General Motors has struck a deal with a mining company to source lithium, a key ingredient in electric-car batteries, from geothermal deposits in the US. The automaker is making a “multi-million dollar” investment in Australia’s Controlled Thermal Resources (CTR) to bolster the mining firm’s efforts to extract lithium from California’s Salton Sea Geothermal Field.
It’s a risky bet by GM, given that there is no full-scale lithium production in the US from geothermal wells. Most of the world’s lithium comes from two places: lithium brine deposits in South America’s “lithium triangle” of Argentina, Chile, and Bolivia; and hard-rock deposits in Australia. But its a sign that GM is trying to think holistically about the challenge of becoming an EV-only company by 2035.
CTR’s “direct extraction” process will have a “very small physical footprint” that produces very few carbon emissions, said Tim Grewe, general director electrification strategy and cell engineering at GM. Electric vehicle batteries can use lithium carbonate or lithium hydroxide, but the industry typically talks of lithium carbonate equivalent, which contains both.
“Lithium is a crucial metal to make these affordable high mileage electric vehicles in our future,” Grewe said. “We’re gonna have the first rights for the lithium produced out of this project.”
GM said a “significant amount” of the lithium it needs for its EV batteries will come from CTR’s “Hell’s Kitchen” development site in the Salton Sea Geothermal Field, located in Imperial, California. The California Energy Commission estimates the area could produce 600,000 tons of lithium carbonate annually, worth $7.2 billion.
“It’s the single largest lithium brine resource in the United States, if not on the planet… It will be a critical hub,” Rod Colwell, CEO of CTR, told Fortune earlier this month.
There won’t be an immediate payoff for GM’s investment, the size of which the company declined to disclose. The first stage of CTR’s project is not expected to yield lithium until 2024. But Grewe said GM will try to synthesize the lithium for its batteries as “quickly as it can, trying to beat [2024]” if possible.
The race to find new and environmentally friendly sources of lithium in California has been called a “white gold rush,” with companies intent on producing millions of electric vehicle batteries looking to secure a piece of the process. This rising demand has also triggered concerns about shortages, with analysts forecasting deficits in the tens of thousands of tons by 2022.
CTR isn’t the first company to try to find a cost-effective way to pull the mineral from the naturally heated waters deep beneath the Salton Sea. One recent example was Simbol Materials, a much-hyped start-up that collapsed in 2015 shortly after Tesla offered to buy the firm for $325 million. (Tesla has since said it would mine its own lithium from clay deposits in Nevada.)
“I’d say the main concerns around lithium extraction from geothermal brines are mostly economic,” said Chris Berry, president of House Mountain Partners and an analyst who focuses on energy metals supply chains. “Investors want to see proven economics before writing big checks to develop projects and battery manufacturers want to see proof of scalable production of battery grade lithium before entering into binding off-take agreements.”
But GM sees the risk worth taking. “It is very difficult,” Grewe said. “It has to cover all of our built in quality metrics that we have at General Motors.”
The automaker recently announced that it would spend $35 billion through 2025 on the development of electric and autonomous vehicles. That includes the construction of two new battery facilities in the US. GM is positioning itself to be the largest manufacturer of EVs in North America, much like it already is for gas-powered vehicles. The automaker has previously said that it hopes to only make zero-emission light-duty vehicles by 2035.
