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US President Donald Trump signed two executive orders on trade policies yesterday that represent a significant escalation in the “America First” trade war agenda of his administration.
The first order commissions a report, to be released in 90 days, on a country by country, product by product, investigation into trade practices that contribute to the $500 billion US trade deficit with the rest of the world. The second calls for an investigation into the better collection of antidumping and countervailing duties imposed on imports by the US.
The signing of the orders comes as Trump prepares for a meeting with Chinese president Xi Jinping next week. China accounts for $347 billion of the US deficit.
On Thursday Trump tweeted that the meeting with China would be “a very difficult one in that we can no longer have massive trade deficits.”
A large part of those deficits is the result of US companies that have established operations in China and then import the finished products into the US. Trump said these firms had to “be prepared to look for other alternatives.”
Trump has repeatedly pointed to the Chinese trade surplus as the reason for its growth, contrasting it with the declining position of the US. But in fact China trade is roughly in balance, as the surplus with the US is offset by its deficit with other countries.
The Chinese vice-foreign minister Zheng Zeguang said the surplus with the US was the result of the global distribution of industries and the division of labour. He said that if the US relaxed its control on high-tech exports to China and facilitated Chinese investment in the US it would be “helpful” in addressing the trade imbalance between the two countries.
Peter Navarro, director of the White House’s National Trade Council, said the orders were an “historic moment.” They were not just a “China story,” he said, claiming they were directed at “trade abuses” and the under-collection of duties.
Drawing out their implications, commerce secretary Wilbur Ross said the measures were “designed to let the world know that this is another step in the president fulfilling his campaign promise” to tackle trade abuses.
Speaking to the American business channel CNBC, he countered criticisms that the US was initiating a trade war.
“We are [already] in a trade war,” he said. “We have been for decades. The only difference is that our troops are finally coming to the rampart. We didn’t end up with a trade deficit accidentally.”
Making clear that the rest of the world, not just China, is the target, he continued: “Our trade deficit overall is about $500 billion a year. Quite miraculously, that equals the net trade surplus with the rest of the world.”
Announcing the orders, Trump said “thousands of factories have been stolen from our country” and the “theft of American prosperity” would end.
Speaking from the Oval Office, Ross said the measures marked “the beginning of a totally new chapter in the American trade relationship with our partners overseas.”
After Trump’s election on an “America First” agenda, there was speculation that the trade war rhetoric that marked his campaign, signalling a return to the kind of measures that proved so disastrous in the 1930s, would be toned down somewhat once he took office.
Ross took the opportunity to dispel such illusions.
“If anyone had any doubts about the president’s resolve to fix the trade problems, these two executive orders should end that speculation now and for all time,” he said. The report on the trade deficits would “form the basis” for further action by the administration.
The latest measures are in line with a document presented to Congress earlier this month in which the Trump administration outlined its trade agenda. It invoked a series of American laws that could be used to undermine or bypass what it considers to be adverse trade relations and rulings from the World Trade Organisation.
Among the measures cited was the Tariff Act of 1930, more commonly known as the Smoot-Hawley Act, which is regarded as having played a significant role in contributing to the trade war measures of the Great Depression that played a significant part in creating the conditions for World War II.
Ross’s remarks about getting “troops” to the rampart, made in the context of the escalation of militarism under the Trump administration, are not simply a rhetorical flourish but recall this history.
The administration may not even wait for the reports to be brought down in three months’ time before initiating action, and already measures are under way.
Yesterday Sigmar Gabriel, the German foreign minister, warned that the Trump administration was taking a “dangerous step” after the Commerce Department had announced a tariff on imports of steel. Besides China, Germany has been a major target with Navarro and others in the administration, who claim it has benefited in export markets because the euro is undervalued relative to the former currency, the Deutschmark.
Gabriel accused the administration of abandoning international principles of free trade.
“The US government is apparently prepared to provide American companies with unfair competitive advantage and other producers, even if such action violates international trade law,” he said, calling on the Europe Union to formally complain about the measures to the World Trade Organisation.
Under the order, following an investigation into the pricing of steel plate from Germany and a number of other countries, the administration will be able to collect tariffs before a final determination in May.
While amounts are not large relative to the overall trade deficit—Germany and France exported respectively $196 million and $179 million worth of steel plate to the US in 2015—the decision is expressive of a wider agenda.
Gary Hufbauer of the Peterson Institute for International Economics told the Washington Post that the forceful German response indicated that the Trump administration is “pushing the envelope.”
Last month, the G20 meeting of finance ministers removed from its communiqué a phrase committing members of the organisation to “resist” all forms of protectionism, at the insistence of US treasury secretary Steven Mnuchin.
The hope was expressed that by the time of the summit of leaders to be held in Hamburg in July, the Trump administration would soften its position. The latest measures indicate that far from any moderation, trade war, with all its potentially devastating consequences, is going to be rapidly escalated.
Earlier this week, the German media reported that the number of civilian victims of American air strikes in Syria had risen dramatically. It has now been revealed that the Bundeswehr (German Armed Forces) have played an important role in “Trumps deadly offensive” (Spiegel Online).
According to reports by the Süddeutsche Zeitung and broadcaster ARD, the Luftwaffe (Air Force) supplied the reconnaissance data for an air attack by the so-called anti-IS coalition on March 21, against the Syrian village of al-Mansoura near Raqqa.
According to the Syrian Observatory for Human Rights, at least 33 civilians were killed in the attack, while Airwars.org reported up to 420 dead. According to the website, up to 100 refugee families were being accommodated in the Badiya School in Mansoura. The attack apparently claimed the lives of many women and children.
