The Lithium Capital of the US
A future world-class lithium player in the making
This subtitle is certainly bold, but the argument for it goes beyond Nevada being home to the only lithium-producing mine in the US. It rests on a forward-looking two-part combination that could drastically change the face of American energy security in the coming decade. First is an unmatched development pipeline, followed by the unique ability to sustain the supply chain from lithium production to finished batteries within the Nevadan borders. “Nevada can be to lithium what Wall Street is to finance, or what Silicon Valley is to technology”, famously stated Governor Steve Sisolak, and the next months might prove him right.
The IEA expects mineral demand for clean energy technologies to quadruple by 2050. In terms of lithium, the US produces less than 4% of the “white oil” globally, but its aggressive development pipeline could see this figure increase to 14% by 2030. Added to Albemarle’s Silver Peak mine in Nevada’s Clayton Valley, two major projects could affirm Nevada’s place as the lithium leader in the country: Lithium Americas’ Thacker Pass, and ioneer’s Rhyolite Ridge. Looking at supply and demand fundamentals for lithium, there arguably should not be any dilemma regarding putting these projects into production promptly; before 2030, the IEA forecasts that 50 new lithium mines need to come into play to meet the projected demand of 4 million t/y of lithium by 2035. The Tesla/Panasonic battery factory alone needs five times the amount of lithium mined annually in Nevada.
Nevada is up to the challenge. By November 2022, the Nevada Division of Minerals had recorded 18,281 claims for lithium across 18 hydrographic basins in Nevada; a 58% increase year on year. The state has seen a persistent increase in lithium activity in the past years, with early-stage explorers intent on benefiting from a strong commodity price and a straightforward demand outlook for the metal. Down the line, the state is home to Tesla’s Gigafactory 1 and Panasonic Energy of North America (Benchmark Intelligence reports that 70% of the mega factories in the pipeline for 2030 are China-based), along with several homegrown technology firms that lead the world in terms of extraction innovations and battery recycling prowess. The state is in the unique position of being able to produce raw materials and develop them into batteries on-site.
Unique geological endowment
The state’s valleys have witnessed a new wave of financiers, geologists and engineers since 2015, all keen to carve themselves a slice of the market for – perhaps – the most important metal in the context of the green transition. The crystalline-blue evaporation ponds in Nevada’s Esmeralda County, home to 743 souls, contain water, but not just any water: lithium-rich H20. Those ponds belong to Albemarle’s Silver Peak operation, which has been producing white oil almost without failure since 1956, and which can these days produce about 5,000 t/y Li. The firm plans to double production by 2025 to meet EV makers’ demand.
The year 2025 should also see ioneer’s Rhyolite Ridge begin production of 22,000 t/y of lithium carbonate, and around 174,000 t/y of boric acid. Outside of the dominating Clayton Valley, the highly prospective Thacker Pass sits in King’s Valley, while Railroad Valley and Edwards Creek Valley have characteristics like Clayton Valley in that they contain volcanic calderas that are the source of the lithified material. A lesser-known area, but one of high potential, is Lida Valley, where Nevada Sunrise is currently exploring its Gemini Lithium project.
Nevada’s unique geology produces an array of small, separated basins that act as natural salt concentrators. During glacial high stands, these basins fill up with salty waters that evaporate during the interglacial period, leaving isolated aquifers with highly concentrated brines. On the state’s geology, Chris Castillo, CEO of Castillo Geophysical, who completed in 2022 seismic surveys for Ameriwest Lithium, added: “Another key factor Nevada shares with other productive regions is its thin crust, which allows for highly enriched deep-sourced fluids. Among South America’s lithium titans, the best wells are in saline basins over buried hydrothermal inputs where these already concentrated brines can become further enriched.”
"Projects in Nevada will require multi-billion-dollar investments. Our staff likes to say that Nevada will become the lithium capital of the US, and I am seeing that coming together, particularly after the series of grants allocated by the DOE to several lithium projects in Nevada."
