Lithium and Copper Production
Global push for renewables brings momentum to the state’s critical minerals
For now, oil remains the king of the energy sector, but there is a line of contenders poised to claim the crown. The first one is copper, which Goldman Sachs recently declared as ‘the new oil’, since it will play a key role in replacing internal combustion engine vehicles (ICEVs) with electric vehicles (EVs). Lithium has also been nominated as a leader in the energy world. This metal, which is an essential ingredient in batteries, was named as ‘the white petroleum’ several years ago in the first wave of enthusiasm for EVs.
Today, Nevada is one of the leading producers in the USA for both metals. Amanda Hilton, general manager of copper producer Robinson Nevada Mining Company, commented on a distinctive element of the state: “Nevada is unique in that our economy supports both ends of the value chain for electric cars. Not only copper and lithium are mined in Nevada, but additionally Tesla has large factories in the state.”
Nevada indeed hosts the Tesla Gigafactory 1 east of Reno, a gigantic battery production facility supporting Tesla’s battery-powered vehicles, which is significantly driving the demand for both metals.
Meeting lithium demand
Given the increasing emphasis on renewable energies, the mining industry is looking towards developing lithium reserves in the US, and Nevada has become the mecca of the new lithium boom. Currently, the state is home to Albemarle’s Silver Peak mine, the only operating lithium mine in the US.
The US’ entire lithium production currently comes from Nevada, but the US accounts for a very small portion of global lithium production. In 2020, global lithium production was overwhelmingly dominated by Australia, Chile and China, which collectively made up 88% of global lithium production, while the US only accounted for approximately 1%. Interestingly, the US is the world’s largest consumer of lithium, which makes it heavily reliant on other countries for its supply - in fact, over half of the US domestic lithium consumption relies on imports.
The US’ excessive dependence on countries such as China for its lithium supply was made evident with the supply chain disruptions during the pandemic. After mining, the lithium supply chain involves refining, processing and packaging the lithium into batteries – and the majority of this occurs in China. Considering that lithium demand is expected to grow rapidly in the coming years, the US has become aware of the need to encourage domestic production for national security. In February 2021, President Joe Biden signed an executive order aiming to build secure supply chains for lithium and other strategic minerals.
To face this growing demand, Albemarle is seeking to increase the Silver Peak mine’s production capabilities. The mine, which is located in Esmeralda County, roughly halfway between Las Vegas and Reno, has been operating since 1967 and has historically produced 3,000-3,500 mt/y of lithium carbonate from evaporation ponds. In January 2021, Albemarle announced its intent to double Silver Peak’s production capabilities. "Albemarle is making a significant investment to double recent wellfield capacity to reach a sustainable production of approximately 7,500 mt/y of lithium carbonate equivalent, which if used to make batteries could support approximately 100,000 EVs," announced Glen Merfeld, vice president and chief technology officer for lithium at Albemarle.
However, this will still be a drop in the ocean, considering that the US will need approximately 100,000 mt/y of lithium by 2024-2025 and 300,000-400,000 mt/y by the end of the decade. Despite the surge of numerous lithium exploration projects and several advanced-stage development projects in Nevada, it remains unclear whether the US will be able to keep pace with its own demand. Companies seeking to develop lithium reserves on Nevada’s public lands are often faced with stringent permitting requirements and opposition from stakeholders.
Nevada’s copper potential
The US is among the world’s five largest copper producing countries, and the nation’s champion copper mining jurisdictions can be found in the Southwest. Leading the region and the country is Arizona, followed by New Mexico, Utah and Nevada. In 2020, Nevada’s copper production accounted for 5.8% of the US total production, with 69,073.5 mt produced, according to data from the Nevada Mining Association (NVMA).
In 2020, copper production in Nevada was dominated by the Robinson copper-gold-molybdenum mine, currently operated by Poland-based KGHM International. The mine has a long history in Nevada, with origins tracing back to the 1860s. It is comprised of three large open pits. The ore is extracted using conventional surface methods and is then processed into a copper-gold concentrate and a molybdenum concentrate in a concentrating plant. The mine is the largest private employer within White Pine County, directly employing 15% of the community’s workforce.
Since 2012, Robinson has undergone several mine-life extensions. In 2020, life of mine was extended for five years, and the company has continued delineation drilling within current pits. “In 2021, we commenced with a near mine exploration program in Lane Valley, just northwest of the Robinson mine, which will be completed in the coming years,” general manager Amanda Hilton explained.
Copper was also produced at Nevada Gold Mines’ Phoenix mine near Battle Mountain, where the 13,873 mt Cu produced represented about 34.5% of the value of the mine’s gold production in 2020.
However, the latest newcomer to the copper market has the potential to become the biggest copper operation in Nevada. In December 2019, Nevada Copper’s Pumpkin Hollow became the first new commercial copper mine in the state since Robinson. Pumpkin Hollow encompasses a high-grade underground mine and processing facility that is now in production, and a large-scale open-pit project that is fully permitted and advancing towards feasibility. Nevada Copper expects to reach steady-state production of 4,500-5,000 mt/d, originally scheduled for 2020, in mid-2022. The ramp up to 5,000 mt/d has been taking longer than anticipated due to slower than expected development rates through the water bearing dike structure and delays incurred in underground infrastructure development, including due to Covid-19 related labor and supply chain challenges.
A limitation that Nevada’s mining industry has been facing with regards to copper production is the lack of downstream smelting and refining capacity. This means that copper mines have to export copper concentrate to other states or countries, increasing transport costs, and therefore, overall production costs. For example, Nevada Gold Mines’ Phoenix operation exports concentrate to Glencore’s Horne smelter in Québec as well as to Asia. Similarly, a portion of Robinson’s concentrate is processed at Kennecott in Utah, but the majority is exported to Asia.
In brief, over the past decade, copper demand has been rising as it is required for both the construction industry and the new green energy economy. However, supply has not caught up over time. The underinvestment in ‘the new oil’ over the past 10 years has resulted in muted growth in project pipelines. This trend is now beginning to change with more and more capital finding its way toward incremental copper production. With higher copper prices and projected increasing demand across industries, mining companies in Nevada are aligning capital strategies to strike a balance between business competitiveness and increasing reserve bases by investment in exploration activity.
Image courtesy of Newrange Gold Corp.