China produced nearly half of the world’s electric vehicles and around 80 percent of its lithium-ion batteries over the past decade. However, with tensions rising between China and the U.S., the Biden administration has encouraged domestic manufacturers to look inward for lithium-ion batteries and other essential EV components with billions of dollars in incentives.
In this article, we’ll look at the administration’s moves to encourage domestic manufacturing and how it might ultimately benefit domestic lithium producers, such as Rockland Resources Ltd. (CSE: RKL).
Bipartisan Law Diverts Billions to Li Batteries
The Bipartisan Infrastructure Law, CHIPS & Science Act, and Inflation Reduction Act combined will invest more than $135 billion to build America’s electric vehicle future, including critical mineral sourcing and processing and battery manufacturing. For example, the IRA alone offers EV tax credits to companies using domestic minerals and battery components.
In October 2022, the Biden administration awarded an initial $2.8 billion in grants to boost U.S. production of EV batteries and the minerals used to build them. These grants reached projects across at least 12 states, making the first significant push toward reducing the country’s dependence on China and other nations for EV batteries.
By 2030, the administration wants half of all new vehicles sold in the U.S. to be electric or plug-in hybrid electric models, along with 500,000 new EV charging stations. In combination with the domestic production requirements, these moves could significantly increase demand for EV batteries and materials from U.S.-based operations.
Lithium Demand Skyrockets Amid the EV Rise
Lithium stands at the core of the EV revolution. A Tesla battery pack contains roughly five kilograms of lithium, while other EVs have upwards of eight kilograms of the substance. While the cost of lithium-ion cells has fallen more than 97% since 1991, the significant increase in demand for EVs over the coming years has sent prices soaring in recent years.
Lithium prices soared in 2022 while demand is projected to exceed supply through 2040. Source: Lithium Americas Corp.
Global lithium supply remains relatively stable and healthy, but the Biden administration’s incentives to source local minerals could translate to higher domestic demand. In particular, American automakers, like General Motors, Tesla, and Ford, may need hundreds of thousands of tons of lithium to meet growing demand and tax credits may depend on local sourcing.
Investing in Domestic Lithium in Nevada & Beyond
Nevada is home to the most large-scale lithium deposits hosted in sediments, like soft clay (stone). For example, Albemarle Corp. (ALB) is the largest producer of lithium from brine in Nevada’s Clayton Valley. However, the company trades with a $26 billion market capitalization and 16x P/E ratio – it’s not exactly a hidden opportunity.
Investors may want to look east of Nevada’s borders to Utah, where Rockland Resources Ltd. (CSE: RKL) is positioning itself as a leading lithium-clay exploration company. The company holds district-scale land package consisting of about 16,219 hectares of properties prospective for lithium-clay and brine deposits (along with a sizable piece of land in Mexico).
Rockland Resources’ land package contains multiple prospective claims across Utah. Source: Company
Lithium-clay mines are highly economical and competitive with brine operations in South America – and they could have a smaller carbon footprint and environmental impact. With on-site sulfur plants, these mines could become energy independent, or even net-sellers of energy, with minimal water usage for lithium extraction.
Looking Ahead
Investors wishing to capitalize on the Biden administration’s efforts to promote domestic EV battery manufacturing and mineral development may want to consider Rockland Resources Ltd. (CSE: RKL), given its low-profile and significant domestic land package. As auto manufacturers look to lock in supply, these claims could soon become valuable.
For more information, visit the company’s website or complete the form below to download the investor presentation.
