Titans forge critical lithium alliances
Tesla, GM, Schlumberger, and Panasonic focus on US supplies Critical Minerals Alliances - September 2021
Last updated 9/16/2021 at 9:25am
The lightest of all the metals in the universe, lithium has emerged as the namesake for the batteries powering electric vehicles down global highways and storing renewable energy for those EVs to plug into. This is on top of the countless laptops, tablets, smartphones, wearable electronics, power tools, household appliances, electric bikes, scooters, toys, and the seemingly endless list of electric devices made possible by lithium-ion batteries.
"Lithium consumption for batteries has increased significantly in recent years because rechargeable lithium batteries are used extensively in the growing market for portable electronic devices and increasingly are used in electric tools, electric vehicles, and grid storage applications," the United States Geological Survey penned in its 2021 mineral commodities report.
While a 10-fold rise in lithium-ion battery production has driven a roughly 325% increase in lithium usage over the past decade, this is only a start of the massive new demand being powered by a global push to transition to EVs plugged into power grids charged with renewable energy.
During Tesla Inc.'s 2020 Battery Day event, CEO Elon Musk elevated the electric automaker's already high battery production objectives from billions of watts of storage per year to trillions of watts.
"So tera is the new giga – and a terawatt is a thousand times more than a gigawatt," he said. "So, we used to talk in terms of gigawatts, in the future, we'll be talking in terms of terawatt-hours ... this is what's needed in order to transition the world to sustainability."
Tesla estimates that global battery factories will need to churn out 10 TWh of storage capacity per year to achieve the ultimate goal of trading in all the carbon fuel-burning vehicles traveling global highways with shiny new electric models.
For its part, Tesla plans to ramp up its in-house battery producing capacity to 3 TWh/year over the next decade.
"Long-term, we're expecting to make on the order of a 3,000 gigawatt-hours or 3 TWh per year," said Musk. "I think we've got a good chance of achieving this actually before 2030, but I'm highly confident that we could do it by 2030."
"It's a lot of batteries, basically," added Drew Baglino, Tesla's senior vice president of powertrain and energy engineering.
And a lot of EV batteries means a lot of lithium, which is why automotive, energy, and battery heavyweights have begun securing U.S. supplies of this lightest of metals.
Establishing local supply chains
With the rise of the electric vehicle revolution, automakers are becoming increasingly concerned about and vested in the battery metal supply chains. And these supply chains are expected to be shortened from global to continental and even regional as battery and vehicle manufacturers seek to hold down the costs and lower the carbon footprint of materials.
"If you put a GPS tracker on a molecule from when it got mined to when it was in a usable product, it would look insane," said Musk.
It has been estimated that the lithium that goes into its namesake batteries travels an average of 31,000 miles, or more than one trip around the world, before it reaches the customer. And this global excursion to be upgraded from a raw mined material to a battery-grade lithium product often makes a stop in China.
"Lithium's foundations for the 21st century are beginning to shift in what is a China-dominated part of the lithium-ion battery and electric vehicle supply chain," said Benchmark Mineral Intelligence Managing Director Simon Moores, a foremost expert on lithium-ion battery supply chains.
Any traffic jam along this global supply chain – whether it be at the mine, refinery, or battery facility – would likely slow EV adoption.
Another limiting factor is a mining sector that would be better likened to a cargo ship than a speedboat in terms of the maneuverability needed to meet rapidly changing market demands.
In the U.S., it typically takes a mining company at least a decade to deliver its first product from the time it applies for permits to build the mine. Even in countries such as Canada or Australia, where the permitting timelines are typically shorter, the time it takes to permit and build a large mining project creates a delay that does not reconcile well with the EV transition ambitions.
For these reasons, vertical integration – where one company becomes directly involved with two or more links along the supply chain – has become increasingly important to global automakers with world-changing EV ambitions.
"Tesla has clearly come to the realization that it cannot rely on the upstream of the supply chain or investors to expand quickly enough for its needs," said Moores.
Tesla heads upstream
The realization that it would need to become more vested in battery metals mining to achieve its EV goals led Tesla to cut a deal 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.
"As global automotive companies electrify their fleets, we expect them to increasingly seek ex-China sources of lithium supply, and North Carolina is ideally positioned to benefit given its proximity to major auto markets in the U.S. and Europe, and the deep lithium talent pool resident in the region," said Piedmont Lithium President and CEO Keith Phillips.
