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GM forms strategic investment for U.S.-sourced lithium

usscmc by usscmc
July 6, 2021
GM forms strategic investment for U.S.-sourced lithium
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Detroit — General Motors Co. detailed a new partnership Friday to extract lithium from southern California’s Salton Sea — marking one of the first moves by a major U.S. automaker to domestically source the crucial mineral needed to build electric vehicle batteries. 

The move by GM comes amid a global race to secure battery minerals as automakers seek to ramp up EV production, and as the auto industry struggles to recover from pandemic- and weather-related supply chain issues. 

General Motors Research & Development Battery Lab Wednesday, Sept. 9, 2020 at the GM Tech Center in Warren, Michigan.

The collaboration with California- and Australia-based Controlled Thermal Resources Limited goes hand in hand with Democratic policymakers’ goals in Washington, where they hope to boost electric vehicle production while protecting U.S. jobs throughout the supply chain. Policymakers on both sides of the aisle also look to battery production as an opportunity to reduce dependence on China, which currently dominates the global battery supply chain.

Most of the lithium in EV batteries is mined and processed outside the U.S. Australia is home to the most lithium production, followed by Chile and China. The U.S. has 3.5% of the world’s lithium reserves, according to the Department of Energy, but lags behind other leading countries in tapping into them.

GM’s news comes as the industry still works through a semiconductor shortage that is  expected to cost the industry 3.9 million vehicles and $110 billion in revenue globally, according to estimates from consulting firm AlixPartners. Semiconductors, similar to raw materials for batteries, are sourced outside of the U.S. and primarily come from Asia. 

“The semiconductor shortage has been a huge wake-up call to everybody that you need to be taking more care managing where everything is coming from and making sure that you have a robust supply chain,” said Sam Abuelsamid, principal analyst for Guidehouse Insights. “Otherwise, it’s gonna end up coming to bite you in the butt.”

Electric vehicle production and sales are expected to skyrocket in coming years, prompting a global race to secure the lithium crucial to building the high-capacity batteries needed to fuel them. 

Australia leads the world in lithium production, followed by Chile and China. But China dominates the global lithium processing field, which is necessary to turn the raw material into useable components for batteries. 

China, the leading economic and political rival to the United States on the world stage, is home to more than 75% of all battery production capacity and around 80% of global refining capacity for EV minerals overall. 

That level of dependence on China has been the focus of scrutiny in Washington, where policymakers of both parties have raised concerns about the possibility of retaliation from the Asian superpower. 

“It is reasonable to expect that China could restrict exports of any or all of the battery supply chain materials it produces” due to trade tensions or interest in giving priority to Chinese customers, Department of Energy researchers wrote in a recent supply chain review for electric vehicle batteries and critical minerals. “Alternatively, China could dump processed materials or finished anode and cathode materials on global markets to reduce competition.”

The agency recommended the Biden administration support domestic lithium extraction and processing by investing in research and development and project financing for U.S.-based companies while working with allied countries to source lithium, graphite, nickel, cobalt and other necessary minerals as domestic production ramps up.

GM aspires to have an emissions-free lineup by 2035. To get there, it says the lithium it will use in future electric vehicles is “crucial” to making those vehicles more affordable with a longer range. 

“This is like a continuous improvement, where we’re really going after the value chain and the fundamental battery raw materials,” said Tim Grewe, GM’s electrification strategy director. 

“It’s about cost reduction … it’s about accelerating the industry with the technology and innovation that has the high benefit to it and getting that all together into a high-confidence product for our customers.”

GM’s CTR investment is part of the Detroit automaker’s $35 billion electric and autonomous technology development budget through 2025. Other domestic and foreign automakers in the U.S. are making similar pledges to transition their lineups from gas-powered to battery-powered and working to reduce battery costs — the biggest expense on an EV. 

A first step in that process comes with the development of their own battery cell manufacturing plants. Both GM and Ford Motor Co., for example, formed partnerships with battery suppliers to have their own battery cell supplies made in the U.S.

“We’re seeing many of the major automakers establish their own cell-production capabilities so they can make sure that they have enough capacity to meet their expected needs over the next 10-15 years,” Abuelsamid said.

The next step of sourcing seems obvious since “the key to producing cells is having those crucial raw materials, the lithium, nickel, manganese, cobalt, aluminum and so on,” he said. 

Sourcing materials where possible in the U.S. would take out several costs associated with getting them from overseas. And that reduced cost will help lower the overall cost a consumer pays for an EV.

“If you can produce all that stuff closer to where you’re using it, that reduces the shipping costs, it reduces the risk of supply disruptions and it gives you more flexibility to make changes,” Abuelsamid said.

GM isn’t alone in finding a U.S. lithium source. Tesla Inc. CEO Elon Musk said at the company’s battery day last September the company now has rights to a lithium clay deposit in Nevada to mine the material for future batteries.

A “significant amount” of the raw material GM uses for its batteries could be resourced out of CTR’s Hell’s Kitchen Lithium and Power development in the Salton Sea Geothermal Field in Imperial, California, where the company extracts lithium from geothermal brine and processes it.

The Detroit automaker is the first company to make a multi-million dollar investment in CTR’s Hell’s Kitchen project. GM has the first rights on lithium produced by the first stage of the Hell’s Kitchen project, including an option for a multi-year relationship. The first stage of the CTR’s project is expected to produce lithium in 2024. 

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Twitter: @bykaleahall

[email protected]

Twitter: @rbeggin

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