U.S. faces hurdles in push to build electric vehicle supply chain (updated)

Nevada Copper

14/05/2019 15:01

(Adds comment, rare earth details from MP Materials)
    By Ernest Scheyder
    May 14 (Reuters) - The United States faces stiff challenges
as it moves to create its own electric vehicle supply chain,
industry analysts say, with the extent of the country's metal
reserves largely unknown and only a few facilities to process
minerals and produce batteries.
    Legislation making its way through the U.S. Congress aims to
help offset those gaps, but China remains the global EV sector
leader, a dominance seen by some as difficult to supplant. Even
some U.S. mines are caught in China's orbit, with domestic
production of so-called rare earth minerals reliant on Chinese
processing and now caught up in the U.S.-China trade conflict. 
    "China has a huge head start," said Gavin Montgomery, a
battery and mining analyst at the Wood Mackenzie consultancy.
"They've just been at this a lot longer than the rest of the
world."
    U.S. Senator Lisa Murkowski, chair of the Senate's Energy
and Natural Resources Committee, this month introduced the
American Mineral Security Act to help streamline regulation and
permitting requirements for the development of mines for
lithium, graphite and other EV minerals. urn:newsml:reuters.com:*:nL1N22E0XQ
    The bipartisan legislation, which seeks in part to codify a
late 2017 executive order on U.S. mineral development by 
President Donald Trump, gets its first hearing before
Murkowski's committee on Tuesday.
    "We have an opportunity here to move ourselves from this
position of vulnerability in terms of reliance on others for our
minerals, our EV supply chain," said Murkowski, an Alaska
Republican.
    But just how much cobalt and other minerals used to make EVs
are actually in the United States is anyone's guess, as the
nation has conducted little by way of a national survey.
    Current estimates from the U.S. Geological Survey rely on
corporate annual reports, historical data from the U.S. Bureau
of Mines and other sources, according to USGS spokesman Alex
Demas.
    Finding out the mineral composition of a particular region
requires sending staff into the field to take rock samples, a
timely and expensive endeavor. Murkowski's legislation would
require a nationwide reserve analysis for all minerals used to
make EVs.
    USGS data show, for example, that the United States has
35,000 tonnes of lithium in reserve, a figure that the agency
and industry executives see as conservative.
    Albemarle Corp  ALB.N  operates the only U.S. lithium mine,
a facility with the capacity to produce about 6,000 tonnes
annually. According to current USGS data, that means that one
mine could deplete U.S. reserves within six years.
    Several lithium projects are under development across the
nation, including those from ioneer Ltd  INR.AX , Lithium
Americas Corp  LAC.TO  and Piedmont Lithium Ltd  PLL.AX . Each
aims to produce at least 20,000 tonnes of lithium per year,
according to corporate presentations.
    Beyond physical reserves, concerns about the lack of U.S.
processing facilities are also cause for worry.
    China controls about 85 percent of the globe's cobalt
sulfate processing, according to WoodMac data. Cobalt sulfate is
the version of the metal used in lithium ion batteries.
    eCobalt Solutions Inc  ECS.TO  aims to produce 1,500 tonnes
per year of cobalt once its Idaho project opens, though that is
only enough of the metal to make about 300,000 EVs. 
    The United States does have some processing capability.
Albemarle and rival Livent Corp  LTHM.N  process some lithium
domestically. Syrah Resources Ltd  SYR.AX  mines graphite in
Mozambique and ships it to Louisiana for processing for use in
making battery parts.
    The United States is also reliant on China for rare earth
processing, a group of 17 elements used to make electric
vehicles and consumer electronics.
    California's Mountain Pass mine, owned by MP Materials, must
pay a 25 percent tariff to ship rare earths it extracts from its
California mine to China for processing, the collateral damage
in the ongoing U.S.-China trade war. urn:newsml:reuters.com:*:nL2N1X503T 
    "All we seek is a level playing field to compete as a
low-cost producer so we can help establish an EV supply chain in
the United States," said James Litinsky, co-chairman of MP
Materials.
    But those facilities tend to be the exception and investors
so far have been wary of funding new U.S. projects in part due
to China's dominance, with concerns that any investment would be
difficult to recoup.
    "Ultimately, these projects have to stack up economically,
even if U.S. politicians make it easier to get permitting," said
WoodMac's Montgomery. 

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Lithium projects underway in the United States    https://tmsnrt.rs/2CXdGWN
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 (Reporting by Ernest Scheyder; Editing by Dan Grebler and Susan
Thomas)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))