Back to the Salt Brines?
Reprinted from Chapter 8 of Turning Oil Into Salt - Energy Independence Through Fuel Choice
On September 10th, 2008, Philip Goldberg, U.S. Ambassador in La Paz, Bolivia’s capital, got a message no ambassador wants to receive. He was declared persona non grata in his host country for his alleged “support of the opposition and encouraging the division of the country.” In the midst of a wave of riots, the country’s president, Evo Morales, an avid socialist and a protégé of Hugo Chavez, was edgy. His concern for the stability of his regime and his paranoia about U.S. meddling in his domestic affairs caused impulse to trump sound diplomatic judgment. Ambassador Goldberg was sent packing. The Bush Administration’s retaliatory response was swift and decisive: “In response to unwarranted actions and in accordance with the Vienna Convention [on diplomatic protocol], we have officially informed the government of Bolivia of our decision to declare [the Bolivian] Ambassador Gustavo Guzman persona non grata,” State Department spokesman Sean McCormack said.
Several days later, President Bush asked to punish Bolivia economically, requesting withdrawal of Bolivia’s trading concessions as part of the Andean Trade Promotion and Drug Eradication Act. (The U.S. is Bolivia’s second-largest export market after Brazil, purchasing 15 percent of Bolivia’s exports.) This out-of-the-blue, full blown, diplomatic crisis received almost no attention in the United States. Between the other big news items of that week, the collapse of Lehman Brothers and the AIG bailout, the latest headline from the presidential elections and the dramatic advance of Hurricane Ike toward Houston, Americans had little attention span even for a sacred event like the seventh anniversary of 9/11, not the least for a diplomatic squabble with a poor and relatively little known Andean country.
But what if instead of Bolivia it was Saudi Arabia that decided to sever its diplomatic ties with the United States? Of course, this would have sent shockwaves throughout every part of our society. After all, Saudi Arabia has oil, and oil underlies the global economy.
Fast-forward two or three decades from now and a crisis with a country like Bolivia could have profound implications for America’s wellbeing. Bolivia may not have oil, but it is the world’s largest reserve of lithium, a critical component of the LiIon battery. If all of our cars are to be powered by LiIon batteries, then those who own lithium would gain enormous geopolitical influence. So while Saudi Arabia is central to our energy security today, Bolivia may enjoy a similar position tomorrow.
“The green-car revolution could make lithium one of the planet’s most strategic commodities,” Forbes Magazine observed in November 2008. Which reminds us that humanity’s pursuit of strategic commodities and the various challenges associated with such dependencies will not end with the transition from oil. There will be new commodities to compete over, new players, new regions and new geopolitics. Bolivia might be the Saudi Arabia of the next oil, and this would no doubt create non-trivial challenges for U.S. foreign policy. But it doesn’t have to be the case if we begin now, as we move to address our current energy dependency, to think about the next set of challenges that the post-petroleum age has in store for us.
In search of the lightest metal
The lithium used in LiIon batteries comes in the form of a chemical compound called lithium carbonate (Li2CO3), the same stuff used to treat manic and depressive disorders. To make all those millions of LiIon batteries, we need Lithium metal. A lot of it. For some perspective on how much lithium will be needed to power the world vehicle fleet, consider this: Our Blackberries require a mere 3 grams of Li2CO3. The lithium ion battery that powers a laptop contains 30 grams. A standard hybrid car with 1.5kWh LiIon would require roughly 1 kilogram. Turn this hybrid into a PHEV with a 10kWh battery and you need 6-10 kilograms of Li2CO3 depending on the technology. In order to go 40 miles on electric power, GM’s Chevy Volt will have a 16 kWh battery which requires something in the order of 22 kilograms of lithium carbonate. Each one of the long range pure electric cars by Renault/Nissan Project Better Place is counting on will need about 30-45 kilograms, and the Tesla Roadster, the all electric sports car which can go up to 200 miles per charge will require more than 80 kilograms, more than is currently used to manufacture 2,500 laptops.
