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Lithium Mining Investment Issues

As the world moves steadily towards electric vehicles and efficient means of storing energy with batteries, lithium batteries have become a major player. Lithium batteries are rechargeable repeatedly, light weight, and can store large amounts of electric energy. They are used in car batteries and that use is expected to go up to ten times the current use by 2030 while GM, Volkswagen, Tesla, and others bring more and more electric vehicles into service. While the USA has abundant sources of lithium only one lithium mine exists in the USA producing about 2% of current production. Lithium mining investment issues will become increasingly important as the USA moves to both mine more lithium and manufacture lithium batteries domestically for domestic use.

Domestic Lithium Battery Supply Chain

Currently, two-thirds of the world’s lithium batteries are made in China. As the USA found out in the early stages of the Covid-19 pandemic, disruption of supply chains for foreign-made products can lead to manufacturing halts, loss of business, and other painful results. As the USA and China increasingly compete to dominate the global economy, the USA is moving to develop supply chains for products like lithium batteries that will not be at risk due to trade disputes or power play supply cutoffs. In short, mining lithium and producing lithium batteries in the USA has become a national security issue closely tied to the health of the American economy.

Problems with Mining Lithium in the USA

The New York Times wrote about the lithium gold rush to power electric vehicles. While lithium batteries are part of the answer for a greener future, lithium is a mixed blessing when it comes to mining it and the other minerals, like cobalt, needed to make lithium batteries. One of the projects they write about is a proposed lithium mine project in Nevada called Lithium Americas that has drawn criticism.

But the project, known as Lithium Americas, has drawn protests from members of a Native American tribe, ranchers and environmental groups because it is expected to use billions of gallons of precious ground water, potentially contaminating some of it for 300 years, while leaving behind a giant mound of waste.

It turns out that while the USA has lots of lithium reserves, traditional mining of these reserves can have very “non-green” side effects when the point of using lithium batteries for cars and energy storage is to create a “greener” world. From an investor’s viewpoint, national security concerns will probably overshadow many of the environmental concerns for many projects. However, not all sources of lithium and not all ways of extracting lithium are as problematic as the Lithium Americas project.

Lithium Mining Investment Issues - Open Pit Mines

Extracting Lithium from Brine

Lithium is found in brine deposits and this is where much of the lithium “mined” in South America comes from. A new process that holds promise for extracting lithium more efficiently and economically may also hold promise for investors. Lilac Solutions has developed ion exchange beads that can be used to more-efficiently extract lithium from salt brines without the many polluting issues related to traditional lithium mining.

Lithium Mining Investment Issues - Ion Exchange Extraction

A site where investors plan to try this approach is the Salton Sea in Southern California. The sea sits atop an extinct volcano and the plan is to build geothermal power plants that by them themselves will generate income and pay for the extraction process of taking lithium from the hot water from 4,000 feet below the surface as is passes through the power plant. Because salt brines contain large amounts of lithium, this approach may be a more commercially and environmentally feasible way to extract large amounts of lithium than traditional mining.

While Lilac Solutions is a privately owned company they don’t do the mining. They produce the means for ion exchange lithium extraction from brine. We suggest that while the stampede begins to mine lithium and build battery production facilities in the USA that investors consider lithium mining investment issues such as those associated with traditional mining when choosing where to invest their money for a greater profit with fewer problems.

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