Michael Brown, Executive Director*, Governor’s Office for Economic Development *up until 2 January 2023
Thumping potential beyond raw materials
Nevada is undoubtedly strategically positioned to lead in lithium. Northern Nevada is only a one-day truck drive away from 11 states, giving the state potential to be the distribution hub of the Western US. Beyond Tesla, the state is also home to firms like Lilac, Redwood Materials, and Schlumberger. The latter is currently evaluating its DLE technology at the Clayton Valley Pilot Plant in collaboration with Panasonic Energy to optimize the process for battery-grade feed. As advancements in DLE are critical to the future of lithium brine production, Nevadan minds are likely to export their expertise worldwide in the coming years.
Michael Brown, executive director of the Governor’s Office for Economic Development – whose staff likes to say that Nevada bears the title of lithium capital of the US – is well aware of the state’s responsibility in leading the lithium space beyond the production of the “white oil”: “We can implement the entire lithium value chain in our state; from extraction to processing of the anodes and cathodes that go into the batteries. Of the 50 states, we will be the only one who can complete the entire circle.”
The downstream part of the value chain is where Nevada truly makes a difference. The IRA requires 50% of battery components (like anodes and cathodes) to be eligible to tax credits in 2024, yet the US does not have enough cathode production. Reno-based Redwood Materials said this year it would spend US$3.5 billion at its Fernley plant – which could supply materials needed for 1 million EV batteries per year - and plans to expand cathode production to 100 GWh by 2025, using local and recycled material. In the Tonopah area, ABTC received a US$58 million grant from the DOE to operate a first-of-its-kind facility to manufacture battery-grade lithium hydroxide from Nevada’s claystone deposits. Still downstream, ABTC will open a lithium-ion battery recycling plant in 2023, while Comstock Inc. is actively focusing on producing lithium carbonate from recycled lithium batteries.
Homegrown technology firms can rely on local talent and the mining industry is fortunate to have some of the world’s best mining programs at the University of Nevada Reno and Las Vegas. Indeed, ABTC has an educational partnership with the former, while state agencies confirmed that the university system will play a key role in the R&D side of the lithium expansion of Nevada.
Overcoming hurdles before unlocking the state’s potential
In June 2021, the White House introduced a report on material security that stated “More secure and resilient supply chains are essential for our national security, our economic security, and our technological leadership.” Indeed, GlobalData suggests that the US is the most vulnerable country in the EV battery materials supply chain. Yet, lithium players notice a cognitive dissonance between Washington’s ambitions and on-the-ground realities. Certain barriers currently impede this shift from reserve to production, and put net-zero goals, along with several critical industries’ futures, at risk.
In Nevada, water rights cause the most headaches for lithium CEOs. Albemarle holds water rights in most of the Clayton Valley, as water is regulated on a “first in time, first in right” basis. This allows for cooperation venues, or one of buying rights to the US’ only producer, causing a barrier to entry for explorers with lower OPEX abilities. Touching upon this challenge, David Watkinson, president, CEO, and director of emerging junior Ameriwest Lithium, explained: “The bigger challenge in the Clayton Valley is that other companies control water rights.”
Debates over a contested water pollution control permit for Lithium Americas’ Thacker Pass have taken on national proportions. In May, a coalition of conservation groups warned stakeholders that the mine could unleash toxic slurries in the state’s watershed, despite Thacker Pass having been issued a state permit by the NDEP in February 2022. Contesting the appeal, the firm upholds its sustainable approach. Almost a decade in the making, this controversy over Thacker Pass highlights the burning dichotomy between a country hungry for lithium to feed its growing EV market and a reticence to streamline permitting due to environmental concerns, which Washington appears unable to solve. Bernard Rowe, managing director of ioneer, expanded: “The US needs the process to be more efficient to increase its lithium domestic production. It is crucial to meet the environmental targets being set that rely heavily on domestic supply.”
Image courtesy of Simonkr via Unsplash