Beijing — Faced with a potential shortage of lithium for electric car batteries, automakers from China to Nevada to Chile are racing to corner supplies of the once obscure “white gold” in a politically and environmentally difficult competition.
General Motors Co and the parent company of China’s BYD Auto Ltd went straight to the source and bought stakes in lithium miners, a rare move in an industry that relies on outside vendors for copper and other raw materials. Others are investing in lithium refining or venturing into recycling the silvery-white metal from used batteries.
Lithium supply shortfalls will hinder plans to increase sales of millions of electric vehicles annually. This is fueling political conflicts over resources and complaints about the environmental costs of extracting them.
At a Deutsche Bank conference in mid-June, GM’s chief financial officer, Paul A. “We are already at risk of not raising enough money,” Jacobson said.
“We have to partner with people who can get us the lithium in the form that we need,” Jacobson said.
Ford Motor Company has signed contracts with lithium suppliers on two continents up to 11 years into the future. Volkswagen AG and Honda Motor Co. are trying to reduce their need for freshly mined ore by building recycling ventures.
Global lithium production is on track to triple this decade, but sales of electric SUVs, sports cars and sedans that grew 55% last year threaten to outpace it. Each battery requires about eight kilograms (17 pounds) of lithium, as well as cobalt, nickel and other metals.
“There will be a shortage of EV battery supply,” said Joshua Cobb, BMI senior auto analyst.
Adding to the uncertainty, lithium has emerged as another flashpoint in strained US-Chinese relations.
Beijing, Washington and other governments view the supply of the metal for electric vehicles as a strategic issue and are tightening access controls. Canada last year ordered three Chinese companies to sell lithium mining assets on security grounds.
Other governments, including Indonesia, Chile and Zimbabwe, are trying to maximize their return on lithium, cobalt and nickel deposits by requiring miners to invest in refining and processing before exporting.
GM is buying direct access to lithium by investing $650 million in the Canadian developer of a Nevada mine, the largest US source. In return, GM says this will be enough for 1 million vehicles per year.
Conservationists and American Indians are asking a federal court to stop the development of the Nevada mine, which the Biden administration has adopted as part of its clean energy agenda. Opponents say it could poison water supplies and soil and pollute birds’ nesting grounds.
Despite rising production, according to Leonardo Paoli and Timur Gul of the International Energy Agency, the industry could face lithium and cobalt shortages as early as 2025 if sufficient investment is not made in production.
“Supply-side constraints are becoming a real challenge,” Paoli and Gul said in a report last year.
According to GlobalData’s Alastair Bedwell, automakers could put up their own money to reassure “notoriously risk-averse” miners. He said miners are reluctant to “go full throttle” on lithium until they are sure the industry won’t switch to batteries made from other metals.
Even if they do, developing a lithium source is a years-long process.
Worldwide lithium resources are estimated at 80 million tons by the US Geological Survey.
Bolivia is the largest with 21 million tonnes, followed by Australia with 17 million and Chile with 9 million.
Annual production is projected to reach 1.5 million tonnes by 2030. But if EV sales continue to grow at double-digit annual rates, demand is forecast to rise to 3 million tonnes.
According to EV Volume, a research firm, EV sales in 2021 are expected to more than double from last year to 6.8 million. Last year’s sales increased to 10.5 million.
Last year, China accounted for 60% of sales, two-thirds of production and three-quarters of battery manufacturing.
President Joe Biden last year announced an official goal of making half of all new cars sold in the United States electric or have other zero-emissions technology by 2030.
As sales grow, so does official concern, especially in Washington and Beijing, about access to lithium and other minerals and the potential for strategic competition.
Volkswagen’s battery unit, Powerco, signed a deal with Canada last August to develop suppliers of “critical raw materials” including lithium, cobalt and nickel.
German Chancellor Olaf Scholz welcomed cooperation with “close friends” on “raw material security” in a statement.
China’s government has accused the United States, Canada, Japan and other governments of misusing fake security concerns to harm Chinese rivals in electric cars, smartphones, clean energy and other emerging technologies.
Other governments welcome Chinese investment. China’s biggest lithium producer, Ganfeng Lithium Co, last year bought Argentinian Lithium Inc for $962 million.
About two-thirds of the world’s lithium comes from mines. This involves crushing the rocks and using acid to extract the metals. It leaves toxic piles of chemical-rich residue.
The remainder is extracted from salt lakes or salt flats. This may require huge evaporation ponds.
Industry is working on techniques to extract lithium from hot springs and soil deposits with less environmental impact.
As they ramp up supply, automakers face another hurdle: a lack of refining capacity to purify the raw lithium into battery materials.
Tesla Inc. is building a refinery in Texas. Other companies, including BMW AG, are buying stakes in the refiner.
As for GM, “I don’t know” whether it will build its refinery, Jacobson said.
