Lithium Scarcity Pushes Carmakers Into the Mining Business

“There’s a bit of desperation,,” said Amanda Hall, chief executive of Summit Nanotech, a Canadian start-up working on technology to hasten extraction of lithium from saline groundwater. Auto executives, she said, are “trying to get ahead of the problem.”

Yet, in their hurry, car companies are making deals with small mines that may not live up to expectations. “There are a lot of examples of problems that come up,” said Shay Natarajan, a partner at Mobility Impact Partners, a private equity fund focused on investing in sustainable transportation. Lithium prices could eventually collapse from overproduction, she said.

The miners appear to be the big winners. Their deals with the car companies typically assure them fat profits and make it easier for them to borrow money or sell shares.

Rio Tinto, one of the world’s largest mining companies, recently reached a preliminary agreement to supply lithium to Ford from a mine it was developing in Argentina.

Ford was one of several car companies that expressed interest, said Marnie Finlayson, managing director of Rio Tinto’s battery minerals business. Rio Tinto takes car company representatives through a checklist, she said, that covers mining methods, relations with local communities and environmental impact “to get everyone comfortable.”

“Because if we can’t do that, then the supply is not going to be unlocked, and we’re not going to solve this global challenge together,” Ms. Finlayson said, referring to climate change.

Until a few years ago, the price of lithium was so low mining it was hardly profitable. But now with the growing popularity of electric vehicles, there are dozens of proposed mines. Most are in early development stages and will take years to begin production.

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