Today is the sixth class in our current January study period. We will start with a casual conversation, followed by news and questions. Our material today is about lithium. Please listen and follow the transcript.
This century, lithium is a hot commodity. That's thanks to the lithium-ion battery used in phones, electric vehicles and grid-scale batteries. More than 90% of the batteries in North American electricity grids are lithium-ion.
ADRIAN MA, HOST:
And the reason lithium is so prized for batteries is that it's the lightest metal there is.
WOODS: Yeah. So not heavy metal, light metal.
MA: Exactly. It's less Pantera...
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MA: ...More Bon Jovi.
(SOUNDBITE OF BON JOVI SONG, "IT'S MY LIFE")
MA: Light metal.
WOODS: Yes. The Bon Jovi of the periodic table. But unlike Bon Jovi, it is not all American. Lithium mining happens across the globe, but when it comes to processing, an estimated two-thirds is processed by Chinese companies.
ERNEST SCHEYDER: China realized that whoever controls the production of lithium and other critical minerals will control the 21st century economy, the way that control of oil defined the 20th century economy.
WOODS: That's Ernest Scheyder. He's the author of "The War Below: Lithium, Copper, And The Global Battle To Power Our Lives." He says the U.S. was once a lithium pioneer. Now it's trying to play catch-up.
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WOODS: This is THE INDICATOR FROM PLANET MONEY. I'm Darian Woods.
MA: And I'm Adrian Ma. Today on the show, we conclude our three-part series on grid-scale batteries by looking at a race to produce the batteries' key ingredient here in the U.S. It's a story that starts with the development of the nuclear bomb and arrives at today, where geopolitics is colliding with environmentalists, local communities and fickle economics.
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WOODS: There's only one lithium mine still running in the U.S. It's a small mine in Nevada run by a company called Albemarle. And the story of lithium in America can be told through this company. Eric Norris is Albemarle's executive vice president and chief commercial officer.
ERIC NORRIS: We've been producing lithium since the 1930s in the U.S.
MA: Eric says that as the Manhattan Project progressed during World War II, lithium was identified as an important fuel for nuclear bombs. It also became used for nuclear power. It was a strategic element for the U.S. to produce, a really high priority during that time. That meant huge government subsidies.
NORRIS: From the period of time after the war and to maybe the 1980s, about a third of the world's lithium was produced here in the United States. And yet, as we sit here today, fast-forward to today, only 2% of the world's lithium is made in the U.S.
MA: So clearly, the U.S. has, like, given up a lot of ground when it comes to lithium production.
WOODS: Yeah - a huge drop. In 1988, a big mine in North Carolina closed. It was called Kings Mountain Mine, and it was owned by a predecessor of Eric's company. This was the nail in the coffin for the U.S. as a significant lithium producer. The main reason was that lithium was much cheaper to extract from the great deserts of Western Australia and Chile.
MA: Those countries were rising to meet a new use that really began in 1991. That's a year when Sony introduced the first rechargeable lithium-ion battery to the market, which it used in its camcorders. Then, with the rise of cell phones, it was time for the Bon Jovi of the chemical table to step into the spotlight.
WOODS: I think it's because of his hit song "Lithium on a Prayer."
(SOUNDBITE OF SONG, "LIVIN' ON A PRAYER")
BON JOVI: (Singing) Living on a prayer.
MA: Yes. I'm sure that's what everybody has been singing at the bars all these years. I just didn't notice it before.
WOODS: (Laughter) While the U.S. was focused on debates around energy independence that mostly revolved around oil, the Chinese government was thinking differently. The Chinese Communist Party started heavily subsidizing lithium mined or processed in China. Now the mines are still overwhelmingly based in Australia and Chile, two countries friendly with the U.S., but getting the lithium out of the ground is only the first step.
The processing to create lithium that's ready for batteries is overwhelmingly Chinese.
MA: Now, to be clear, the story of China's rise in lithium extraction is not purely about competition with the U.S. It's also about cooperation. Eric Norris' company, Albemarle, is American and it's done a range of joint ventures with Chinese companies. And Albemarle sells its lithium to battery manufacturers, which includes companies based in China.
WOODS: But some people in the U.S. are anxious about the lack of domestic lithium production. And as you may have noticed, relations between the U.S. and China aren't great at the moment, especially after the trade war between the two countries. There is a fear that China could restrict access to lithium. The Chinese government did this with other minerals as recently as in December.
In response to U.S. restrictions on China's semiconductor manufacturing, the Chinese government placed new rules on three important elements in making semiconductor chips. China has now banned these elements from being exported to the U.S.
MA: And this is why Congress made it a point to try and build up domestic lithium production. It was part of the bipartisan infrastructure law and the Inflation Reduction Act that was passed. And because of these acts, a few years back, the government awarded Albemarle $240 million to restart the Kings Mountain lithium mine in North Carolina.
But what happened next is sort of instructive about the difficulties governments face when they get involved in markets for commodities, like lithium. Eric Norris from Albemarle says, it's complicated.
NORRIS: We're big advocates of that, but there are challenges that have to be addressed.
MA: He says, not only would you have to restart the mine, but you'd also have to build a processing facility. And that could be a billion dollars-plus. Also, there's this question of who the customers are.
NORRIS: If we were to be processing all of Kings Mountain today, most of that product would have to be exported because there isn't demand here for it. Most of those batteries aren't made here. They're made somewhere else.
WOODS: Most electric vehicle sales are in China and Europe, so that's where most of the electric vehicle batteries are made. So shipping the lithium elsewhere to those battery factories would add costs. Another issue in the U.S. - mines like Kings Mountain also face opposition. Often environmental advocates oppose destruction of endangered species' habitats. Abandoned mines can become contaminated with toxic chemicals, like arsenic. Opposition from Indigenous groups is common, too.
MA: Kings Mountain faces less of these headwinds than new mines because the old mine was already there. So the big damage is basically already done. But the fact remains that permitting is a big issue.
NORRIS: Nothing happens without the communities' engagement and support. We have a mine together or we don't have one. And so we have a community center. We have a team that engaged with the communities.
MA: They're doing a lot of homework, but they're still not sure if they'll go ahead with restarting this mine.
NORRIS: We were plotting how to do it. Now we need the numbers to support it (laughter). It's - the economics just don't support it now.
WOODS: A few years ago, when Albemarle was kicking off this idea, one ton of lithium was selling for record amounts of money. Now those Chinese lithium processes are churning out plenty of lithium, and the price has fallen about 90%. This makes it harder for Albemarle to justify restarting the Kings Mountain Mine. And it also worsens the economic case for other lithium proposals, like a big potential mine in Nevada.
MA: And this dip highlights a key issue with all commodities everywhere. Prices are volatile. And there can be these big price spikes, like there was a few years ago when lithium supply could not keep up with demand, but those high prices don't usually last, especially when you have governments around the world subsidizing production. One winner, at least for now, is the people making and buying batteries.
(SOUNDBITE OF BON JOVI SONG, "IT'S MY LIFE")
WOODS: In the words of Bon Jovi, it's now their life. Cue the chorus.
(SOUNDBITE OF BON JOVI SONG, "IT'S MY LIFE")
MA: This episode was produced by Cooper Katz McKim with engineering by Gilly Moon and Jimmy Keeley. It was fact- checked by Sierra Juarez. Kate Concannon edits the show, and THE INDICATOR's a production of NPR.