We are committed to expanding the global supply chain for advanced lithium compounds to support the forecasted surge in demand and enable new opportunities for lithium production globally," said Schlumberger New Energy Executive Vice President Ashok Belani.
This project is benefitting from the lithium-ion battery experience brought by Panasonic, which joined the project in 2021
"Panasonic has a longstanding commitment to contributing to society and increasing sustainability in the supply chain as we work to produce the world's safest, highest quality and most affordable batteries is a critical priority," said Panasonic Energy of North America President Allan Swan.
Similar to Hell's Kitchen, without the added benefit of geothermal energy, NeoLith Energy plans to pump brine from the subsurface, extract greater than 90% of the dissolved lithium, and pump more than 85% of the brine back to the subsurface in an environmentally safe manner.
This cutting-edge technology is expected to result in a sustainable process for producing battery-grade lithium material at a much faster rate than the months of waiting for the sun to evaporate the water off a lithium-rich brine.
With a much smaller groundwater and physical footprint than lithium brine extraction, this process has the potential to be a game-changer that creates new market opportunities for the lithium extraction and battery manufacturing sectors and maximizes the value of the lithium-rich resource base in Nevada.
The NeoLith Energy lithium pilot plant also happens to be only 200 miles from the Tesla Gigafactory Nevada, where the growing demand for this critical EV battery metal began.
With more than 16 years of covering mining, Shane is renowned for his insights and and in-depth analysis of mining, mineral exploration and technology metals.
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