The high demand and high prices for lithium mean that the mines are running at full speed

Salty water laps softly through a pipe across a dry lake bed and into a Caribbean blue pond. It carries an element crucial to the electric car revolution and suddenly one of the world’s hottest commodities: lithium.

Located halfway between Reno and Las Vegas, Silver Peak might not resemble most people’s idea of ​​a mine. But for decades it has been the only domestic producer of lithium in the United States. Now the tiny mine is about to double production and faces new rivals as part of a massive global phenomenon that is transforming multiple industries.

Demand for electric cars is growing rapidly, straining the supply of lithium used in the vehicles’ huge batteries. Proposals for new mines abound, accompanied by controversy. One proposed site, for example, threatens the only habitat of a rare Nevada wildflower, while another has outraged both Indigenous groups and ranchers. But new mines aren’t the only way to get more lithium. And they’re certainly not the fastest.

Over the next three to five years, the world will largely rely on mines already in operation to be expanded as quickly as possible, says Susan Zou, energy metals analyst at Rystad Energy.

“Actually, over the past six months, we’ve been quite surprised to see how quickly these existing projects have responded to lithium price increases,” she says.

Silver Peak shows that the race to produce more lithium is not just in the future through battles over proposed mines. It’s in full swing.

A quiet little mine gets a new boost of energy

Lithium can perform a number of nifty tricks. As a pure metal, it bursts into flames when it comes into contact with water. In its salt form, it treats mood disorders. (It was an ingredient in the original recipe for 7 Up).

And, most importantly for the global economy, a single particle of lithium will easily donate an electron and then flit back and forth between the positive and negative ends of a rechargeable battery, storing and discharging energy in the process.

Lithium-ion batteries are a key element in any viable path to mitigating the climate crisis. Electric vehicles can help to reduce the consumption of petrol and diesel. Huge batteries can store electricity from wind and solar farms to replace coal and natural gas. The promise of batteries: the quality of life that fossil fuels provide, minus the fossil fuels themselves.

What this means for demand for minerals like lithium is hard to fathom.

“We crack the first million [metric tons] of demand over the next few years,” said Cameron Perks, a lithium expert at Benchmark Minerals Intelligence. “And add another 1 million every few years after that [metric tons] … every few years, which is overwhelming.”

That’s an unbelievable pace of expansion. And it’s already happening. Global lithium production has beautiful doubled within a few years. Now he has to do it again. And again. And again …

Silver Peak was tacitly supplying about 5,000 of those tons per year without anticipating much future growth. It has now invested around $60 million in an expansion and is on track to produce 10,000 tons per year until 2024.

As the name suggests, Silver Peak was once a silver mine – the kind that people dug tunnels into the earth to extract ore from rich veins. But more than 50 years ago, it started a revolution in lithium mining by proving that the mineral can be mined from liquid, not just rock.

Below this dry lake bed lies a lithium-rich ancient volcano. Workers are drilling down beneath the playa, pumping up brine that has soaked up the lithium and spreading it under the hot sun. As water evaporates and salt precipitates, the liquid that remains has an increasing concentration of lithium.

After at least 18 months of traveling through 23 separate, increasingly smaller evaporation ponds, the brine is pumped out and treated with a chemical that reacts with the dissolved lithium to produce lithium carbonate — a white powder that’s placed in sacks each weighing more than a tonne is filled, which are sent to customers.

Not all of the lithium produced here is used in batteries, but if it were, it could potentially meet the demand for a few hundred thousand electric vehicles a year. This makes Silver Peak a relatively small player in the global lithium markets; The global auto industry already produces millions of electric vehicles per year.

But while it strives to double its output, it’s not alone. S&P Global Platts wrote in late 2021 that every major lithium producer in the world was planning to expand.

“We’re doing everything we can to keep up with customer demand, and I know most of our competitors are doing the same,” said Meredith Bandy, vice president of investor relations and sustainability at Albemarle, the company that owns Silver belongs to Summit — as well as other, larger lithium mines around the world.

There is a very simple reason for this, and there is no sense of duty in helping the global fight against climate change. Lithium prices have tripled. That rising price, combined with rising production, propelled Albemarle to record profits in its most recent quarter.

Look for excess lithium in the lab and in the garbage heap

Building new mines and increasing production at existing mines are the most obvious ways to produce more lithium, but they’re not the only ways.

Albemarle also plans to reopen a closed mine in North Carolina that used to extract lithium from rock, and there’s an abandoned mine in Quebec that another company also wants to reopen. Reopening a closed mine is easier than starting one from scratch for a variety of reasons, and rising prices are suddenly making projects closed for economic reasons more viable.

Recycling is another source of lithium, and Albemarle also intends to open an electric vehicle battery recycling facility. The problem is that, much like opening a new mine, this won’t be a significant source of lithium for years to come. You can’t recycle batteries that don’t exist, and right now, a large number of batteries that can be recycled just don’t exist yet.

Another avenue for research and investment — and not lacking in hype — is the possibility of using improved technology to extract lithium from the brine used in geothermal power plants. Since the brine is already being pumped and large evaporation ponds would not be required, it promises a much smaller ecological footprint if the companies manage to do it.

“New companies coming to market with new technologies could help lower the cost of lithium extraction and open up deposits we never thought possible before,” says Perks.

There is actually a lot of lithium in the earth’s crust. The question is whether it is feasible to extract it. And higher prices are changing that calculus every day.

For example, US Magnesium, a producer in Utah, recently began selling lithium that was previously a waste product. That means Silver Peak is no longer the sole source of US-produced lithium. US Magnesium has announced that it will be able to supply an additional 10,000 tons of lithium per year at full capacity.

When you put on your lithium spotting glasses, there are all sorts of possibilities. At Silver Peak there is a huge mound of sand that overlooks the evaporation ponds. It was dredged from the ponds and piled up here to get it out of the way.

“There’s a theory that the salt that comes out of these ponds can also be harvested again,” says Karen Narwold, Albemarle’s chief administration officer, from a seat on the crunchy, glittering hill.

It’s not like a heap of salt in a single small mine will satisfy the global hunger for lithium. But the fact that it is even considered is significant.

Yes, analysts agree Rising demand for lithium means new mines need to be built — which, given the sizeable footprint of each mine, means tough conversations about where to place them and how to build them in the most responsible way possible.

But in the meantime, existing mines are trying to figure out how much lithium they can produce when they go into overdrive. Old mines are reopened, waste piles are re-examined, new technologies are tested. Recycling companies are popping up everywhere. And at the other end of the supply chain, battery manufacturers are trying to figure out how to get more storage capacity from fewer raw materials.

Faced with the possibility of a huge lithium shortage, companies are taking the long view, reassessing sources that were once dismissed as obviously unviable to try to fill the gap and make a fortune in the process.

“There’s something interesting about high prices,” says Kwasi Ampofo, head of minerals and mining at BloombergNEF. “That creates incentives all.”

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