U.S. Forges First Link Of Lithium Supply Chain In West Africa

Last year, the US federal government started talking about building supply chains for the energy transition. Many saw this as a better late than never moment after China had essentially cornered every transition-related market. Others saw it as an opportunity.

The Ewoyaa lithium project in Ghana is an example of how a company seized that opportunity. The West African country’s first lithium mine is expected to become one of the first links in the emerging U.S. transition supply chain when it begins production.

“Our investment in Ewoyaa will help alleviate potential future U.S. supply constraints and provide critical resources to help reduce U.S. dependence on foreign nations, such as China,” said the CEO of one of the companies involved. told Bloomberg recently.

Piedmont Lithium is one supplier for Tesla and LG Chem, and the company is currently preparing to break ground on a lithium refinery in Tennessee, with construction set to begin in 2024 and first production expected in 2026, the company said. The refinery’s annual capacity will be 30,000 tons of lithium hydroxide, which would triple the current lithium refining capacity of the United States.

Piedmont Lithium is also the second-largest shareholder of Australia-based Atlantic Lithium, which is leading the Ghana project. Both companies will benefit from subsidies provided by the Biden administration under the Inflation Reduction Act.

“What the IRA does for me is it gives me the assurance that 50% of my offtake goes to a hydroxide plant dedicated to incentivized battery conversion,” the CEO of Atlantic Lithium told Bloomberg, which published an article this week on the Ewoyaa published. project.

Meanwhile, China is home to more than 50% of the world’s lithium refining capacity. Also earlier this year cut the ribbon about a new lithium refinery in Zimbabwe, which is home to some of the most abundant lithium reserves and is the leader in reserves in Africa.

The new plant will have an annual capacity of 450,000 tons of lithium concentrate, which will be further refined in China. The reason China built the plant in Zimbabwe was because the southern African country had passed a law banning the export of raw lithium ore, in an effort to keep more of the supply chain at home.

This is a step that Indonesia also took about a decade ago, when it essentially ordered the country’s active nickel miners to build processing facilities there instead of exporting the ore to their home country or elsewhere to get a greater share of keep the activities at home.

Ghana does not appear to have such legislation, but may decide at some point that this is a good idea: resource nationalism is a growing trend in developing countries as demand for resources, especially mining, increases thanks to the transition.

For now, though, the project is potentially a win for America’s EV ambitions. Given the latest developments in electric vehicle sales and production plans, these ambitions appear doubtful.

The CEOs of some of the world’s largest automakers, including GM, Mercedes-Benz and Ford, are taking a step back from electric cars and cutting production targets as sales prove weaker than expected.

In a recent article, Business Insider summarized the change in sentiment demonstrated this earnings season by the CEOs of major automakers, quoting GM’s Mary Barra: “As we get further into the transformation to EV, things are going to get a little bumpy.”

The report also quoted the head of Mercedes-Benz, who was a lot more blunt: This is a pretty brutal situation,” Harald Wilhelm said during his earnings call with analysts. “I can hardly imagine that the current status quo is completely sustainable for everyone. “

A new lithium mine not controlled by Chinese companies certainly sounds like a good idea from an American perspective, especially with a 50% offtake assured by the IRA. It’s just a shame that no amount of legislation can ensure the demand for electric vehicles that will use lithium.