“The Great Nevada Lithium Rush to Fuel the New Economy”

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The Story

“The Great Nevada Lithium Rush to Fuel the New Economy”
by Paul Tullis
Bloomberg Businessweek, March 29, 2017

The Pitch

When Tesla received 300,000 pre-orders for its Model C, Argentina smiled. The country is home to huge deposits of lithium, a vital ingredient in the carmaker’s batteries. Lithium-ion batteries also power most of the world’s cell phones and other consumer electronics, and are expected to be favored for energy storage, which will be necessary for any large-scale conversion of the electric grid to renewable energy. Goldman Sachs, which calls lithium “the new gasoline,” predicts a 300% rise in production by 2025 just to serve demand from EVs. To meet its goal of 500,000 cars per year, Elon Musk has said, “we would basically need to absorb the entire world’s [lithium] production.”

But getting all that lithium to Tesla’s “gigafactory” in Nevada is another matter. 70% of the world’s lithium is in Chile, Argentina, and Bolivia. Bolivia has suspended lithium mining, and Chile isn’t granting any new concessions. Getting it from Argentina’s deposits to a port involves crossing Chile, which isn’t likely to be wild about that idea, or the Andes, and in any case importing a fine white powder from South America to the U.S. will present some challenges. 14% of supplies are in China, but its many battery makers are expected to need all the lithium the country can source as battery-production capacity will exceed the U.S.’s by a factor of 2 in just a few years. Australia has 5%, but companies there have been slow to ramp up, and thelithium isn’t the high-quality brine type.

That leaves the U.S. Wouldn’t you know it, among the world’s highest-quality deposits of lithium is just 200 miles from Tesla’s gigafactory, outside the tiny hamlet of Silver Peak, NV. Lithium X, a start-up founded by a geologist with 20 years of experience in mining, has purchased 15,000 acres in the area, and last month secured an important source in Argentina as a hedge.

To be sure, there’s the possibility of a bust in lithium: It’s difficult and costly to extract, so not super responsive to surges in demand, so nobody expects the recent doubling of the price will continue. It’s possible some other battery technology will displace lithium-ion, as its energy density isn’t as good as gasoline’s and it can’t recharge in minutes. But for now, it’s where Tesla has put all its eggs, so it’s likely to be the battery commodity of choice for several years at least.

I’m not sure yet if this is about Lithium X and its boss, a gold rush in Nevada, or an explosion of investment in Argentina since it settled its bond difficulties, but it seems the time is right for a piece on the only commodity to have gone up in price in 2016.

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