Paul Gosar, a U.S. congressman from Arizona, said the U.S. is sitting on millions of tons of lithium supply but is not using domestic production to mine. Gosar claimed the U.S. is relying on China's production of lithium, which, according to reports, is undergoing an environmental probe that could threaten the rest of the world's supply of the rare mineral.
Gosar told Interior Newswire:
"Communist China’s latest market manipulation tactics highlight what we have known for a long time about the growing need for domestically mined lithium: The United States cannot afford to rest on the sidelines any longer,” Gosar said. “America is sitting on millions of tons of lithium resources within our own borders. Rather than relying on China to secure minerals, including lithium, America should be competing on the world stage by prioritizing domestic lithium production. This begins with improving the timeliness of the permitting process that has been stymied by Joe Biden and climate radicals."
According to Time, China's lithium industry is in turmoil as its top production hub, responsible for around 10% of the world's supply, faces sweeping closures due to a government probe of environmental infringements. The crackdown in Yichun, Jiangxi province, follows a local lithium frenzy over the past year as miners raced to feed rampant demand for the battery material and benefit from record global prices. Ore-processing operations in Yichun have been ordered to stop as investigators probe alleged violations at lithium mines. Companies with operations in Yichun include major battery manufacturers Contemporary Amperex Technology Co. and Gotion High-Tech Co.
"This supervision may mean that the inspection and control over lepidolite mining in China will be more stringent in the future," said Susan Zou, an analyst at Rystad Energy.
All lepidolite mining in Yichun, aside from those by a state-owned company, has been suspended, but refineries are still operational, according to analysts at Daiwa Capital Markets. Beijing officials will mainly look at violations at lithium mines and seek to guide the "healthy development" of the industry, according to the Yicai report. It will largely target those mining without permits or with expired licenses.
Time reported, according to Goldman Sachs Group Inc., the Chinese car industry's demand for lithium has fallen by more than half in recent months, a dramatic reversal that will drive a further slump in the market. Prices in China have dropped more than 30% from last year's peak. Analysts said the shutdown of the lithium production hub in China may do little to help prices of the metal rebound from a recent decline, at least in the near term.
"Any mine would typically have a stockpile of ore in place, so as long as the refineries are operating, you aren't likely to see any whipsaw in lithium pricing," said Chris Berry, president of House Mountain Partners, an industry consultancy.
Although the Biden administration has tried to increase domestic production of lithium and other critical materials in support of a transition to green energy and to decrease reliance on materials from China and Russia, many mining projects in the U.S. face challenges related to environmental regulations, Greenwire reported. Very few mines proposed on federal lands have been approved by the administration.
“The actions we have seen from the administration have really been contrary to providing that domestic mineral production,” said Mark Compton, executive chairman for the American Exploration and Mining Association. “Right now, permitting is still creating an unfavorable environment for attracting mining investment in the United States.” China dominates the global supply chain for lithium, as well as other metals including cobalt, nickel and graphite.
In 2021, the U.S. imported $160 million worth of rare earth minerals, an increase from $109 million in 2020, according to a report from the U.S. Geological Survey. Of the imported minerals, 78% came from China.
The House Committee on Natural Resources also held a hearing in early February titled "Unleashing America’s Energy and Mineral Potential." The hearing memo states that China "unquestionably" dominates the global supply chains of minerals, both in terms of raw materials and refined products. New mining projects in the U.S. typically take hundreds of millions of dollars in upfront capital costs and require as long as 10 years to get through the permitting process, according to the memo. The refining process for the minerals once they have been mined is also lengthy and expensive. The Biden administration has stymied some domestic mining projects, including the January 2022 cancellation of two 20-year-old leases in the Superior National Forest in Minnesota, and at the same time beginning the withdrawal process for 225,378 acres of mineral-rich land, which was finalized last month.
"These actions specifically targeted a prospective copper-nickel-cobalt mine in the region, despite years of environmental review, a pending Mine Plan of Operations at the Bureau of Land Management and a myriad of comments and letters from Members of Congress, mineral developers, local residents, union workers and many other parties stating their support for the project," the memo said.
