Categories:
Energy
/
General Market Commentary
Topics:
General Energy
/
General Market Commentary
The Great Nevada Lithium Rush to Fuel the New Economy
The race is on to get the mineral out of Clayton Valley and into your iPhones, Bolts, and Powerwalls.
John Rud has been riding the peaks and valleys of the commodities markets around North America since he left the University of Oregon 55 years ago with a master’s degree in geology. “The valleys are real broad, and the peaks are real narrow,” he likes to say. Copper in Canada. Silver in Texas. Gold in Mexico. Iron in Arizona. Uranium in Utah. In one 18-year stretch, Rud and his wife moved 27 times. “I got to where I could load up a house in a U-Haul truck starting at 4 p.m., be done by midnight, and be on the next job by morning,” he says. “I considered that quite a talent.” (His wife was rather less impressed and eventually left him.)
Rud—pronounced like the adjective—typically shows up in an area with abundant stores of a natural element that looks set for a price spike, puts his geology skills to work finding a lode, files a claim under the General Mining Act of 1872, and waits for the phone to ring. Once it does, the company he co-owns, GeoXplor Corp., leases its claim to the would-be owner and offers its extraction services. “We’re glorified prospectors,” Rud says of himself and his business partner, Clive Ashworth. “Some days, not so glorified.”
On a cold, gray January morning, Rud sits in his white Dodge Ram pickup with his pet Chihuahua mix, B.J., outside the Dinky Diner in Goldfield, Nev. He’s on the phone with a drilling-rig operator he hired to dig a well in nearby Clayton Valley. They’re trying to get at a mineral-rich brine solution stuck between layers of a porous aquifer created by the explosion of volcanoes in the vicinity about 5 million years ago. “We need some gravel on this road; can you talk to the county about that?” the driller asks. “Yeah, I’ll get on ’em,” Rud replies.
The rumblings of underground activity are again being felt on the outskirts of Goldfield, the epicenter of an early 20th century mining boom that for a while made it Nevada’s largest city. This time the rush isn’t for gold or silver or the other traditional minerals that have historically helped fuel the state’s economy, but for a metal crucial to what bankers, regulators, and clean-energy advocates see as the imminent transformation of the transportation sector and the electric grid: lithium.
The lightest metal on the periodic table of the elements and a superb conductor, it’s what gives the lithium ion batteries in our cell phones, laptops, newer Priuses, and Teslas the ability to recharge more times, last longer, and provide more energy per weight or volume than other battery chemistries. And it’s cost-effective: The lithium in a Tesla costs around $500, less than a roof rack. It’s also what makes devices explode if their battery-management systems aren’t working properly, as seems to be the case in many so-called hoverboards, or there’s a manufacturer defect, as with Samsung’s Galaxy Note 7.
Rud came to this remote region, three hours northwest of Las Vegas, eight years ago. “In my business, you follow the minerals that come in flavor, you might say,” he explains, his voice sounding as if the county dumped that gravel down his throat. “We were into a uranium exploration because uranium prices were up. When uranium prices dropped, I started looking around at what’s going to be hot next. And I thought the batteries for electric cars were just beginning to be nosed around with. We decided on lithium, and where do you find lithium? Well, Clayton Valley was the only place in North America.”
At least six startups have recently placed or leased claims in the area. They join North Carolina-based Albemarle Corp., whose recently acquired Silver Peak mine and processing operation has been unearthing lithium from Clayton Valley’s brines since the mid-1960s, for use in glass, ceramics, greases, medical applications, and consumer electronics. Each newcomer is hoping to become the pure-play lithium company that blows up to fill a projected supply shortage.
Banks and consultants such as Deutsche Bank and Macquarie Research are near-unanimous in the belief that the next several years will see an increase of 60 percent to 250 percent in demand for lithium—and that it will sell for 50 percent or more above historical levels. The rise in demand will be driven by batteries for electric vehicles and energy storage for wind and solar plants. UBS Group estimates that electric cars will account for 9.2 percent of global light vehicle sales by 2025, up from only 1 percent today, while analysts at Goldman Sachs Group Inc. have suggested that the market for lithium in energy storage could eventually be bigger than in all other products combined.