To put it slightly differently, if all the lithium carbonate used to make the 78 million laptops shipped globally in 2007 were diverted into production of Teslas, it would be sufficient to make no more than 30,000 cars. This would not have been a problem if batteries were the only end user for lithium. But they aren’t. Only 14 percent of lithium carbonate production – in 2007, 11,000 tons out of a total production of 81,000 tons – is utilized by the battery industry, mostly for power tools, cell phones and computers. The rest is used for the production of ceramics and glass, lubricating greases, pharmaceuticals and polymers, air conditioning and aluminum alloys, among other purposes. Clearly, if LiIon batteries become the batteries of choice for automotive use, the lithium requirement of the battery sector will grow in spades.
Consider this: according to the Energy Information Administration 2008 Outlook, by 2030, 38 percent of new cars will be hybrids, a projection that many find to be overly conservative. This equates to over 8,000,000 hybrids per year in the United States alone. If those hybrids are equipped with LiIon batteries, this market alone would require 8,000 tons of lithium carbonate, nearly one tenth of current global production. The lithium requirement of President Obama’s plan to deploy one million PHEVs by 2015 is equivalent to the current needs of the global battery market for portable electronics. Roughly one third of the current total world production of lithium will be needed to meet the lithium requirements of the electric vehicle program announced by the Governor of Hawaii and Project Better Place. If this looks like a tall order, take a look at Google’s plan to reduce fossil fuel consumption. Google’s plan foresees a rapid ramp up of U.S. sales of PHEVs and EVs reaching 16.5 million units per year in 2030. Seventy percent of these vehicles would be PHEVs, with the remainder being EVs. Not a word from Google though on how to obtain the 190-280,000 tons of lithium carbonate needed to make those 16.5 million batteries. And this is without even considering the projected growth of 25 percent per year in lithium requirements for the portable electronics market and the vehicle electrification needs of other major auto markets like China, Japan and Europe. Get the picture? Clearly, if we are to peg our hopes to the LiIon battery, we must begin to assess lithium availability, the existing reserve base and, most important, the ways to ramp up production – and quickly.
The good news is that there is plenty of lithium to go around. Lithium is the 28th most abundant element in nature. One of the most quoted studies into material availability for a future EV fleet was carried out by Bjorn Andersson and Inge Rade of Chalmers University of Technology in Sweden which shows that there is sufficient lithium in the Earth’s crust to power anywhere between 200 million to 1.2 billion EVs with LiIon Manganese based batteries. The world’s leading authority on lithium, veteran geologist R. Keith Evans, claims a total of 28.5 million tons of lithium, equivalent to nearly 150 million tons of lithium carbonate of which nearly 14 million tons lithium (about 74 million tons of carbonate) are at active or proposed operations.
Lithium metal can be obtained through traditional hard-rock mining of ores called pegmatites which contain the lithium bearing silicate spudomene. This traditional mining is time, energy and cost intensive. A more efficient and cost effective way to get lithium is from lithium rich brine deposits that occur in closed basins in high evaporation, arid environments. The process is quite similar to the production of salt. The brines are pumped to a series of evaporation ponds where the lithium chloride solution is allowed concentrate, soda ash is then added, and the end result is lithium carbonate that is then purified, dried and shipped. Currently, 36 percent of the world’s lithium comes from Salar (in Spanish “salt lake”) de Atacama, a lake 700 miles north of Santiago, Chile.
Other major producers are the Salar Hombre Muerto in Argentina, and a few locations in Tibet, China and Brazil. But where is Bolivia? More than 30 percent of the world’s reserve base of lithium brine is located in its Salar de Uyuni, the world’s largest salt flat. About the size of Connecticut, the Salar is located in southwest Bolivia, near the crest of the Andes. It is home to 10 billion tons of salt, and were salt still a strategic commodity, the Salar would be a name known to every third grader. Provided that the LiIon chemistry gains dominance, not too many years from now this magnificent salt desert could become as central to the world’s economy as the world’s largest oil field, Ghawar, in Saudi Arabia. This despite the fact that the quality of its lithium is inferior to that of the Salar de Atacama.
