As part of its strategy for breaking Chinese dominance of the supply chains of essential minerals, the US approved construction of an enormous new lithium mine in Nevada. It also extended tax breaks to certain miners.
Ioneer, an Australian company, announced on Thursday that it received a federal license for its Rhyolite Ridge Lithium-Boron mine. The project could produce enough battery material to power 370,000 electric cars a year. The silvery white metal is a key ingredient in the production and future of EVs.
Rhyolite Ridge was the first lithium mine approved by the Joe Biden Administration. The administration has given Ioneer $700mn to build a project which will quadruple US production of lithium when it is completed in 2028. Only three US mines for essential minerals have been operational since 2002. None of them are located on public lands.
Ioneer’s shares rose 15 percent in New York after the approval was announced to have closed at $7.92.
Western producers struggle to compete with Chinese competitors in the production and refinement of critical minerals due to higher costs, stricter regulatory standards, and delays caused from legal challenges. The extraction and processing of Lithium has a large environmental impact, as it requires a lot of energy and water. It also uses toxic chemicals like sulphuric acids.
Conservation groups have opposed Ioneer’s project, warning that it could lead to the extinction of an endangered flower species. US regulators stated that they worked with the company on modifying its project and developing a plan to protect the Tiehm’s buckwheat flowers. This allowed the mine approval after a six-year evaluation.
Bernard Rowe said that Ioneer, the managing director of Ioneer, believes its Nevada mine will help break US customers’ dependence on Chinese companies. These companies account for over two-thirds global capacity in lithium refining.
“We have one of the largest lithium-boron deposits on the planet.” . . He said, “It’s ready to be built.”
Washington released new guidelines on Thursday in an effort to jump-start the construction of mines and processing facilities. The guidance allows producers to claim credits for mining and extraction of critical minerals as long as some of that material is processed.
The US has no shortage of Lithium. The US Geological Survey announced this week that it had found between 5mn to 19mn tonnes (or more) of lithium under southwest Arkansas. This could be enough to supply projected world car battery demand for lithium by 2030 nine times.
Most of the world’s Lithium is still mined in Australia, or extracted from saltwater lakes in South America. It is then processed in China.
Analysts say the mine approvals and tax breaks are important steps for Washington to encourage the creation of an domestic lithium mining industry and refinery to supply the electric vehicle sector.
James West, an analyst at Evercore ISI investment bank, said: “Extracting Lithium from US-based Mines or brines rich in salt is important to boost American Supply Chain Security and ensure that a Domestic EV Industry is not reliant upon China.”
The US has only one lithium mine, Albemarle Silver Peak in Nevada. It produces about 5,000 metric tonnes of lithium per year. Site preparations are underway for another mine in Nevada, Thacker Pass. The project is being led by Lithium Americas, a Vancouver-based company, and , backed by General Motors. The Donald Trump administration approved the project in January 2021. Biden’s administration announced a $2.3bn loan from the federal government to develop the mine.
Ioneer faces competition from other lithium producers who have announced plans to build new US mines or processing plants in an effort to take advantage of incentives under the Inflation Reduction Act. ExxonMobil, Occidental and other oil producers are pursuing lithium pilot projects in Arkansas and California.
Ioneer’s Nevada project is estimated to cost over $1.2bn. It signed a deal in 2021 with South Africa’s Sibanye Stillwater to sell half of the Nevada project at $490mn. The agreement was subject to approval. The company has also signed deals with Ford to supply lithium and a joint venture between Toyota & Panasonic.
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