U.S. Approves Major New Lithium Mine in Nevada Amid Effort to Reduce Dependence on China
The United States has approved the construction of a significant new lithium mine in Nevada and extended tax incentives to mining companies as part of a broader strategy to break China’s grip on critical mineral supply chains. Australian producer Ioneer announced on Thursday that it received federal permission for its Rhyolite Ridge lithium-boron mine, a project set to produce enough lithium to power approximately 370,000 electric vehicles per year. Lithium, a silvery-white metal, is a crucial component in rechargeable batteries and plays an essential role in the future of the electric vehicle (EV) industry.
Rhyolite Ridge is the first lithium mine approved by the Biden administration, which has also offered Ioneer a $700 million loan to help develop the project, which is expected to quadruple U.S. lithium production by 2028. Since 2002, only three U.S. mines for critical minerals have come online, none of which are on public land.
Western mining companies have historically struggled to compete with Chinese rivals in the production and refining of critical minerals due to higher costs, stricter regulatory standards, and delays from legal challenges. Lithium mining and processing have a significant environmental impact, consuming large amounts of water and energy, while also involving the use of toxic chemicals like sulfuric acid.
The Rhyolite Ridge project has faced opposition from conservation groups warning that the mine could drive an endangered species of flower, the Thiem's buckwheat, to extinction. U.S. regulators said they worked with Ioneer to modify the project and develop a protection plan for the flower, enabling approval after a six-year review.
Bernard Rowe, managing director of Ioneer, emphasized that the Nevada mine will help reduce U.S. dependence on Chinese lithium refining, which currently accounts for more than two-thirds of global refining capacity. “We have one of the largest lithium and boron deposits in the world… it's basically ready to build,” Rowe said.
To accelerate domestic mining and processing, Washington issued new guidance on Thursday allowing producers to claim tax credits on the costs of mining and extracting critical minerals, provided that some of the materials are processed domestically. This measure aims to incentivize the creation of a domestic lithium mining and refining industry to support the EV sector.
The U.S. Geological Survey recently reported that there are between 5 million and 19 million tons of lithium reserves beneath southwest Arkansas, an amount that could meet nine times the projected global demand for lithium for car batteries by 2030. Despite this abundance, most of the world’s lithium is currently mined in Australia or from large saltwater lakes in South America, with the majority of processing occurring in China.
Currently, only one lithium mine is operational in the U.S.—Albemarle's Silver Peak mine in Nevada, which produces about 5,000 tons of lithium annually. Preparations are also underway for another mine, the Thacker Pass project, also in Nevada, operated by Lithium Americas and backed by General Motors. This project was approved during the Trump administration in January 2021, and the Biden administration has announced a $2.3 billion loan to support its development.
Ioneer is set to face competition from several other lithium producers aiming to capitalize on incentives from the Inflation Reduction Act (IRA). Oil companies like ExxonMobil and Occidental have also begun pursuing lithium pilot projects in Arkansas and California, respectively. Ioneer estimates that the Rhyolite Ridge project will cost over $1.2 billion to complete. In 2021, the company signed an agreement with South Africa's Sibanye-Stillwater to sell a 50% stake in the project for $490 million, pending regulatory approvals. Additionally, Ioneer has agreements to supply lithium to Ford and a joint venture between Toyota and Panasonic.
