Lithium could give Nevada’s economy a needed jolt

By Karoun Demirjian

Friday, Feb. 4, 2011 | 2 a.m.

When President Barack Obama highlighted his investment priorities during the State of the Union speech last week, he made special mention of clean energy and electric cars.

“With more research and incentives, we can break our dependence on oil with biofuels, and become the first country to have a million electric vehicles on the road by 2015,” Obama said in his address to Congress.

Those words are expected to give a boost to companies across the country designing the next generation of road-ready battery-powered cars. But they may also open a door for Nevada’s lithium miners — the only ones in the country — to restart a domestic industry that they hope will help fuel the clean-car revolution.

“It’s one of those elements that are critical for new energy technology, and the best thing going for batteries for automobiles,” said state geologist Jon Price of UNR. “We have the only lithium-producing mine in the country today — and because we have an active mine, there’s been a lot of interest in finding similar sorts of deposits in other parts of Nevada.”

In the past few years, exploratory companies have been flocking to the Silver State to drill and dig for lithium. Reno-based Western Lithium received permits last year to dig for lithium on government land about 60 miles north of Winnemucca, and Lithium Corp., also based in Reno, has been chasing site permits across the state and drilling for mine-worthy reserves.

Lithium mining started in Nevada in the mid-1960s at Silver Peak in Esmeralda County, the country’s only lithium-producing mine today.

The industry fit nicely in a state where mining has been a way of life since before its inception. However, mining lithium can be different from mining other minerals: Harvesting it at Silver Peak doesn’t require digging for ore, but drilling for a greasy brine that is evaporated under the sun and reduced to lithium carbonate powder, which is further purified and utilized in battery production.

In the years since Silver Peak began production, Nevada’s lithium industry has been eclipsed. The current lion’s share of production is in Chile’s Atacama Desert, which holds 27 percent of the world’s reserves. And Chile could be dwarfed by new discoveries in Afghanistan and Bolivia.

That has some in the industry saying Nevada’s lithium rush is a misguided enterprise.

“There’s been quite a bit of hype in the lithium space, in general, over electric cars ... It’s worth putting money into that, because you want to try to get off gas, and the battery industry is the basic facilitation for electric vehicles,” said Edward Anderson, president and CEO of TRU Group, an energy technology consulting company.

“But the U.S. is simply not a player in terms of the production of basic lithium chemicals,” he continued. “They might claim to be able to make a profit, but that’s not the same as being competitive.”

Yet Nevada’s would-be lithium magnates say there’s no reason the United States, as the world’s largest lithium consumer, shouldn’t try to grow a domestic industry.

The Chemetall Foote Lithium Operation in Clayton Valley, as the Silver Peak site is officially known, is spending $57 million on upgrading and doubling the size of its operations. It’s being aided by a $28.4 million grant from the U.S. Energy Department under the stimulus bill.

With the price of lithium the highest it has ever been — triple 2001 prices — domestic startups also want in on the lithium rush.

Western Lithium is working with private investors to bring its project in northwestern Nevada, called King’s Valley, online by 2014. It hopes to produce about 13,000 tons a year. (The lithium at King’s Valley is slightly below the surface of the earth in hard clays.)

Dennis Bryan, senior vice president at Western Lithium, said he thinks the mine can compete with overseas operations.

“It’s just tweaking it to keep the costs down,” he said. “And we’re domestic — you don’t have to ship the material from overseas. The more products we produce at home, the more jobs we have.”

Today, most of the world’s lithium is used for making glass, ceramics, lubricating greases and pharmaceuticals — only about a quarter of it goes to lithium-ion battery production. But if batteries become the backbone of a new automobile industry — battery-based hybrid models, such as the Mercedes S-Class and the Chevy Volt, have been rolled out — demand is expected to skyrocket.

Car batteries need about 100 times as much lithium as the lithium-ion batteries that power laptop computers.

“The possibility of growth in this industry is huge,” said Tom Lewis, president of Lithium Corp., which is performing exploratory drilling in Nevada. He is most hopeful about a site to the west of Silver Peak, in an area called Fish Lake Valley, where greasy lithium-rich brine has been detected underground.

“With the infrastructure we have in place, where better to source any of your needs, other than your backyard? That would bode well for the lithium industry in the United States,” he said. “And if the price of lithium continues the rise, and the demand increases, that’s enough to make companies like ourselves more interested in exploring.”

But, some warn, safety issues associated with lithium could curb its use in vehicle batteries. Lithium’s conductivity makes it highly flammable. Though that’s not posing an immediate danger — electric vehicles are hybrids with smaller-capacity batteries — the eventual goal of going all-electric has scientists scrambling to design the next generation of lithium-ion batteries that both reduce cost and cut safety risks.

“Lithium batteries really are very good for laptops, power tools and such. But ... these companies are using very similar technology to the technology that’s used in the laptop,” Anderson said. “It’s going to take just one car fire to create a huge problem for the electric vehicle industry.”

Some of that development is happening in Nevada: Reno-based Altairnano is designing, in cooperation with auto manufacturers and the Defense Department, high-capacity lithium-based batteries that could power cars. Altairnano’s lithium-ion batteries power several electric-hybrid buses in Southern California, a partnership between the company and Colorado-based Proterra. Five to 10 minutes of charging lets the buses run for more than two hours.

“To our knowledge it’s the only commercial technology that can provide these capabilities,” said Sara Woodman, marketing director for Altairnano.

Projects like that are just scraping the surface though, as most of the battery-production market has long since moved to China and South Korea, where production costs are much lower. And China and South Korea aren’t importing Nevada’s lithium for their production lines.

But technological developments in the clean-car arena appear to be the green-energy alternatives the president’s willing to pay for.

“We need to get behind this innovation,” Obama said in his State of the Union address. “And to help pay for it, I’m asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies ... Instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s.”

If we’re ready to restart the domestic battery industry, Nevada’s would-be lithium producers say that’s reason enough to seek a domestic source of fuel — because it’s right in the ground.