What's Our Lithium Doing Under Their Land?

Yesterday Tesla Motors officially christened its new production plant in San Jose, California, taking over the old GM/Toyota NUMMI plant that was laid idle last year. Could this mark a shift in the American automotive industry westwards? Time will tell. But if electric vehicles take off then another shift will also happen: heretofore relatively poor companies will receive a bonanza from mining to extract the vital lithium for lithium-ion batteries that are powering laptops, cell phones -- and Teslas and all other upcoming EVs.

A few years ago, one of our EV gurus at frog, Eric Burns, wrote an article for design mind about the distribution of lithium around the world. It was only ever published in a print version of design mind, so with his permission I'm providing it here digitally. It really highlights how lithium deposits are highly localized, and countries in South America will make out very well in this 21st century, er, gold rush. Bolivia, for example, is about 2.5 times the size of California and may have as much as half of the entire planet's lithium supply. The old joke goes, "What's our oil doing under their land?" which we can now update for the lithium age.

What's more, the Middle Eastern countries that have become so rich and powerful with oil have virtually zero lithium. The US and Canada are also fairly lithium-poor. And as always seems to happen, the companies that have the least are also the biggest consumers. China is a major manufacturer of batteries using lithium, but its own lithium supplies are largely in the politically sensitive area of Tibet. So a shift in wealth and power is highly likely in the next few decades.

Electric vehicles will create huge new demand for lithium. But as Eric writes, "Paradoxically, the drive for lithium and its green energy end-use in hybrid car batteries is leaving a mark on pristine parts of the world. The best lithium-bearing brines are found near volcanic belts, in geologically enclosed depressions found in desert regions. Large evaporation ponds are used at the sites to concentrate the lithium before trucking it to a processing plant, and processing 1 ton of lithium requires 3 tons of brine and 1.8 tons of soda ash. The demand for lithium is pushing countries to open up designated parklands and ancient lakes for development."

Battery technology is moving quickly, however, and an unforeseen advance that relies on other ores and rare-earth metals could well appear. That doesn't necessarily solve the geopolitical problem, however. China has large stores of other rare earth metals, and today controls about 97% of the world's supply, creating fears that it will have massive control over the pipeline and price of not just the raw materials but all products those materials go into. In other words, just about every electronics product made.

Here's a PDF of Eric's original article, with a lot more information and a very nice graphic representation of lithium distribution and usage around the world.

AVP of Marketing Strategy Adam Richardson is the author of Innovation X: Why a Company’s Toughest Problems are its Greatest Advantage. His book is the manual for leaders looking for clarity about the emerging challenges facing their businesses. You can follow Adam on Twitter @richardsona.