While electric vehicles have supercharged demand for critical minerals, US lithium consumption relies heavily on imports. And there is little to no refining capacity for battery-grade lithium today in the United States, making the country highly dependent on China and open to geopolitical shocks.
China, today, has a monopoly on the production of battery-grade lithium that goes into EVs. Up to 85% of lithium resources are sent to China for refinement and then sold to manufacturers. The US currently has only one substantial battery-grade lithium asset in Nevada, producing approximately 5,000 metric tons per year versus the estimated 500,000 metric tons per year of unrefined lithium required to power EVs in the very near future. Several companies, including Tesla, are developing lithium refineries to help support EV production. But there is so much more to do.
Geopolitical tensions further magnify the need for American production of battery-grade lithium.
“China recently threatened to cut exports of rare earth elements to the US – a move which many insiders see as a veiled threat for threatening to ban lithium exports. The Department of Defense sees this threat clearly and has made moves to support American production of lithium. The question, therefore, remains: How can we truly help develop America’s lithium supply chain, restore its industrial base and secure the country’s energy independence?”
– Roshan Pujari, Co-Founder and Chief Executive Officer
At Stardust Power, we are looking to do our part in developing a new battery-grade lithium refining facility in the Central United States. When fully operational, Stardust’s factory is expected to produce 50,000 metric tons per year of high-quality battery-grade lithium – still well short of what is needed to supply America’s growing energy demands. Stardust provides a solution for American lithium producers who might not be able to develop their own lithium refineries. America needs a robust ecosystem approach to solve this critical supply gap in the long term. While Australia and Canada, among other countries, have been proactive, America needs American lithium companies.
With over 25 gigafactories currently under development across the US, there is an acute need for a national battery-grade lithium refining capacity to develop in lockstep with battery production to build supply chains that are logistically sound and cost-effective.
Investments in downstream EV factories and battery plants are outstripping investments in upstream lithium mining. Indeed, the battery materials consultancy Benchmark Minerals calculates that the downstream EV supply chain is growing at twice the pace of upstream mining and processing.
We believe future supply chains will become more regionalised, making a central US location key to not only supplying factories but also cutting down on rail transportation costs.
Fortunately, the Biden Administration, Congress and States seem to recognise the importance of securing America’s energy future. There is now strong momentum behind the energy transition today, including:
- The Inflation Reduction Act of 2022, which allocates more than $350bn towards energy security, as well as offering tax credits to buy new and used electric vehicles;
- California banning the sale of gas-powered vehicles starting in 2035; and
- US Department of Exterior is actively motivating energy independence and provided a $141m grant to Piedmont for a new lithium refining facility.
While there are strong market tailwinds and incentives, we believe there is not as much attention yet being paid to building sustainability into the newly emerging battery-grade lithium supply chain. After all, the move to an EV future is meant to reduce greenhouse gas emissions (GHG) and help protect our environment. However, mining and rail transportation are carbon intensive by nature, which could offset some of the benefits of the EV revolution.
Stardust is integrating sustainability into the planning and development of our work from the outset. For example, we have a strong preference for brine projects over hard rock and open pit mining, which are more environmentally destructive, and we plan to use low-carbon power sources onsite. Our strategic location in proximity to both suppliers and manufacturers further reduces our carbon footprint.