U.S. to Tap Domestic Lithium Supply Without Chinese Products

Refining, Processing Still Issues
But industry experts say while Western countries have poured a lot of investment into developing raw minerals, they have paid little attention to refining and processing, areas in which China dominates.

Ellen R. Wald, a nonresident senior fellow with the Atlantic Council Global Energy Center, tells VOA, “Lithium is not useful just as it is. You have to refine it to make what’s used in the batteries. And that’s really where China controls the supply chain because almost all of the refining for lithium that creates it into the substance that can be used to make batteries is done in China.”

According to the Chatham House, Chinese companies accounted for about 72% of global lithium refining capacity in 2022.

China also dominates much of the global market for battery-related equipment, leaving limited options for U.S. companies that want to showcase their domestic production credentials.

American Battery Factory Inc., or ABF, is an emerging battery manufacturer that says it is “the first network of entirely U.S.-owned vertical manufacturing, supply chain and R&D for Lithium Iron Phosphate battery cells in the United States.”

But to secure custom automation equipment and machinery for use in its first large-scale rechargeable battery factory in Tucson, Arizona, it has formed a partnership with Lead Intelligent Equipment, a Chinese company.

Dependent on China
In an article in January, Wald said China is in a good position to restrict access to lithium-ion batteries to certain countries or companies as it wishes, and if the U.S. military suddenly finds itself in need of more specialized batteries, the Pentagon may not be able to obtain them.

In February 2022, China announced sanctions against Lockheed Martin, the manufacturer of the F-35 fighter jet, and Raytheon Technologies, the world’s largest missile manufacturer. Although China did not specify the details of the sanctions, it is generally considered to be a possible threat to cut off the Western countries’ supply of critical minerals.

Wald told VOA, “The U.S. defense industry is basically dependent on China for these specialized batteries that they need in all of their drones and their surveillance systems and all sorts of things.”

David Whittle, adjunct professor in resource engineering at the Department of Civil Engineering at Monash University in Australia, told VOA even if “the world develops a robust, independent supply chain for lithium, up to the point of battery chemical production, at present, China would still be the largest customer for those chemicals, since it is the largest cell manufacturer, the largest battery pack manufacturer, the largest E.V. manufacturer and the largest market for E.V.s.”

The Thacker Pass lithium mine is located at the southern end of the McDermitt Caldera, and is considered to be one of the largest in the world.

The record loan to Lithium Americas Corp. is the largest such loan the U.S. has offered for the development of a lithium mine project since the country stepped up its efforts to build a domestic supply chain for critical minerals in recent years.

The Thacker Pass lithium project is not expected to start production until 2028, and even then, Wald said, that goal may be too ambitious. The mine plans to extract lithium from clay, but Wald says it has never been mined in this way on a commercial scale. In addition, the mine is in a remote and sparsely populated location, requiring the company to build housing for workers and their families and to reassess its environmental impact.

Despite the challenges, Wald said creating a secure supply chain is not impossible for the U.S.

“I don’t think it’s too late,” Wald said. “Will they be able to compete with China globally? Probably not. But can we create non-Chinese sustainable and secure supply chains? Yeah, we can do it.”

Whittle said Western countries being “resilient to challenges from China” can’t mean “isolated from China” anymore, but resilience is still possible.

The DOE’s LPO said while their announcement shows intent to give the loan, the company must first satisfy certain technical, legal, environmental and financial conditions before the funds will be released.

John Xie is senior editor at VOA.Adrianna Zhang contributed to this report. Adrianna Zhang contributed to this report. This article is published courtesy of the Voice of America (VOA).