Rare Metal in California Could Help US Turn Tables on China

Lithium deposits at the Salton Sea in California hold a promising future for the United States as it seeks to reduce its dependence on China for the metal and other so-called rare earth elements.

Lithium is a critical component in the production of lithium-ion batteries used in electric vehicles and other sought-after electronics. The country that controls its supply around the world—and the extraction and processing know-how required to use it—is likely to shape the future of the EV market.

Today, that nation is China, a leading player in the processing of lithium deposits. Estimated by Oslo's Rystad Energy said Chinese state-backed companies controlled 65 percent of the world's processing and refining capacity as of 2021.

At the Salton Sea, however, known reverses of lithium could support the production of 3,400 kilotons of the refined metal, according to researchers at the Lawrence Berkeley National Laboratory. A study funded by the U.S. Energy Department, published last month, said the lake had "a potential domestic U.S. resource of lithium due to the brine-hosted lithium in the deep subsurface geothermal reservoir."

The amount could be sufficient to build batteries for an estimated 375 million EVs, contributing significantly to the burgeoning electric car market, the authors said.

China's scientists have made rare ore discoveries of their own, also with the potential to tip the scale in the global EV contest.

The promising findings come at a crucial time. The U.S.'s Inflation Reduction Act prioritizes domestic sources of rare earth metals, and California's plans to phase out gas car sales over the next decade, which will likely intensify demand for lithium and other minerals.

Environmental concerns remain a key consideration when extracting lithium deposits, Jennifer Mossalgue, editor of the EV specialist publication Electrek, wrote this month.

The U.S. has approximately 2.4 million registered EVs, with projections indicating a possible lithium shortage by 2025 due to an expected boom in the electric car market by 2030, she said.

And while China's mineral extraction process has been criticized in the past for its lax environmental protection standards, lithium extraction at the Salton Sea could be safer for the environment than traditional methods, Mossalgue suggested.

"But rather than open-pit drilling and creating huge evaporation pools, all of which can take months and years and leave destruction in their wake, the plan is to do it in a more environmentally friendly way," she said.

"To tap geothermal lithium directly, as operators hope to do in Southern California, miners typically drill thousands of feet deep into the earth, bringing the naturally existing brines to the surface. There, chemical technologies are used to separate the lithium out of a complex mineral-rich soup whose temperature can reach up to 300 degrees Celsius [572 degrees Fahrenheit]," The Wall Street Journal said in a report last week.

Several companies are vying to capitalize on this resource, backed by state and federal funds. The San Diego-based EnergySource Minerals, which operates a geothermal plant at the Salton Sea, has already signed a contract to sell lithium to Ford, The Los Angeles Times reported last week.

Meanwhile, Warren Buffett's Berkshire Hathaway Energy, which owns most of the existing geothermal power plants by the lake, has been exploring profitable techniques for lithium extraction for some time now, the newspaper said.

U.S. President Joe Biden wants EVs to account for at least half of all car sales by the end of this decade. A government-backed project to extract the lithium—a major undertaking—could help the U.S. onshore more parts of the supply chain as the country builds the next generation of batteries for EVs and other products.

A U.S.-China tit-for-tat over rare metals and the future EV market is already underway.

Last week, the U.S. Commerce Department announced new rules that could reduce consumers' incentives to purchase electric cars with components made in China. Also last week, China threatened to cut the U.S.'s access graphite—another element used in EV batteries—in a move that will likely accelerate America's search for alternatives.