Major Lithium Discoveries in California Ignite Calls for U.S. Investment in Domestic Production

The US Department of Energy has officially confirmed the discovery of a 3,400-kiloton reserve of lithium in California’s Salton Sea on November 28, 2023. This remarkable find positions California as home to one of the largest exploitable lithium deposits globally.

The discovery follows an earlier find by American volcanologists and geologists in Nevada’s McDermitt Caldera volcano, potentially yielding between 20,000 and 40,000 kilotons of lithium.

Despite the magnitude of these discoveries, there has been a notable absence of efforts to develop the necessary technology, capacity, and infrastructure for their exploitation. Critics argue that these untapped resources should serve as a wake-up call for American investors and lawmakers to redirect their focus towards exploiting domestic lithium reserves, reducing reliance on foreign partners.

Currently, the United States heavily depends on foreign countries for lithium extraction, manufacturing, and production, with South America’s Lithium Triangle—comprising Bolivia, Chile, and Argentina—being a major source. However, challenges such as economic instability and bureaucratic dysfunction in Argentina, coupled with technological limitations and geopolitical complexities in Bolivia, have hindered these nations’ lithium sectors.

Heather Exner-Pirot, director of the Energy, Natural Resources, and Environment Program at the Macdonald-Laurier Institute, emphasized the volatility of Latin American production, stating, “For Latin American producers, the booms and busts of the mining sector will continue to challenge economies and budgets, even as we enter a commodity upswing.”

The push for domestic lithium production aligns with a broader political momentum to reduce reliance on foreign sources, particularly China, which currently possesses over half of the world’s lithium refining capacity. Both Democratic and Republican leaders, including Presidents Joe Biden and Donald Trump, have advocated for bolstering critical mineral supply chains within the United States.

To capitalize on these discoveries, experts suggest utilizing the Inflation Reduction Act (IRA) passed in August 2022. Section 45c(6) of the IRA provides the U.S. with the ability to invest public funds into lithium projects, offering a strategic avenue for supporting the exploitation of the newly identified lithium reserves and developing essential technology and infrastructure.

Exner-Pirot sees these discoveries as “good news for the United States’ energy transition and security goals,” emphasizing the need for the U.S. to compete effectively in the global market. The strategic use of the IRA could not only secure a stable lithium and battery supply for the U.S. but also create new opportunities for American battery manufacturers worldwide.

Beyond energy security, proponents argue that the American lithium project could rejuvenate declining manufacturing sectors within the country, providing thousands of clean, well-paying middle-class jobs. By embracing this opportunity, the U.S. government has the potential to reduce economic and energy dependence on foreign states while simultaneously promoting clean mining practices, fostering economic growth, and stimulating domestic innovation.

Advocates argue that seizing this opportunity will not only reduce economic and energy dependence on foreign states but also create thousands of clean, well-paying middle-class jobs. Failure to do so, they warn, would exacerbate America’s reliance on foreign sources, making the nation vulnerable to economic and energy manipulation by other countries.

Information for this story was found via The National Interest and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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