The second question speaks to the fraught geopolitics surrounding the production of lithium and other strategic commodities (cobalt, nickel, graphite, iron, to name a few). Put simply: China dominates the market in a way that could pose problems for US industry in the (increasingly likely) event of a major breach between the world’s two largest economies. The country’s share of the lithium-ion battery market is estimated to be as high as 80 percent, with 6 of the 10 largest global EV battery producers based in China. This dominance also extends down the supply chain, with China controlling around two-thirds of global lithium processing capacity. Even lithium supply in a friendly jurisdiction such as Australia is dominated by China; for example, Tianqi Lithium owns a 51% share in the massive Greenbushes mine and Ganfeng Lithium owns a 50% share in Mount Marion.

China’s dominance in global lithium was decades in the making, but only now is it finally sinking in amid policymaking circles in Washington. The message is unequivocal: US industry lags far behind in supply and processing capacity for this (and other) strategic commodities, and catching up will require both time and billions in targeted investment. How much investment? One estimate puts the figure at $175 billion over three years for the United States to catch up to China in the field of battery production.

Enter the Thacker Pass complex, located in Humboldt County, Nevada – an approximately $1 billion open pit mine that received government approval during the final days of the Trump administration in 2021. The mine, owned by Canada’s Lithium Americas corporation, represents the largest known lithium reserve in the United States, and is estimated to be able to produce up to 80,000 tonnes per annum (tpa) over 40 years. For context, that’s roughly equivalent to the global output of lithium production in 2020. Processing facilities are also planned for the site, with a proposed extraction-to-battery-ready turnaround time of just 24 hours, thus helping to alleviate Washington’s processing gap with China.

In the wider context of US-China lithium competition, Thacker Pass would be a clear win for Washington.

But the win comes at a cost, and herein lies the political dynamic acting as a drag on lithium production in the United States and elsewhere: this supposedly green input isn’t entirely green. In addition to the burning an estimated 11,300 gallons of diesel fuel per day for its regular operations, Thacker Pass would be just as water-intensive as lithium mining operations elsewhere, requiring an estimated 5,200 acre-feet/year of groundwater extraction by Phase 2. Water quality is an issue due to the risk of chemicals tied to extraction and processing leeching into groundwater reservoirs. The lithium processing aspect of the operation would also involve other risks stemming from the use of large volumes of sulfur (an estimated 1,896 tons per day) and sulfuric acid (5,800 tons per day). However, these and other environmental issues surrounding the mine were largely glossed over by the environmental impact statement, which was atypically swift owing to a series of executive orders by the Trump administration meant to streamline the approval process.

Unsurprising given the environmental stakes, local opposition to the project has been fierce. A lawsuit was filed by a local rancher in cooperation with environmental and indigenous groups against the Bureau of Land Management (BLM), with the result of a final appeal expected any day now. Other local residents are hoping the project will go ahead based on the influx of jobs and economic activity it promises to bring. As it currently stands, Thacker Pass has received all necessary state permits and construction is expected to go forward after the legal process runs its course.

Thus, Thacker Pass and similar projects represent an environmental paradox: short-term, localized pain for long-term gain via the wider displacement of fossil fuels by green technology. Transposed onto the geopolitics of US-China competition, it’s evident how the Chinese system enjoys certain advantages in its ability to deploy state-directed investment that cuts across bureaucratic red tape, albeit to the very real detriment of local populations at times. Yet the Biden administration is attempting to forge ahead despite these constraints of the US political system; in May 2022, it enacted the 1950 Defense Production Act to classify nickel, graphite, cobalt, lithium, and manganese as minerals essential to national defense. In practical terms, the move will help direct government investment toward the extraction of these strategic commodities, particularly in funding feasibility studies and modernization programs, but it stops short of further streamlining of the approval process. The Biden administration has also made no real effort to reverse Trump administration’s eleventh-hour approval of Thacker Pass despite pressure from environmental and indigenous-rights groups that normally constitute an important part of the Democratic Party’s base.

In the likely event that it gains final approval, Thacker Pass will become just the second active lithium mine in the United States, along with Abermarle’s Silver Peak (also in Nevada). But given the fierce opposition to lithium extraction, evident not only with Thacker Pass, but also with operations as far afield as Chile and Serbia – growing the US lithium industry beyond two mines will be easier said than done.