'We don't have enough' lithium globally to meet EV targets, says mining executive

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

A parking space reserved for electric vehicles is seen in the parking lot of a subway station in Norwalk, Calif., Monday, Aug. 29, 2022. Discounted fares, car-sharing programs and a robust network of public charging stations are among ways that California will try to make electric vehicles affordable and convenient for people of all income levels as it phases out the sale of new gas-powered cars by 2035. Advocates of the policy say the shift from gas-powered cars to with batteries, a step is needed to reduce pollution in disadvantaged neighborhoods, but for the state to ensure that these residents also have access to cars.  (AP Photo/Jae C. Hong)

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)

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.

SALAR DE ATACAMA, CHILE - AUGUST 24: Lithium mine workers inspect machinery in an evaporation pool in the Atacama Desert on August 24, 2022 in Salar de Atacama, Chile.  Albemarle Corporation, based in Charlotte, North Carolina, is expanding mining operations at their Salar plant to meet growing global demand for lithium carbonate, a key component in the production of batteries, increasingly for electric vehicles.  To extract lithium, natural brine is pumped from beneath the salt flats to 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 trucked to the 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 processed 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 in an evaporation pool 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 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.”

A Tesla battery pack is shown during a media tour of the new Tesla Motors Inc. Gigafactory on Tuesday, July 26, 2016, in Sparks, Nevada.  It's Tesla Motors' biggest bet 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 on Tuesday, July 26, 2016, in Sparks, Nev. (AP Photo/Rich Pedroncelli)

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

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