As the United States positions itself to develop its own lithium reserves to counter Chinese dominance in critical minerals, it still has a long way to go to ensure a just transition.
As the world shifts to a low-carbon economy, a geopolitical race is underway to secure access to the critical minerals that renewable energies require. Lithium, used in batteries that power electric vehicles and store energy from renewables, faces skyrocketing demand. With significant lithium reserves in Nevada and California, the United States is trying to win the race by transforming from importer to producer.
And with good reason. Experts believe the United States holds 10 percent of the world’s estimated 86 million tons of proven lithium reserves. Many deposits are located in the American west, with around 2,000 lithium claims having been made on 30,000 acres of federal public land in California alone. While domestic production can help to meet U.S. lithium needs, there will always be minerals that the United States won’t be able to produce domestically.
Domestic Supply and Correcting Historical Injustices
In February, the Biden administration announced new domestic investments in minerals production. California’s lithium deposits, located mostly in the Imperial Valley and the Salton Sea, are referred to as the “the Saudi Arabia of lithium.” The current projections of lithium reserves in the state are indeed astronomical. California officials estimate that around 600,000 tons of lithium could be produced annually in the state.
While tests currently underway will be able to reveal the true size and concentration of the deposits, plans for large-scale extraction are already underway. There are currently “eleven existing geothermal plants along the Salton Sea that have the potential to produce enough lithium to provide about ten times the current U.S. demand.” Even a portion of that, compared to 2021 total global production, which was around 100,000 metric tons, would put the United States far ahead of the current leader, Australia, which currently produces an estimated 55,000 metric tons a year.
This is important as electric vehicle sales in the US grew by 85 percent from 2020 to 2021 compared to overall light-duty vehicle sales, which increased only three percent during the same period. A domestic supply of lithium, as well as other critical minerals, is sorely needed but is only a portion of a larger portfolio of changes required for a transition to a low-carbon society.
President Biden said environmental protections were “paramount” so that nearby communities would not face the same environmental devastation other mining towns have in the past. He emphasized that it’s important to ensure that these resources benefit communities and not just shareholders. “We can avoid historical injustices that too many mining operations left behind in American towns,” he said. This was a landmark statement from a President–new technologies should not repeat the environmental harms imposed by the fossil fuel era. This is especially true for the communities near California’s Imperial Valley and the Salton Sea. Communities there have suffered disproportionately high asthma rates and health impacts from air emissions, agricultural dust, and runoff laced with toxins.
Adding to the urgency of protecting communities, on March 31st, the Biden administration invoked the Defense Production Act to increase mining of critical minerals for batteries and EVs to alleviate shortages needed to bolster the clean energy economy. The frustration of not being able to pass significant climate legislation is forcing the administration to change tactics. The move also attempts to solve a significant geopolitical issue: Chinese dominance of battery production and mineral processing.
Chinese Dominance
China dominates the production of components for lithium-ion batteries, producing 61percent of cathode materials for EVs and 83 percent of anodes in 2019, and is the undisputed leader of cell manufacturing, with a 73 percent market share. China also dominates battery production today, with 93 “giga-factories” that manufacture lithium-ion battery cells, vs. only four in the United States. Even more concerning, the International Energy Agency has estimated that China’s share of refining is around 35 percent for nickel, 50-70 percent for lithium and cobalt, and as high as 90 percent for rare earth elements.
Additionally, the U.S. imports 100 percent of its annual graphite requirements, and a majority of that comes from China. China has been aggressive in the procurement of minerals to continue this dominance, and its lack of concern for human rights and the environment allows it to operate in places where a lack of oversight gives it a competitive advantage. Recently, China has expanded its influence and investments in the Democratic Republic of Congo’s cobalt reserves, a crucial mineral for electric vehicles, as the Chinese government purchased two large cobalt deposits.
While domestic investment is good news for electric vehicle makers and consumers as well as the renewable energy movement, the United States will continue, at least in the near future, to procure minerals from abroad, some of which are located in areas where significant human rights and environmental violations take place. Biden’s comments about not repeating historical injustices are beyond welcomed, but he also needs to implement reforms to ensure that companies operating abroad behave responsibly and honor human and environmental rights in their supply chains.
Tesla’s New Approach
One company moving faster than the rest of the industry is Tesla. Not only is Tesla applying to build a giant new facility to produce battery materials, making it less dependent on China, but it is also procuring minerals from the source. Recently, it signed a deal souring nickel from a planned mine in Minnesota and became an advisor to the Goro nickel mine in New Caledonia, a project that has seen frequent labor strikes and political protests due to historical injustices against the Indigenous population. Tesla’s new move to procure more minerals at the source of the supply chain may be less about the improvement of governance and environmental wellbeing and more about the supply of minerals and cost-cutting. As other carmakers are moving to go fully electric, these companies are going to cut into the electric vehicle market, which will see Tesla’s market dominance diminish. Its goal: stay ahead by selling cars that are of high quality but cheaper than its competitors.
Tesla is attempting to position itself as the best mineral procurer in the electric vehicle industry and is taking significant risks by buying materials from the source. As it aligns with the mining industry, it also opens itself up to criticism from environmental and human rights advocates. Tesla has already influenced mineral procurement among its competitors: GM is investing in a California mine, and BMW is buying lithium from one in Australia. As journalist Hannah Beech points out, this “could serve as a model for a green industry confronting an uncomfortable paradox.”
Human Rights-Based Approach to Critical Minerals Procurement
One avenue of improvement for domestic mining of critical minerals, which Interior Secretary Deb Haaland has mentioned, is to reform the General Mining Law of 1872. This law was born out of the California Gold Rush and allows mining companies to stake claims on public lands regardless of potential conflicts with other uses. This law does not include any environmental, reclamation, or royalty provisions. It is problematic because it’s estimated that ‘the majority of U.S. reserves of cobalt, copper, lithium, and nickel are located within 35 miles of Native American reservations. Additionally, U.S. mines that have critical mineral reserves, 97 percent of nickel, 89 percent of copper, 79 percent of lithium, and 68 percent of cobalt reserves and resources in the U.S. are located within 35 miles of Native American reservations. Climate justice means not replicating the same patterns of injustice and oppression imposed by the fossil fuel industry. A critical component of achieving climate justice is ensuring that mining doesn’t continue to harm Indigenous and frontline communities who already bear much of the brunt of the climate crisis.
A responsible, community-driven critical minerals approach would advance the United States government’s and the European Union’s plans to compete with China while also benefiting host countries instead of solely relying on domestic supplies that are still yet to be fully realized. The United States has come to the realization that its domestic development of natural resources is inadequate, and it is imperative to secure critical minerals as the need to compete with China in this space intensifies.
If the U.S. wants to position itself as a responsible alternative to China’s model, then it can help countries extract critical mineral resources in a way that provides them with the know-how to shift towards more sustainable energy sources, respects local communities as partners, rather than as nuisances who need to be pushed out of the way.
The United States needs a comprehensive human rights policy approach to critical mineral extraction–domestically and abroad. Without one, it risks exacerbating the negative impacts of climate change.
