Electric vehicles have been targeted as an important transition toward a greener planet. Yet the manufacturing of lithium ion batteries is creating a significant environmental impact.
As it stands, most large volumes of lithium-bearing rocks and brines mined in Australia, Chile, Argentina and other countries must be shipped to China, which controls 65 percent of the supply chains for battery-ready lithium chemicals and 73 percent of the manufacturing of lithium ion batteries.
While carbon emissions from shipping is substantial, the greatest environmental impact comes from the actual processing of lithium and the manufacturing of its end products, such as lithium ion batteries. This is because the energy required for these activities typically comes from coal-powered plants, and pollution controls in China have been known to be bypassed, said Jesse Edmondson, chair of the Critical Minerals Committee of the Energy Minerals Division of AAPG.
The United States could play a significant role in solving this problem if it increased mining for critical minerals needed for batteries, such as lithium, cobalt and graphite, and simultaneously constructed advanced materials processing and battery-manufacturing plants, said Edmondson, who is also founder and CEO of U.S. Critical Minerals.
Furthermore, if processing and manufacturing plants were powered by gas, wind or solar energy and located near critical mineral mines, the carbon footprint for batteries and our dependency on China would be drastically reduced.
Critical minerals are defined by their necessity to economic and national security, their vulnerability to supply chain disruption, and being essential for products a nation cannot live without. They are not only indispensable for energy storage in the United States but to national security, which relies on critical minerals for armored vehicles, precision-guided weapons, batteries and night-vision goggles.
Today, China holds a 20:1 ratio on battery manufacturing plants to the United States. In the event of a trade war or global warfare, the United States and other countries could easily be cut off from their supplies, resulting in devastating effects.
Edmondson believes that as the United States progresses toward a sustainable energy base, it must take a hard look at both its critical mineral supply and manufacturing capabilities for transportable energy storage.
The Business of Critical Minerals
So how does the United States build a critical mineral supply chain that rivals its robust oil and gas industry? Like the petroleum industry, there must be a cyclical market for mining, production, refining and manufacturing.
The U.S. Geological Survey reports that more than 20 critical minerals, including lithium, are currently mined in the country. While the United States manufactures 10 percent of the world’s lithium ion batteries, it is a meager comparison to China.
“It’s one thing to have control over mining, the upstream part of the process, but if you don’t have control over the downstream process, which is the advanced manufacturing component, then you have lost control of your supply chain,” Edmonson said. “This is where we are right now in regard to most of the critical minerals necessary for batteries as well as rare-earth minerals.”
Yet the United States lags in mining activities as well, supplying just 1 percent of the world’s lithium. If the United States aims to transition to electric vehicles by 2025 or 2030, battery plants currently under construction will see a huge supply shortage because of a lack of investment in mining, he said.
What is needed is a balanced approach to boost both mining and manufacturing projects.
“We’ve got to protect the supply chain and capture value along the way,” he said.
It is not widely understood that a conversion to clean energy will require “orders of magnitude” more mining than the oil and gas industry ever did, Edmondson said.
According to the World Bank, by 2050 the world will need five times more lithium than what it is currently mining.
The key to catching up is attracting private investors. Yet a lack of certainty about when the United States will mandate electric vehicles has made many hesitant.
“A couple billion dollars in investments from oil and gas companies right now would completely change the landscape. They could control most of North America’s mining projects. You can invest for pennies on the dollar right now,” Edmondson said. “But there’s hesitancy, and that’s where the Chinese have the advantage. Lithium is the lightest metal on the periodic table. It is irreplaceable, especially for lightweight transportable energy storage. It will always be needed.”
Raw mineral concentrates, such as spodumene (hard rock lithium mineral) and graphite, sell at much lower price points than their end products. “Would you rather make $800 a ton for a run-on-mine graphite concentrate or $8,000 a ton by selling a specialty battery-ready graphite?” Edmondson asked. “The advanced processing greatly improves the economics and will be essential for the success of most new domestic critical mineral projects.”
Enter: Private Industry
Commonly known for its electric cars, Tesla is, in actuality, predominantly a battery and software company, using its vehicles to showcase its sophisticated technology. As the “poster child” of successful electric vehicles, Tesla has attracted investors to break its dependence on China.
“Tesla controlled its own destiny when it got into the lithium chemical business,” Edmondson said. The company is now looking to build a battery manufacturing plant in Austin, Texas, in proximity to its Cybertruck manufacturing plant.
Companies including Mercedes and Volkswagen are following in similar footsteps in Woodstock, Ala. and Chattanooga, Tenn., respectively.
Not only will these set-ups reduce the cost of batteries and minimize carbon emissions, it opens up a commercially viable U.S. customer for domestic lithium miners, Edmondson said.
When Tesla CEO Elon Musk announced last year his company’s intention to build its own lithium chemical plant, the stock prices of aspiring domestic lithium miners skyrocketed, particularly Piedmont Lithium in Belmont, N.C., which negotiated a five-year sales agreement to supply the new chemical plant with spodumene. It is perhaps a not-so-subtle hint that investors are ready if a reliable supply chain can be established.
“Forecasting demand is a little like writing an equation with a few constants, but many, many variables,” said Lindsay Ross, AAPG Critical Mineral Committee co-chair and director and exploration geologist at Cherryvale Partners in Australia. “Resource companies should position their investments in greenfield new ventures and exploration opportunities by using a portfolio approach, similar to how in oil and gas we deal with our prospect and lead inventories within a play-based exploration context.”
He added that development opportunities for discovered, but currently uneconomic or stranded resources, should be handled by maximizing deposit knowledge by application of the latest technology to better understand the deposit economics.
“This is where the oil and gas companies and mining houses can work together in what I see as an integrated future energy enterprise,” Ross said.
Getting the U.S. On Board
Edmondson has spent four years having discussions at the federal level, making a case for both mining and advanced material manufacturing of critical minerals. He and others are working to show that critical minerals are as indispensable for the future as oil and gas have been for the last 100 years.
The points he drives home include:
- The United States has a massive and diverse geologic terrain for extracting critical minerals.
- The United States is a wealthy country, yet it has not invested in mining for the last 30-plus years.
- There is a demand for critical minerals, as the United States is a top consumer of their end products.
- The United States has the infrastructure, including power, water, rail and highways, in direct proximity to mining projects.
The United States, like China, needs to adopt a long-term vision and financial commitment to critical minerals by helping to secure long-term contracts with end users and facilitating the process of qualifying new suppliers, Edmondson said.
And, the public must be on board.
“We need to change the perception of mining in the Western world,” Edmondson explained, adding that people tend to equate all mining projects with “big, nasty coal mines” and oppose them.
“It’s hard for the industry to earn the trust of society, but we have to and the best opportunity to do that is right here in the United States,” he said. “With our environmental regulations and human safety regulations, all activities are under the public spotlight and it will be done right.”
There are many places in the country to mine responsibly, sustainably, and create a plethora of jobs across diverse skillsets, he said. It is essential for the mining industry to be “very” mindful of the natural value of land when selecting mining sites and design them to minimize their impacts and perform proper reclamation when complete, Edmondson added.
Ross added that an increase in demand in critical minerals could result in extraction of lower-grade ore deposits or deposits with higher waste ratios.
“Just like we certify organic produce, for example, we should rank and register a sustainability index for critical minerals throughout the supply chain,” he said.
“Australia, Canada, Europe and China are moving these projects forward,” Edmondson said. “We need to incentivize these projects and connect them to energy and national security. There is really nothing that is more American. Clean energy, national security, job creation. This is something the country should be able to come together on. It’s got something for everybody.”