The U.S.’s Bold Push to Become the First Electro-State
The country that controls the global refined lithium supply will be the superpower of the 21st century.
And it’s only a matter of time before that country emerges.
Right now, 96% of lithium is mined in just four countries: Australia, Chile, Argentina, and China.
But that’s deceptive. Because the countries that have the Lithium don’t necessarily own the lithium.
You see, China is never content with its own resources. And it is rapidly moving to corner the global lithium market—in a bid to become the only powerful electro-state in the world.
To get there, China has systematically steamrolled its way into the other three major lithium mining countries.
- The second-largest lithium reserve in the world, located in Australia, is underwritten by Ganfeng Lithium, a Chinese company.
- Greenbushes, the largest hard rock lithium reserve in the world and also in Australia, is majority-owned by a Chinese lithium company.
That same company paid $4 billion to become the second-largest shareholder in SQM, the largest lithium producer in Chile.
In 2021, Chinese companies bought three major lithium mines in Argentina in deals worth $1.3 billion.
No corner of the earth is safe from China’s grasp.
Out of the eleven lithium projects in Africa, seven are already partially or wholly owned by China.
“It’s not fear of the Chinese getting there first. They are there first. It’s already happened.”
– Critical Metals Executive Director Russell Fryer
Around the world, China now controls the supply of lithium—which means it can set the price.
But here’s the most dangerous part: China can also control who has access to lithium.
No country can transition to renewables, or EVs, or utility-scale energy storage, or distributed power grids, without access to mass-mined lithium.
Most of the U.S.’s lithium supply is currently imported from Argentina and Chile. Those are the same sources that are getting bought out and taken over by China.
Which means China finally has what it needs to make the lightest metal on the planet a very heavy weapon.
Mined in America
The United States used to have a strong grip on the global lithium supply.
In 1996, the U.S. produced over a quarter of the world’s lithium. A quarter century later, it’s at less than 1%.
The grand total of lithium mines producing in the U.S. now? One.
The actual production number is so embarrassing it’s withheld on U.S. Geological Survey reports.
Meanwhile, lithium has transitioned from barely-used metal to a vital energy component.
But it’s estimated that the solitary Silver Lake mine, located in Nevada, produces enough lithium for about 80,000 EVs.
That’s less than 1% of what the U.S. will need by 2030—for EVs alone.
And that doesn’t even include the demand from utility-scale battery storage to make the switch to renewables.
- In other words, Silver Lake is a puddle. The United States desperately needs an ocean.
Fortunately, the U.S. is #5 in the world in lithium reserves. And that number is quickly rising as exploration locates more economic lithium.
There’s plenty of lithium at home, and nowhere else to turn. So the U.S. government is enlisting every weapon in its arsenal to stimulate domestic production.
In 2022, Congress invoked the Defense Production Act—originally intended to help the U.S. win wars—to get the industry moving again.
The Act provides huge tax incentives to critical mineral miners and battery manufacturers. Tesla alone estimates the credits are worth $1 billion+ per year.
But there’s a catch.
To qualify, at least 40% of battery components have to be extracted or processed either in the United States or in one of twenty free-trade countries.
That ramps up to 100% by 2029.
The law also requires evidence that zero lithium has been “extracted, processed, or recycled by a foreign entity of concern.” (In other words, “China.”)
But not just Chinese-mined lithium…
- Australia mines half of the world’s lithium—and ships 90% of that to China for processing. All off-limits to U.S. manufacturers starting at the end of 2023.
Car manufacturers have only a single option left if they want to do business in the U.S.: identifying a source of local lithium.
By backing car manufacturers into that corner, the U.S. government has knowingly kicked off a new Lithium Rush.
And this one’s going to put every Gold Rush to shame.
The Winner Takes It ALL
You see, the subsidies from the Defense Production Act are worth $10,000 or more per car.
Manufacturers are desperate to get their hands on those subsidies. Because noncompliant manufacturers will have to charge $10,000 more for the same car.
Whichever manufacturer is the first to produce a 100% Made-in-the-USA EV will dominate the entire market.
And there’s simply no way that U.S. car manufacturers that don’t qualify for the credits can stay alive. So there’s nothing they won’t do to get their hands on U.S.-mined lithium.
Now, that includes outright purchasing lithium mines to keep competitors from snatching them up first. For example, General Motors has invested $650 million to develop a mine in Nevada.
It’s literal vertical integration—and it’s making lithium mines the hottest commodity on the market.
Even Chinese car manufacturers are stepping into the market themselves, upping competition for mines.
“Chinese companies… have realized how much lithium they’re going to need… and [are] going after some of the most promising junior projects in development.”
– Seth Goldstein, senior equity analyst at Morningstar
Over the next year, we’re going to watch the world’s biggest game of King of the Hill unfold—with the highest stakes.
I’m going to tell you about a little-known mine in a few days…
Located in the United States, that has all the hallmarks of a prime buyout target.
America is about to strike back for energy security and independence. Hard.
You won’t want to miss it.
Regards,
Marin Katusa
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