Roadmap for the Transformation of the U.S. Lithium Supply Chain: Strategic Layout from Domestic Mining to Manufacturing Autonomy

Mobile phones, wireless earbuds, laptops, electric vehicles, solar energy storage - lithium-ion batteries not only power these everyday devices, but have also become a key part of America's alternative energy strategy and its process of moving away from fossil fuels.

For more than a year, the Biden administration has been pushing to strengthen America's domestic lithium-ion battery production capacity. These efforts include financial and resource support for domestic lithium mining and end-to-end supply chains, including the processing and manufacturing of electric vehicle batteries.

The goal is to reduce America's dependence on foreign lithium supplies and enhance national energy self-sufficiency. But to achieve this, the U.S. needs to significantly expand its domestic lithium battery manufacturing base.

The National Blueprint for Lithium Batteries 2021-2030, developed by the Federal Consortium for Advanced Batteries (FCAB), outlines plans to increase U.S. investment in the lithium supply chain from mining to processing and production. The blueprint focuses on improving processing capabilities, procurement systems, and workforce development within the industry, clarifying the Biden administration's path to a more sustainable energy future and the supply and operational support needed to achieve that goal. However, given the U.S.'s currently limited access to global lithium resources, this will be an uphill battle.

Domestic lithium mining is a 'huge undertaking'

According to data from the U.S. Geological Survey, the only current lithium producer in the U.S. is located in Nevada, and its proven lithium reserves account for about 3.6% of the global total. Global lithium production is dominated by China; consulting firm Wood Mackenzie estimates that China accounts for nearly 75% of global lithium-ion battery manufacturing capacity and holds a significant portion of lithium reserves. Other major lithium reserves are distributed in Australia, Chile, and Argentina.

The dominance of overseas players in this industry means that most of the lithium the U.S. currently needs must be sourced from abroad.

As other countries also shift to alternative energy to address the climate crisis, global demand for lithium-ion batteries is growing. David Howell, acting director of the U.S. Department of Energy's Office of Manufacturing and Energy Supply Chains and FCAB chair, said that as demand rises, the market is expected to reach a scale of $100 billion in the coming decades.

According to the International Energy Agency, this demand largely comes from the booming global electric vehicle market, whose sales reached record highs last year and are expected to hit new highs again in 2022. The Biden administration set a goal last year that half of all new vehicles sold in the U.S. should be zero-emission vehicles by 2030.

The government has also introduced consumer economic incentives for automakers that source critical minerals in North America. But domestic supply is far from meeting demand.

"Where is the supply? We don't produce electrode materials," said Venkat Srinivasan, director of the Argonne Collaborative Center for Energy Storage Science at Argonne National Laboratory and deputy director of its Joint Center for Energy Storage Research. "We don't produce the materials needed for other parts of the battery. We don't process minerals. We don't even mine them."

While trying to source raw materials like lithium domestically is a good idea, it's a huge undertaking, said Charlie Welch, founder and CEO of battery developer ZapBatt. Starting new mining operations is costly and politically risky.

"Even if we flip the switch and say the U.S. is going to do this overnight," he said, there are still many obstacles including costs and environmental challenges. "Extracting specific substances from the ground is not easy."

Nevertheless, automakers still face pressure to manufacture domestically. The Biden administration offers a $7,500 tax credit for electric vehicles, provided the battery is primarily made from materials extracted or processed in the U.S.

"Every automaker is talking about their fleet being largely electrified by 2030," Srinivasan said.

To accelerate domestic production, the president has announced a series of investments to strengthen manufacturing. The government allocated $2.8 billion last week to boost the production of electric vehicle components, such as lithium materials.

Data at a glance: Overview of electric vehicle and critical mineral funding in the Bipartisan Infrastructure Law

• $7 billion:Amount allocated to improve the national battery supply chain.
• $320 million:Funding for critical mineral mapping.
• $140 million:Funding for the first U.S. refinery for extraction and separation of rare earth elements and critical minerals.

To advance more such programs and investments, the government has also created Li-Bridge, a public-private partnership operated by Srinivasan and Argonne National Laboratory, aimed at helping achieve the goals set in the blueprint. With Li-Bridge, "the goal is to bridge the gap between battery supply and growing demand," he said.

Li-Bridge aims to bring together industry stakeholders to collaboratively build the lithium supply chain. Srinivasan said the organization has been working to align the federal government's vision with private sector actions to understand industry bottlenecks and what measures must be taken to achieve federal goals.

Building a new supply chain requires innovation-driven approaches

Nevertheless, to address capacity issues, innovative breakthroughs are essential. For example, some researchers have already produced batteries that use fewer critical minerals, including not only lithium but also cobalt and nickel.

"There are innovative chemistries that don't use cobalt and don't use nickel," Howell said. "Some of these are already on the market. Lithium iron phosphate batteries use lithium but contain no cobalt or nickel."

Srinivasan said research on new designs must proceed in parallel with scaling up existing production to ensure continuous improvement. "We have to think about all parts simultaneously," he noted.

"Where is the supply? We don't produce electrode materials. We don't produce the materials needed for other parts of the battery. We don't process minerals. We don't even mine them."
— Venkat Srinivasan, Director, Argonne Collaborative Center for Energy Storage Science, Argonne National Laboratory

Recycling has also emerged as a potential solution to meet demand. Howell said Biden's blueprint also includes plans to develop stronger recycling capabilities to capture more useful battery minerals.

The goal in the blueprint is to create incentives for companies to achieve a 90% recycling rate for consumer electronics, electric vehicle, and grid storage batteries by 2030.

Nevertheless, since the supply of recycled materials is expected to fall short of demand, other companies are researching alternative formulations for their batteries.

"People often race to invent entirely new batteries, a miracle battery," Welch said.

Welch's ZapBatt uses lithium titanate technology to produce batteries that charge faster and last longer. He said these batteries, originally developed for military use, can be fully charged in less than 20 minutes and can withstand 15,000 charge cycles.

Can the U.S. succeed?

In the view of many industry observers, the U.S. government's multi-pronged approach to building a sophisticated lithium supply chain is a good start, but many challenges remain. Srinivasan is reassured by the number of small companies with hundreds of millions of dollars in battery manufacturing capacity, and by automakers building new battery plants in the U.S. He sees recycling companies receiving funding to begin collecting and recycling cells and batteries.

"Five years ago, I used to worry about this, thinking it was just a bunch of R&D," Srinivasan said. "(I thought) 'How are we actually going to make an impact in the real world?'"

Nevertheless, while recycling and the circular economy are important, they are "not a silver bullet," Welch said. "We can barely recycle Tupperware containers right now."

He said more effort should be put into ensuring batteries have long lifespans in the first place. Given the significant energy invested in mining and obtaining scarce minerals, emphasizing longer battery life would encourage producers to efficiently use available materials and move away from a "fast fashion battery economy."

But as companies of all sizes race to find solutions, more and more stakeholders are cautiously optimistic that mineral production can scale sustainably.

"I'm very excited. I'm more hopeful," Srinivasan said. "I've never seen a time like this."