The Indicator from Planet Money

Episode•January 15, 2025•8 min

The race to produce lithium

Lithium is one of the hot commodities of the 21st century: needed for electric vehicles, semiconductors needed for AI, and grid-scale batteries. While the U.S. was once a pioneer in lithium production, it's fallen off — with others, including China, taking the reins. On our third and final episode of our grid battery series, we look at the race to produce the key ingredient in most of these batteries. Related episodes: How batteries are already changing the grid (Apple (https://podcasts.apple.com/us/podcast/how-batteries-are-already-changing-the-grid/id1320118593?i=1000683520581) / Spotify (https://open.spotify.com/episode/4ovAji1iPKA3Hv8AfoAL3S?si=aa84cbc8468f42be)) How EV batteries tore apart Michigan (Update) (Apple (https://podcasts.apple.com/us/podcast/the-indicator-from-planet-money/id1320118593?i=1000629435652) / Spotify (https://open.spotify.com/episode/11o3i84P3GzNcYsSViK6ee?si=508dc3e0b7984cad)) The surprising leader in EVs (Apple (https://podcasts.apple.com/us/podcast/the-indicator-from-planet-money/id1320118593?i=1000642029169) / Spotify (https://open.spotify.com/episode/6GCBeTRZBR8gMgFUojsom3?si=d054a957d3074e03)) How China became solar royalty (Apple (https://podcasts.apple.com/us/podcast/the-indicator-from-planet-money/id1320118593?i=1000666816364) / Spotify (https://open.spotify.com/episode/5uc80u98FNTuk8AbsZZLqD?si=42bfa4d90c464fdf)) For sponsor-free episodes of The Indicator from Planet Money, subscribe to Planet Money+ via Apple Podcasts or at plus.npr.org (http://plus.npr.org/). Fact-checking by Sierra Juarez (https://www.npr.org/people/g-s1-26724/sierra-juarez#:~:text=for%20Planet%20Money-,Sierra%20Juarez%20is%20a%20researcher%20and%20fact%20checker%20at%20the,and%20fact%20checking%20in%20Mexico.). Music by Drop Electric (https://dropelectric.bandcamp.com/). Find us: TikTok (https://www.tiktok.com/@planetmoney), Instagram (https://www.instagram.com/planetmoney/), Facebook (https://www.facebook.com/planetmoney), Newsletter (https://www.npr.org/newsletter/money). To manage podcast ad preferences, review the links below: See pcm.adswizz.com (https://pcm.adswizz.com) for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences. Learn more about sponsor message choices: podcastchoices.com/adchoices (https://podcastchoices.com/adchoices) NPR Privacy Policy (https://www.npr.org/about-npr/179878450/privacy-policy)

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Transcript

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Npr.

0:11

This century, lithium is a hot commodity. That's thanks to the lithium ion battery used in phones, electric vehicles and grid scale batteries. More than 90% of the batteries in North American electricity grids are lithium ion.

0:27

And the reason lithium is so prized for batteries is that it's the lightest metal there is. Yeah.

0:32

So not heavy metal, light metal.

0:35

Exactly. It's less Pantera, more Bon Jovi. Light, light metal.

0:45

Yes, the Bon Jovi of the periodic table. But unlike Bon Jovi, it is not all American. Lithium mining happens across the globe, but when it comes to processing, an estimated two thirds is processed Chinese companies.

1:00

China realized that whoever controls the production of lithium and other critical minerals will control the 21st century economy. The way that control of oil defined the 20th century economy.

1:09

That's Ernest Scheider. He's the author of the War Lithium Copper and the Global Battle to Power Our Lives. He says the US Was once a lithium pioneer. Now it's trying to play catch up. This is the indicator from Planet Money.

1:26

I'm Darren Woods.

1:27

And I'm Adrienne. Madam. Today on the show, we conclude our three part series on grid scale batteries by looking at a race to produce the battery's key ingredient here in the US It's a story that starts with the development of the nuclear bomb and arrives at today, where geopolitics is colliding with environmentalists, local communities and fickle economics.

1:54

There is only one lithium mine still

1:56

running in the US It's a small

1:58

mine in Nevada run by a company called Albemarle. And the story of lithium in America

2:04

can be told through this company.

2:06

Eric Norris is Albemarle's executive vice president

2:09

and chief commercial officer.

2:11

We've been producing lithium since the 1930s in the U.S. eric says that as

2:16

the Manhattan Project progressed During World War II, lithium was identified as an important fuel for nuclear bombs. And it also became used for nuclear power. It was a strategic element for the US to produce, a really high priority during that time. That meant huge government subsidies.