According to a 2021 calculation, Piedmont's North Carolina project hosts 39.2 million metric tons of indicated and inferred resources averaging 1.09% (422,000 metric tons) lithium oxide.
Piedmont envisions its coming North Carolina mine producing 248,000 metric tons per year of spodumene, a lithium mineral, concentrate per year, which the company will convert to 22,700 metric tons per year of battery-grade lithium hydroxide.
While the June scoping study shows robust economics for this operation, the company is particularly proud of North Carolina Lithium's sustainability profile.
"Customers, investors, and neighbors are increasingly focused on businesses that are 'doing things the right way.' It is critical that raw material supply chains do not detract from the overall sustainability of the transition to electric vehicles," said Phillips. "Our project will have a far lower environmental footprint than alternative suppliers, and we expect that to position Piedmont well with all stakeholders."
This sustainability will be of particular interest to Tesla, which has cut a deal to acquire 160,000 metric tons of spodumene annually. This is estimated to be enough to convert into 22,700 metric tons of the battery-grade lithium hydroxide needed to produce 25GWh of lithium-ion battery capacity, or around 400,000 Tesla vehicles per year.
Importantly, the lithium will be sold at a fixed price over the five-year term of the agreement. This will provide price stability for both companies in a market where oversupply followed by massive demand could cause major price fluctuations.
The North Carolina lithium produced by Piedmont will be delivered to Tesla's Texas Terafactory currently under construction near Austin. As its name implies, when built out to its full capacity, this facility is slated to produce 1,000 GWh (1 TWh) of batteries annually, which means this one megafactory alone will need nearly 1 million metric tons of battery-grade lithium per year.
More Nevada lithium
The Texas Terafactory and more than a dozen other lithium-ion battery gigafactories currently on the docket to be built in North America are going to need a lot more lithium than Piedmont will have the capacity to supply.
Currently, Albemarle's Silver Peak Mine in Nevada is the only large-scale lithium producer in the U.S.
Not a mine in the traditional sense, as Albemarle pumps brine from Nevada's Clayton Valley basin into ponds where the water is evaporated off to produce a lithium concentrate, Silver Peak is expected to produce 10,000 metric tons of lithium-carbonate-equivalent once an expansion to double capacity is complete.
"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," Eric Norris, Albemarle's president for lithium, said in reference to the nearly $50 million cost of the expansion.
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 earlier this year.
"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. "We look forward to working with Schlumberger New Energy to help achieve our vision of advancing the lithium-ion battery space and accelerating to a clean energy society."
The plan for this facility first being developed as a pilot plant, is 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 1 just outside of Reno, Nevada.
GM cooks up Hell's Kitchen deal
General Motors, which has declared plans to only manufacture zero-emission vehicles by 2035, has 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.
"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. GM looks forward to working with CTR, in addition to state and local leaders, in achieving these goals."
Much like NeoLith Energy, Controlled Thermal Resources is establishing a direct extraction plant at Hell's Kitchen. This project, however, has the bonus of plentiful geothermal energy to power the lithium extraction process, as well as 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 power grid.
This means that Hell's Kitchen can deliver a continuous baseload of renewable power to the Southern California electrical grid, as well as near-zero-carbon lithium that goes into the batteries that store intermittent solar and wind sources of renewable energy and EVs that plug into that green energy.
For an American automaker that aspires to lead "in all aspects of the transformation to a more sustainable future," lithium from a facility that also delivers near-zero carbon electricity will add several green energy stars to the 30 EV models it plans to have on global showroom floors by 2025.
"GM has shown great initiative and a real forward-thinking strategy by securing and localizing a lithium supply chain while also considering the most effective methods to minimize environmental impacts," said Controlled Thermal Resources CEO Rod Colwell.
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.
To keep up with the demand for domestic and environmentally responsible lithium to feed into a rapidly expanding American EV supply chain, CTR anticipates it will need to ramp up additional production capacity alongside this first stage of development at Hell's Kitchen.
"Worldwide growth in electric vehicle adoption has highlighted the critical need to develop a strong and secure battery supply chain in the United States," Colwell said. "CTR is fully committed to developing its significant lithium resource in response to this, and we look forward to collaborating with GM as we continue to accelerate these efforts."
Efforts that will help fill the demand for the millions of tons of lithium that will be needed each year to meet the skyrocketing demand powered by the rapid transition to EVs plugged into power grids charged with renewable energy.