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The United States has approved construction of a new large-scale lithium mine in Nevada and extended tax breaks to some miners as part of a strategy to break China's grip on critical mineral supply chains.
Australian producer Ionia on Thursday received federal permission for its Rhyolite Ridge lithium-boron mine, a project that could produce enough lithium to power about 370,000 electric cars a year. announced. The silvery-white metal is an essential ingredient in the production of rechargeable batteries and is critical to the future of the EV industry.
Rhyolite Ridge is the first lithium mine approval by President Joe Biden’s administration, giving Ionia $700 million to help build the project that will quadruple U.S. lithium production when completed in 2028. I applied for a loan. Since 2002, only three mines have been operating in the United States. None of the important minerals are in public domain.
Western producers are struggling to compete with Chinese rivals in producing and refining critical minerals due to higher costs, stricter regulatory standards and delays caused by legal issues. Extracting and processing lithium uses large amounts of water and energy, as well as toxic chemicals such as sulfuric acid, which has a significant impact on the environment.
Ionia’s project faces opposition from conservation groups who have warned it could drive endangered flower species to extinction. U.S. regulators said they worked with the company to revise the project and develop a protection plan for the tiem buckwheat flower, allowing the mine to proceed with approval after a six-year review.
Bernard Lowe, Ionia’s managing director, said the company’s Nevada mine will help break U.S. customers’ dependence on Chinese companies, which account for more than two-thirds of the world’s lithium refining capacity.
“We have one of the largest lithium and boron deposits in the world… basically ready to build," he said.
Ionia estimates the Nevada project will cost more than $1.2 billion to complete © Robyn Beck/AFP via Getty Images
In an effort to start building mines and processing, Washington state on Thursday announced new guidance that will allow producers to claim tax credits for the cost of mining and extracting critical minerals as long as they process some of the feedstock. did.
There is no shortage of lithium in the United States. This week, the U.S. Geological Survey announced it had discovered between 5 million and 19 million tons of lithium reserves underground in southwestern Arkansas. This could be enough to meet nine times the projected global automotive battery demand in 2030.
But most of the world’s lithium is mined in Australia or extracted from large saline lakes in South America and processed in China.
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Analysts said the mine permits and tax breaks are important steps in Washington’s efforts to encourage the creation of a domestic lithium mining and refining industry to feed the EV sector.
“Extracting lithium from U.S. mines and salt-rich brine waters will increase the security of the U.S. supply chain and reduce the domestic EV industry’s dependence on China,” said James West, an analyst at investment bank Evercore ISI. This is important to ensure that this does not happen.”
A piece of saarsite, a lithium- and boron-bearing rock, at the Rhyolite Ridge site in Rhyolite Ridge, Nevada © Robyn Beck/AFP via Getty Images
The only lithium mine operating in the United States is Albemarle’s Silver Peak mine in Nevada, which produces about 5,000 tons of lithium annually. Site preparation is underway for another mine and processing plant at Tucker Pass in Nevada, led by Vancouver, Canada-based Lithium Americas and sponsored by General Motors. Approved by President Donald Trump’s administration in January 2021, the Biden administration announced a $2.3 billion federal loan to support mine development.
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But Ionia will face competition from several lithium producers who have announced plans to open new mines and processing plants in the United States in an attempt to take advantage of Inflation Control Act incentives. Oil producers ExxonMobil and Occidental are among several companies pursuing pilot lithium projects in Arkansas and California, respectively.
Ionia estimates the Nevada project will cost more than $1.2 billion to complete. In 2021, it entered into a financing agreement with South Africa’s Sibanye Stillwater to sell half of its Nevada project for $490 million, subject to approvals. It also has contracts to supply lithium to automakers Ford and a joint venture between Toyota and Panasonic.