2:33

From the period of time after the war into the maybe the 1980s, about a third of the world's lithium was produced here in the United States. And yet as we sit here today, fast forward TO Today, only 2% of the world's lithium is made in the

2:45

U.S. so clearly the U.S. has like, given up a lot of ground when it comes to lithium production.

2:50

Yeah, a huge drop. In 1988, a big mine in North Carolina closed. It was called Kings Mountain Mine and it was owned by a predecessor of Eric's company. This was the nail in the coffin for the US As a significant lithium producer. The main reason was that lithium was much cheaper to extract from the great deserts of Western Australia and Chile.

3:12

Those countries were rising to meet a new use that really began in 1991. That's a year when Sony introduced the first rechargeable lithium ion battery to the market, which it used in its camcorders. Then, with the rise of cell phones, it was time for the Bon Jovi of the chemical table to step into the spotlight.

3:31

I think it's because of his hit song Lithium on a Prayer.

3:37

Yes, I'm sure that's what everybody has been singing at the bars all these years. I just didn't notice it before.

3:42

While the US Was focused on debates around energy independence that mostly revolved around oil, the Chinese government was thinking differently. The Chinese Communist Party started heavily subsidising lithium mined or processed in China. Now the mines are still overwhelmingly based in Australia and Chile, two countries friendly with the US but getting the lithium out of the ground is only the first step. The processing to create lithium that's ready for batteries is overwhelmingly Chinese.

4:12

Now, to be clear, the story of China's rise in lithium extraction is not purely about competition with the U.S. it's also about cooperation. Eric Norris's company, Albemarle, is American, and it's done a range of joint ventures with Chinese companies. And Albemarle sells its lithium to battery manufacturers, which includes companies based in China.

4:33

But some people in the US Are anxious about the lack of domestic lithium production. As you may have noticed, relations between the US And China aren't great at the moment, especially after the trade war between the two countries. There is a fear that China could restrict access to lithium. The Chinese government did this with other minerals as recently as in December. In response to US Restrictions on China's semiconductor manufacturing, the Chinese government placed new rules on three important elements in making semiconductor chips. China has now banned these elements from being exported to the US and this

5:10

is why Congress made it a point to try and build up domestic lithium production. It was part of the Bipartisan Infrastructure Law and the Inflation Reduction act that was passed. And because of these acts, a few years back, the government awarded Albemarle $240 million to restart the Kings Mountain lithium mine in North Carolina. But what happened next is sort of instructive about the difficulties governments face when they get involved in markets for commodities like lithium. Eric Norse from Albemarle says, it's complicated.

5:40

We're big advocates of that. But there are challenges that have to

5:43

be addressed, he says. Not only would you have to restart the mine, but you'd also have to build a processing facility, and that could be a billion dollars. Plus, also, there's this question of who the customers are.

5:55

If we were to be processing all of Kings Mountain today, most of that product would have to be exported because there isn't demand here for it. Most of those batteries aren't made here. They're made somewhere else.

6:04

Most electric vehicle sales are in China and Europe, so that's where most of the electric vehicle batteries are made. So shipping the lithium elsewhere to those battery factories would add costs, another issue in the US Mines like Kings Mountain also face opposition. Often, environmental advocates oppose destruction of endangered species habitats. Abandoned mines can become contaminated with toxic chemicals like arsenic. Opposition from indigenous groups is common, too.

6:33

Kings Mountain faces less of these headwinds than new mines because the old mine was already there. So the big damage is basically already done. But the fact remains that permitting is a big issue.

6:43

Nothing happens without the community's engagement and support. We have a mine together or we don't have one. And so we have a community center. We have a team that engages with the community.

6:54

They're doing a lot of homework, but they're still not sure if they'll go ahead with restarting this mine.

7:00

We were plotting how to do it. Now we need the numbers to support it. The economics just don't support it now.

7:07

A few years ago, when Albemarle was kicking off this idea, one tonne of lithium was selling for record amounts of money. Now those Chinese lithium processors are churning out plenty of lithium, and the price has fallen about 90%. This makes it harder for Albemarle to justify restarting the Kings Mountain mine. And it also worsens the economic case for other lithium proposals, like a big potential mine in Nevada.

7:33

And this dip highlights a key issue with all commodities. Everywhere, prices are volatile. And there can be these big price spikes like there was a few years ago when lithium supply could not keep up with demand. But those high prices don't usually last, especially when you have governments around the world subsidizing production. One winner, at least for now, is the people making and buying batteries.

8:00

In the words of Bon Jovi, it's now their life.

8:03

Cue the chorus. This episode is produced by Cooper Katz McKim, with engineering by Gilly Moon and Jimmy Keighley. It was fact checked by Sierra Juarez Cake, and Ken edits the show and the indicators of production of npr.

The race to produce lithium

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