• Lithium Batteries
  • Electric Vehicles
  • Clean Transportation
  • Mining

Demand for Lithium Production Is Pressuring the US to Stay Competitive

Apr 08, 2021

Guidehouse Insights EV

A US Geological Survey (USGS) report published in January 2021 stated that about 71% of global lithium was used for batteries, an increase from 65% in the January 2020 report. With the Biden administration’s goals to convert the entirety of the government’s fleet into EVs and plans to expand the nation’s charging network, this figure will likely continue to increase in the coming years. It’s obvious that the US has ambitious goals for transportation electrification, but now the focus has turned to the upstream side of the EV value chain: lithium supply and production.

In March 2021, US Secretary of Energy Jennifer Granholm stated that the US needs to increase its domestic production of lithium and other minerals used for EV batteries. President Biden has also called upon federal agencies through an executive order to improve coordination around supply chain issues. Currently, the US is mostly dependent on countries such as China for lithium supplies. Experts believe that EV material independence in the US is necessary to bring down EV battery costs and keep up with demand for fast-charging EVs with longer driving ranges. 

How Does the US Stack Up with the Rest of the World?

According to the USGS, in 2020, the US had an estimated 750,000 metric tons of lithium reserves (domestic production data was withheld from this report). Although this might seem like a large supply, it is small relative to other countries such as Argentina and China that have over 1 million metric tons in reserves. Australia has over 4 million metric tons of reserves, and Chile has over 9 million metric tons. Only about 1% of world’s lithium is extracted and processed in the US, compared with around 10% in China. 

Some key lithium projects in the US include Piedmont Lithium, a company with mining operations in North Carolina, which was founded in the 1950s and is one of the leading domestic producers of lithium. Although not an American company, Hawkstone Mining has lithium mining operations in Arizona that have the potential to alleviate some of the supply chain concerns in the US. Hawkstone is notable in its claim to be able to produce a 99.8% lithium carbonate yield, which is higher than average. Incentivizing high percent yields is important because it encourages efficient use of land and natural resources, something that conservation advocates are keen on making a priority.

Can Demand for Lithium Be Reconciled with Calls for Sustainability?

Like other types of mineral extraction, lithium mining can be land and resource intensive. While expansion of domestic production would help solve shortages of supply, it has the potential to exacerbate problems of conservation. President Biden has stated that this lithium production expansion would be subject to environmental oversight, and projects would need to be deemed sustainable in order to operate. Still, there are ongoing concerns in existing sites that have some conservationists worried. 

To maintain a competitive edge, the US must be willing to invest heavily in battery material production; however, the pursuit toward clean transportation must not come at the cost of the US’ natural lands and resources. The unified goal of a sustainable green economy and future health of the planet rely on cooperation from industry specialists and environmental advocates. The federal government should supply incentives to companies that can minimize negative environmental impacts while still reaching high yields of lithium production. There should be strict and transparent standards for mining companies that encourage production innovation through sustainable practices.