energy insights

Will Defense Production Act Announcement Help Lithium Mining?

According to the Biden administration, domestic production of lithium to support burgeoning demand for electric vehicle batteries is a matter of national security. Afterall, China has a near monopoly on the EV battery market, prices are skyrocketing, and the U.S. has little say about it.

Meanwhile, high gasoline prices are sending record numbers of potential EV buyers to the internet, clicking for more information, leading some experts to believe EV sales could double in 2022. The U.S. is already the world’s third largest EV market, and that kind of demand increase would make the country even more dependent on China’s refined lithium and EV batteries.

Lithium is a national priority

The Biden administration responded in March by invoking Cold War powers to spur more domestic production of lithium for America’s anemic EV supply chain.

The announcement must have sparked raucous celebration among prospective mining camps from North Carolina to Nevada. As it turned out, Biden’s Cold War power announcement will do little to help a lithium mining industry straining to get off the ground.

The Defense Production Act is a Cold War-era power that gives the president emergency authority to expedite and expand the supply of materials and services that promotes national defense. In the case of his March 31 announcement, Biden made $750 million available to the mining industry for expansion and other improvements. But, the money is only accessible to existing mining operations and can only be used to increase productivity, technology and safety. Right now, there is only one existing lithium mine in the U.S., the Silver Peak mine in Nevada. The growing number of other U.S. lithium mines are still prospective and nonoperating, still waiting to clear a series of regulatory hurdles.

As other countries invest in lithium supply chain, US must too

Meanwhile, others in the world continue to churn lithium from their mines and EV batteries from their factories, strengthening their market hold as more consumers gravitate toward electric vehicles. South America and Australia are the world’s main lithium sources, while China ranks third among countries in world production.

In all, China has invested between $60 billion and $100 billion in subsidies to build its lithium battery supply chain. Now, Canada is taking steps to bolster its competitiveness. The country is spending $3.2 billion to grow domestic production of lithium for the world’s electric vehicle market.

From South America to Australia, China, Mexico, Canada and across Europe, countries are vying to capitalize on clean energy. Call it economic development, national security or plain old good business, the world is responding to a movement that is here to stay.

The United States must hurry to catch up, or we risk falling even further behind.