Electricity’s Holy Grail: The Lithium Rush is On!

"Lithium Demand Skyrockets as Global Race to Secure Resource Intensifies for Electric Vehicles"

The race for lithium, the new oil for electric vehicles (EVs), is on as the demand for lithium-ion batteries in the United States hit a record high in Q1 2023. According to a report by S&P Global, US imports of lithium-ion batteries reached 235,386 metric tons, up 66% from the previous year. This surge in demand highlights the need for the US to ramp up domestic production capabilities to meet the soaring demand. However, the US only has one source of domestic lithium production, which could be problematic for EV manufacturers like Tesla in the future. American Lithium Corp. (AMLI) could play a major role in filling the supply gap, managing two of the biggest lithium deposits in the Americas.

Tesla has announced that it will use lithium-based cathodes for its batteries, which it had already been doing at its Shanghai factory. The company also plans to use lithium-ion batteries for its mid-sized vehicles and short-range heavy electric trucks. Tesla’s goal is to produce 20 million EVs each year by 2030, and it delivered just over one million units in 2022 but used around 42,000 tons of lithium in 2021. To meet its ambitious goal, Tesla would need a huge volume of lithium to make the required batteries. Earlier this year, it broke ground in Texas for its lithium refinery plant worth $1 billion. In its recent Master Plan report, Tesla analyzed that lithium is responsible for about 20% of the materials needed to deliver the energy storage in batteries for EVs relative to 2023 USGS data. With that data, the giant EV maker estimated that it needed a total of $374 billion to invest in mining ($170B) and refining ($204B) lithium (Li).

Global lithium production was at 100,000 tons or 90+ million kg in 2022, but the International Energy Agency said that the world needs up to 6x more of that by 2030. This presents a big opportunity for companies like American Lithium to serve with their large lithium reserves in highly attractive jurisdictions. Nevada, dubbed the “Silicon Valley of Lithium,” is home to the only lithium mine in the US – the Silver Peak mine, run by Albemarle Corp based in California. However, more projects are in the pipeline, alongside American Lithium’s TLC. Strong government support had made undergoing projects possible, attracting massive investments. For instance, Ford Motor inked a deal last year to source 7,000 metric tons of lithium from an Australian-owned Rhyolite project. General Motors also invested $650 million in the state’s largest claystone deposit near the TLC project of American Lithium. Similar deals also abound, with major battery manufacturers signing supply deals with proposed lithium projects in Nevada.

The Department of Energy announced a conditional $2 billion loan guarantee for a Nevada-based battery recycling firm at Reno’s event last March. Energy Secretary Jennifer Granholm pointed out that the state is flush with more projects that are all part of a rising lithium battery supply chain. The entire process, from mining to recycling of the critical mineral, otherwise known as the lithium “loop,” is possible within state lines, which is unheard of domestically. Nevada is the only state that allows for each phase of the lithium lifecycle.

The lithium-ion battery market is estimated to reach over $100 billion by 2030, and Nevada’s lithium reserves are vital for both the state’s and the country’s economy. The US needs to increase its own lithium capabilities to reach its Net Zero goal, and American Lithium Corp. could play a major role in filling the supply gap. However, every investment in securities mentioned in publications of carboncredits.com involves risks that could lead to a total loss of the invested capital. Therefore, investors must do their own due diligence.

Matt Lyons

Matt Lyons

Matt Lyons is the founder of Forestry & Carbon. Matt has over 25 years as a forestry consultant and is invoilved in numerous carbon credit offset projects.

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