But despite its 40 percent share, today Bolivia is a non player in the world’s lithium market. In fact, its lithium production is almost zero. (Imagine Saudi Arabia and Iran, cumulatively sitting on top of 35 percent of the world’s oil reserves, not producing a drop of oil.) The Andean nation of eight million is the poorest country in Latin America – over 70 percent of Bolivians live below the poverty line – so lithium production could become a tremendous economic engine. But Bolivia is not a country known to be friendly to foreign industry. It had a long history of foreign exploitation, beginning with Spanish colonists sending home its silver and leaving the Bolivians deprived. Millions of Bolivian Indians and slaves died extracting silver and tin for the Spanish. Bolivians are concerned that, as before, the money from their lithium will end up in the pockets of the elites rather than benefiting the population at large. The Bolivian government is therefore not quick to tap into its treasure of 5.4 million tons of lithium reserves.
“We want to send a message to the industrialized countries and their companies,” said Bolivia’s minister for mining, Luis Alberto Echazu, “We will not repeat the historical experience since the fifteenth century: raw materials exported for the industrialization of the west that has left us poor.” President Morales announced: “The state doesn’t see ever losing sovereignty over the lithium. Whoever wants to invest in it should be assured that the state must have control of 60 percent of the earnings.”
U.S. relations with Bolivia are complex. Despite the strong anti-American sentiment by the current regime in La Paz, the United States still provides foreign aid to Bolivia. In 2008 alone, USAID provided Bolivia with $85 million in development grants. But tension over the country’s role as major coca grower and key ally of Venezuela’s president Hugo Chavez and his “anti-imperialist block” is likely to hinder U.S. attempts to participate in the country’s lithium industry. To change the trajectory, the Obama Administration would have to assign U.S.-Bolivia relations a special status, emphasizing the need for the country’s equitable and sustainable development and ensuring that unlike in previous historical experiences, the country’s natural resources would directly benefit the people. The good news is that even without Bolivia’s lithium, and contrary to pessimistic projections by some analysts prophesying “peak lithium,” Chile, Argentina, Australia, Russia, Zaire and China could provide ample supply for many years to come, provided sufficient investment is made. The bad news is that the United States, a holder of a non-trivial lithium reserve has very limited domestic production capacity. Two mines in North Carolina were closed, one in 1986 and one in 1998, and the only active lithium production plant remaining in the United States is a brine operation in Nevada. (The exact magnitude of the company’s production is not disclosed to the public. )
Cobalt and Rare Earth Elements
Lithium is not the only commodity that could become strategic as we move toward electric transportation. State-of-the-art cathode materials contain metals such as cobalt, manganese and nickel, while electric motors require magnets made from neodymium, a rare earth metal which is also used for electric generators, computer hard drives, lasers, lamps and wind turbines. The NiMH battery of one Toyota Prius requires approximately 1.5 kilograms of cobalt and 12 kilograms of the various rare-earth oxides. The electric motor alone requires 1-2 kilograms of neodymium. PHEVs and EVs would require a similar amount of neodymium as their electric motor is basically similar, but due to a larger battery a much higher content of cobalt, up to 5 kilograms, would be required. In 2007, global cobalt supply stood at 62,000 metric tons, most of it coming from the war-torn Democratic Republic of Congo, Zambia, Australia, Canada, Tibet, Siberia and Cuba (global reserves are estimated at 7,000,000 tons.) The United States doesn’t mine cobalt. Cobalt is generally a byproduct of nickel and copper production, so whenever trouble arises in nickel and copper mines, as in the case of the violent civil war in the Shaba region in Congo, the supply of cobalt is also affected. According to Irving Mintzer from the Potomac Energy Fund, unless cobalt content in advanced rechargeable auto batteries declines significantly and assuming demand by other end users remains unchanged, global cobalt production would have to more than triple by 2030 to meet the worldwide demand created by the deployment of 24 million standard hybrids, PHEVs and EVs.
