The Race to Produce Lithium: A Comprehensive Overview

Podcast: The Indicator from Planet Money
Host: Darren Woods and Adrienne
Episode Title: The Race to Produce Lithium
Release Date: January 15, 2025

Introduction: The Critical Role of Lithium

In the January 15, 2025 episode of The Indicator from Planet Money, hosts Darren Woods and Adrienne delve into the pressing issue of lithium production in the United States. Lithium, the cornerstone of modern battery technology, is essential for powering everything from smartphones to electric vehicles (EVs) and large-scale grid batteries. Darren Woods introduces the topic by highlighting lithium's prevalence, stating, “More than 90% of the batteries in North American electricity grids are lithium ion” (00:26).

Why Lithium is Invaluable

Adrienne underscores lithium's unique properties that make it indispensable for battery production. “The reason lithium is so prized for batteries is that it's the lightest metal there is,” she explains (00:26). Darren humorously adds, “Yeah. So not heavy metal, light metal,” further emphasizing its lightweight nature, likening lithium to the “Bon Jovi of the periodic table” (00:35).

Historical Context: U.S. Leadership and Decline in Lithium Production

The episode traces the United States' historical role in lithium production. Ernest Scheider, author of War Lithium, Copper and the Global Battle to Power Our Lives, provides critical insights: “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 U.S.” (03:08). This dramatic decline is attributed to the closure of significant mines, such as the Kings Mountain Mine in North Carolina in 1988, primarily because lithium extraction became more economically feasible in Australia and Chile.

China's Ascendancy in Lithium Processing

A pivotal point in the narrative is China's strategic move to dominate lithium processing. Scheider explains, “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” (01:09). The hosts elaborate on how China not only mines lithium but also leads in processing it for battery production. This dual control has positioned China as a global powerhouse in the lithium supply chain.

Collaborative Yet Competitive Dynamics

Despite geopolitical tensions, there is a layer of cooperation between American and Chinese companies. Eric Norris, Albemarle’s Executive Vice President and Chief Commercial Officer, points out, “Eric Norris is Albemarle's executive vice president and chief commercial officer” (02:52). Albemarle, an American company, has engaged in joint ventures with Chinese firms and supplies lithium to battery manufacturers, including those in China (05:09). However, the ongoing trade war and restrictions imposed by both nations, such as China’s export bans on critical elements for semiconductor manufacturing, have heightened U.S. anxieties about relying on Chinese lithium (05:30).

Efforts to Rebuild Domestic Lithium Production

In response to these geopolitical challenges, the U.S. government has initiated measures to bolster domestic lithium production. Adrienne notes, “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” (06:07). Albemarle received a substantial $240 million grant to restart the Kings Mountain Mine, signaling a significant government push to revive U.S. lithium manufacturing.

Challenges Facing U.S. Lithium Initiatives

Despite substantial investments, Albemarle faces numerous hurdles. Norris admits, “It's complicated,” highlighting the multifaceted challenges involved (06:37). The primary obstacles include:

• Economic Viability: The current global oversupply has driven lithium prices down by approximately 90%, making it economically unfeasible to restart existing mines or develop new ones (08:04). This price volatility poses a significant risk for investors and companies alike.

• Infrastructure and Investment: Reestablishing lithium production requires not only mining operations but also the construction of processing facilities, entailing investments upwards of a billion dollars (06:41).

• Demand Uncertainty: With most EV production centered in China and Europe, there is limited domestic demand in the U.S. for processed lithium, potentially necessitating exports and adding logistical costs (06:52).

• Environmental and Community Opposition: New mining projects often encounter resistance from environmentalists concerned about habitat destruction and contamination from toxic chemicals. Additionally, garnering support from indigenous communities remains a persistent challenge (07:30).

Economic Fluctuations and Market Dynamics

Adrienne highlights the inherent volatility in commodity markets, using lithium as a prime example. She explains, “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” (08:04). Such fluctuations complicate long-term planning and investment in lithium production infrastructure.

Future Prospects and Conclusion

The episode concludes on a reflective note, drawing a parallel with Bon Jovi’s iconic song to emphasize lithium’s centrality to modern life. “In the words of Bon Jovi, it's now their life,” Adrienne quips, underscoring the indispensable role of lithium in current and future technologies (08:57).

Despite significant efforts and investments, the U.S. lithium industry remains at a crossroads. The interplay of geopolitical tensions, economic challenges, and environmental concerns continues to shape the trajectory of lithium production in America. As the race to secure lithium resources intensifies, the outcomes will have profound implications for the global economy and the future of sustainable energy technologies.

Notable Quotes:

• Darren Woods: “More than 90% of the batteries in North American electricity grids are lithium ion.” (00:26)
• Adrienne: “The reason lithium is so prized for batteries is that it's the lightest metal there is.” (00:26)
• Ernest Scheider: “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 U.S.” (03:08)
• Adrienne: “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.” (06:52)
• Adrienne: “Everybody has been singing at the bars all these years.” (04:28)
• Darren Woods: “It's now their life.” (08:57)

This episode offers a nuanced exploration of the lithium supply chain, highlighting the intricate balance between economic feasibility, geopolitical strategy, and environmental stewardship. For listeners interested in the intersection of economics, technology, and global politics, this comprehensive analysis provides valuable insights into one of the most critical commodities of the 21st century.