Laws Thwart US Bid to Match China on Lithium Mining

US bid to increase domestic production of lithium in order to reduce reliance on Chinese supplies of critical mineral frustrated by 'confusing' state laws

The US government’s bid to reduce its reliance on China for lithium is being thwarted by a muddle of state regulations that are preventing it from tapping vast domestic deposits of the critical mineral.

The US Department of Energy has funded 12 lithium-based projects to the tune of $1.6 billion to support new commercial-scale domestic facilities to extract and process lithium.

The funding comes from the Bipartisan Infrastructure Law, which authorises up to $108bn for public transportation, including substantial investment to establish the home-based supply chains needed to produce clean energy and transportation.

Key among this is lithium, consumption of which has increased significantly in recent years because rechargeable lithium batteries are used extensively in the growing market for electric vehicles and portable electronic devices. 

But across Texas, Louisiana and other mineral-rich US states, there is uncertainty around who owns the millions of metric tons of subterranean lithium locked in salty brines, Reuters reports. 

US states confusion around lithium prduction

Neither is there any agreement on how the battery metal should be valued by regulators, nor around who should pay to process it into a form that is usable by manufacturers. Reuters says US federal officials have little say in state regulations, and that this confusion is limiting what is possible.

These grey areas are now frustrating US efforts to reduce its reliance on foreign supplies, particularly those from China.

At present, six mineral operations in Australia, one in Brazil, two each in Argentina and Chile, and five in China account for most of the world's lithium production.

China also owns a substantial number of overseas lithium mining companies. According to UK Foreign Affairs Committee, from 2018 to 2020, China invested US$16bn in overseas mining, including in South America's ‘lithium triangle’, consisting of parts of Argentina, Bolivia, and Chile. 

Global lithium demand is expected to outpace supply by 500,000 metric tons annually by 2030, and unless the US is able to boost its own production, it will remain reliant on China.

"I don't even know where to start in terms of working with the local authorities to get brine mineral rights in Texas. It's confusing," Brady Murphy, CEO of Tetra Technologies told Reuters.

Brady says the company has tested around 200 brine samples from Texas, but is yet to go into production in the state due to “legal uncertainty”.

Zijin Mining Group bemoans US policies

In related news, the Zijin Mining Group – the country’s biggest listed mining company – has warned that US moves to loosen Beijing’s stranglehold on minerals could slow the company’s global expansion.

In a media call, the company’s Chairman, Chen Jinghe, said “Zijin will be targeted for sure, given our leading role in the industry and plans for more acquisitions”. 

He added that the development of the Chinese economy and the Chinese mining industry “is becoming more difficult”. 

As well as copper and gold mines in Canada to Africa, Zijin has also expanded into lithium.


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