The situation in the market for rare earth elements is even more complex than the conditions in the cobalt market. Rare earth elements are a family of metals on the periodic table, critical raw materials for hundreds of applications from consumer electronics to precision-guided weapons. Called “rare” for historic reasons, most of these elements are actually quite abundant in the earth’s crust. Production capacity is another matter. Let’s start with neodymium. In 2006, global neodymium demand was 7,300 metric tons. Depending on the demand scenario, and assuming all other end users for neodymium remain frozen, world demand under the high scenario would increase by a factor of five. Highly ambitious plans to dramatically increase wind power capacity such as the Pickens Plan – significant quantities of neodymium are required for the production of the permanent magnet generator that goes on top of one wind turbine – could translate into competition between wind turbines and electric motors for the same resource (not to mention already existing end uses such as computer hard drives and headphones used with iPods and MP3 players.)
Want more of the rechargeable NiMH batteries used in hybrid cars like the Prius and some electric bikes? Can’t make them without lanthanum. Just like the other rare earth elements, lanthanum production is complex. The ore – which is comprised of several different elements – is mined, crushed and milled, and then oxidized. There is only one country in the world today that can take the oxide and convert it to metals, and that’s China. Due to a gradual shutdown of processing operations of rare earth oxides in the United States and Japan, once pioneers in the field, today China mines and processes almost all of the world’s rare earth elements, lanthanum included. The world’s largest deposit for rare earth is the Baiyunebo deposit located in Baotou, Inner Mongolia, China.
In 1992, Chinese President Deng Xiaoping pointed out, “There is oil in the Middle East; there is rare earth in China.” In recent years, China has done a laudable job ramping up production of rare earths, but due to its growing domestic demand its ability to export the metals is falling. Millions of electric motorbikes are built and sold in China each year, and increasingly such vehicles utilize NiMH batteries rather than lead-acid types. As a result of its growing domestic needs, China exports less and less to the rest of the world. In January 2009, the Chinese Ministry of Commerce reduced the amount of rare earth elements that can be exported by 34 percent. Experts predict that the Chinese will be internally consuming many of those rare earths, if not all of them, by about 2013.
So if we are to have more NiMH battery-powered hybrid cars and electric motors, we will have to ramp up production of rare earth elements in countries other than China. Outside of China, there are substantial reserves of rare earth minerals in Australia, Russia, South Africa, Brazil and India. The United States also has considerable reserves – 14 percent of the world’s total. But as with other critical materials, we produce zero. As with lithium and other critical metals, today, we prefer to be totally dependent on foreign suppliers of those materials necessary for our energy future. (While a separate issue from the oil alternatives effort, it is worth noting that the above also applies to other technology metals and rare earth elements necessary for the green energy revolution desired by many. Want billions of those compact energy-efficient fluorescent light bulbs? Try to make them without europium, cerium, terbium and yttrium. Thin-film photovoltaic solar panels? Better check on the status of indium, gallium, selenium and tellurium.)
