Climate regulations in Inflation Reduction Act put the US back on track for significant emissions reductions, potentially reducing greenhouse gas emissions by 40% from 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 most ambitious targets. The Biden administration, for example, aims to reduce the sale of gas-powered vehicles to 50 percent of all new purchases by 2030.
“Yes, we will [eventually] they have enough, but not until then,” Keith Phillips, CEO of Piedmont Lithium (PLL), said in an interview with Yahoo Finance Live (video above). “There will be a real crunch to get the material. We don’t have enough in the world to turn that many around [lithium] production in the world by 2035
Since the average electric car battery requires approximately 8-10 kg of metal, lithium remains a crucial material in the transition to zero-emission vehicles. Rising demand has seen the price of lithium carbonate nearly double this year alone and IEA projects demand to grow 40-fold over the next two decades, with most of that supply coming from outside the US
This has complicated the climate goals set by the Biden administration. The president 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 requiring parts and components to be largely sourced in North America, leading some EV manufacturers to oppose the targets on the grounds that they are not realistic.
Piedmont Lithium is looking to profit from demand, as one of the few lithium miners in the US. On Thursday, the mining company announced plans to open a lithium processing operation in Tennessee, with construction slated 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 that would allow the firm to supply lithium for 1 million electric vehicles a year.
“The world has changed,” Phillips said. “We are now in an age where everyone will want an electric car. Car companies can’t make them fast enough, and people are now scrambling for the lithium they need for the batteries in these electric cars.
While car manufacturers such as General Motors (GM) have rushed to secure partnerships with local mining operations pending search, Albemarle (ALB) The Silver Peak mine in Nevada remains the only operating lithium mine with significant production.
Phillips said the slow permitting process has stalled approvals for new manufacturing sites. Meanwhile, China continues to dominate the industry, refining more than half of all lithium supplies, while Australia and Chile remain the world’s largest producers.
“The projects are being resolved [in Australia] in less than a year,” Phillips explained. “It’s been two, four, six, seven, eight years here, which is a problem, especially in a business that’s booming so quickly.”
The White House decided to speed up the process by invoking the Defense Production Act to help produce minerals critical to the production of electric cars, including lithium and cobalt. The IRA also created an advanced manufacturing investment tax credit for local manufacturing.
But with demand for EVs far outstripping supply and new mining operations operating on a five- to 10-year schedule before coming online, Phillips said that as it stands now, the U.S. can’t meet its priority clean energy goals for local sources.
“Energy security is a national issue,” Phillips said. “I think you’re going to see companies looking at battery plants in different parts of the world or lithium conversion plants coming to America because this 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