Addressing the material constraints
One way to stretch critical metals is through battery recycling. When batteries reach their end of life, the recovered metals can be used to produce new ones. Such closed-loop recycling system with end-of-life management guarantees the best utilization of the world’s metals. But battery recycling, particularly of LiIon, is still a nascent industry. Today, only 20 percent of total portable batteries in the world are being recycled. The figures for the U.S. are even lower. The Rechargeable Battery Recycling Corporation, (www.rbrc.org) a non-profit group formed by the rechargeable power industry and supported by companies like Bosch, Lowes, Best Buy, RadioShack and Office Depot, is playing an important role in promoting a recycling program for portable electronics. Since the metal content in car batteries is much higher than in portable electronics such programs need to be established for them. One reason is that in industrial countries like the U.S., the environmental and occupational health regulatory cost of operating battery recycling facilities is ever-increasing, and the prices offered for the recycled materials are often too low. The economics of recycling are, of course, a function of the price of the recycled metal. Typically, old batteries are shipped to developing countries where they are recycled under minimal environmental standards. This may cause a slew of severe environmental and health problems for the populations of these countries, but it enables the best economic use of technology metals.
Another way to address the materials challenge is to extend the life of the battery. Longer battery life means fewer batteries needed, less lithium, less cobalt, less mining, less pollution, less demand for foreign metals. LiIon batteries last longer if strained less. High current discharge and recharge during acceleration and braking shorten the life of the battery. The battery can be buffered from these stresses with high power density devices called ultracapacitors. Ultracapacitors store electrical charge for later use at much higher density than in batteries. Just like other advances in electric storage, they too were developed in part by Big Oil. Today's ultracapacitors originated with the work of Standard Oil of Ohio Research Center (SOHIO) in the early 1960s. Over the years, the technology advanced and was applied to fuel cell vehicles. Unlike rechargeable batteries which begin to wear after several hundred charge-discharge cycles, ultracapacitors can endure millions of cycles and as a result their lifespan is much longer. Since they don’t have the reactive chemical electrolytes found in rechargeable batteries, they do not present disposal and safety hazards. FS Trinity, a privately-owned company headquartered in Bellevue, Washington, was the first to demonstrate a drive train for a PHEV with a two-part energy storage system which combines LiIon batteries with ultracapacitors. Such a storage system gets the best of both worlds: the lightweight and high energy density of LiIon batteries and the small size and high power density of ultracapacitors. FS Trinity’s Extreme Hybrid™ vehicle achieves top speeds and rapid acceleration in electric-only mode equal to a conventional hybrid while its design allows for a smaller internal combustion engine.
But in the end, if we are serious about the electrification of transportation in addition to the above measures, we have to mine – and a lot. The electric revolution will not come through words and hype but through a systematic treatment of all the components of the car and battery supply and manufacturing chain – from mine (or brine) to wheel. Ensuring future supply of critical metals will require a joint effort by government, industry and relevant constituencies. For example, environmentalists who still lament the killing of the electric car and who promote the so-called “green economy” should realize that the road to electric cars, efficient light bulbs, and both solar and wind energy production passes through the mine and entails easing some of our mining laws and opening new areas for exploration and recovery.
To put it plainly: one cannot go green and tout energy independence while reflexively opposing any mining activity and lobbying for the designation of millions of acres where essential minerals can be found as wilderness. The real inconvenient truth is that more renewable energy entails easing some of our mining laws, reducing mining taxes, alleviating heavy-handed environmental regulations and opening new areas for exploration and recovery. No industrial nation can be totally self-sufficient, but if we are to be dependent on imported raw material for our energy future we must ensure that this dependence is carefully managed and that no single country can control the supply chain of industries critical to our existence. Like with oil, we must have stockpiles of essential materials sufficient for times of emergency, while our foreign policy establishment should begin to consider how our future energy needs might impact our foreign relations particularly since – as with oil – so many of the specialized materials are concentrated in unstable and/or potentially adversarial countries like Bolivia, Congo, Russia and China. The energy challenge we face cannot be addressed through faith-based energy policy but only through one that systematically addresses the entire supply chain of each component of our energy future, carefully identifies the bottlenecks and provides solutions to open them. Without such a comprehensive approach, our march toward energy independence could come to a grinding halt.
Gal Luft and Anne Korin are the co-founders of the Institute for the Analysis of Global Security, a Washington, D.C. think tank.
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