The military blog Augen Geradeaus! (Eyes Forward!) writes: “The Luftwaffe’s reconnaissance Tornados had flown over the building in question two days earlier, and then a few days later to assess the impact of the raid.” The parliamentary Defence Committee, composed of representatives of all parliamentary parties, was informed of the Luftwaffe’s role in a secret meeting on Wednesday.
The Ministry of Defence does not usually comment on “concrete data and targets,” the blog said. Fundamentally, however, Tornado aircraft routinely take pictures of possible targets. These are then passed on to the armed forces of the United States, France, Britain and several Arab states, which use them to determine their targets.
In other words German fighter jets are involved in the devastating coalition air strikes that are claiming the lives of more and more innocent people.
The massacre of Mansoura recalls the criminal history of the Luftwaffe. During the Second World War, it played a significant role in the Nazi war machine.
Guernica, the town destroyed by 1937 German aircraft during the Spanish Civil War, still stands as a symbol for the ruthless bombing of civilians. During the Second World War, the Luftwaffe rained down its terror over Europe, the Soviet Union and North Africa, and destroyed cities such as Warsaw, Stalingrad, Rotterdam and London.
The return of German terror from the air is a direct result of the new superpower appetites of those in power in Berlin. At the Munich Security Conference in January 2014, the then Federal President Joachim Gauck, Defence Minister Ursula von der Leyen (Christian Democratic Union) and Foreign Minister Frank-Walter Steinmeier (Social Democratic Party) announced “the end of [Germany’s] military restraint.” At the end of 2015, the Luftwaffe then entered the war in Syria, accompanied by up to 1,200 soldiers and a frigate.
In an article in the anthology “Germany’s new foreign policy,” published by Wolfgang Ischinger for this year's Munich Security Conference, current President Frank-Walter Steinmeier repeated his previous demand that Germany intervene “earlier, more decisive and substantially” in foreign policy. There was a “fierce competition for the supposedly correct social order [...] and for geopolitical spheres of influence.” By the “timely setting of the agenda” in “shaping the future order,” he said, Germany could “often be more effective than extinguishing fires later.”
Mansoura shows the horrific consequences of such a policy. The fact that the German ruling class is responsible for the worst crimes in the history of mankind will not stop it from committing new ones to enforce its geopolitical and economic interests worldwide.
Another contribution in the anthology puts this matter bluntly. Under the title, “Foreign policy as moral ordeal,” Jan Techau, director of the Richard C. Holbrooke Forum at the American Academy in Berlin, complained that in Germany, the “neurotic desire to remain 'morally clean' runs through almost all domestic and foreign policy debates.” It is clear, he insisted: “Whoever goes to war, must, as a rule, take responsibility for the deaths of people. Even the deaths of uninvolved and innocent people.”
Carter Page, a foreign policy adviser for Donald Trump during the 2016 presidential campaign, has been mentioned repeatedly in news coverage about the ongoing investigation into the Trump campaign's alleged ties to Russia.
Page owns the New York City firm Global Energy Capital LLC, located right next to Trump Tower, and lived and worked in Russia for a few years. Beyond that, however, he comes across as somewhat of an enigma, with little known about his past. Yet his own scholarly writings on the topics of geopolitics, energy, and climate, along with other career details, reviewed by DeSmog, may offer deeper insight into who Page is and how he came to assume the role of a Trump foreign policy adviser.
“The perspectives of mutual respect, equality, and mutual benefit both acknowledge the relative contributions of diverse parties while aligning closely with the respective competing economic models,” Page said in his July speech, in which he pointed to the “Great Game” theory of foreign policy in Central Asia as an anachronism. “Free market approaches have tended to incentivize positive relative performance by corporations through its inherent architecture of encouraging mutual benefits for shareholders and management.”
“Great Game” is a theory originating in the 1904 article “The Geographical Pivot of History,” written by Halford Mackinder, a British academic. It stated that the battle for geopolitical global dominance lay in Central Asia, calling the territory the “Heartland.”
An overarching theme of Page's scholarship is his preference for international business collaboration in the private sector rather than competition between nation-states. He did not respond to a request for comment for this story.
Steele Dossier
Page was also mentioned in the unverified dossier, now playing a guiding role of the Federal Bureau of Investigation's (FBI) probe into the Trump campaign's ties to Russia, which was written by former British MI6 agent Christopher Steele. According to that dossier, Page may have been offered a brokerage fee — if U.S. economic sanctions toward Russia were lifted — for what became the December sale of a 19.5 percent stake in Russian state-owned oil company Rosneft. That stake in the company was sold to the Qatar Investment Authority and Glencore.
However, Page denied he received any stake in the deal, also denying he ever spoke to anyone about it, in a recent letter he submitted to the U.S. House Intelligence Committee. He wrote, “I have never met with any member of that company’s executive management.”
Clinton, Bush White House
Though often portrayed to the contrary, the Trump campaign was not Page's first dip into U.S. politics. In 2000, President Bill Clinton named him a semi-finalist to become a White House Fellow.
“White House Fellows spend a year serving the President as full-time paid special assistants to members of the Cabinet and senior White House staff,” explained the Clinton White House. “The more than 500 alumni of the program have gone on to become leaders in all fields of endeavor, fulfilling the fellowship's mission to encourage active citizenship and service to the nation.”
Page was also later named a regional finalist for the same White House fellowship by President George W. Bush in 2007.
Page also contributed a chapter on energy geopolitics in Central Asia and the Caspian Sea region to the 2004 academic book The Caspian: Politics, Energy and Security. In his chapter, he gently critiques U.S. foreign policy elites for promoting oil and gas extraction in the region over human rights. During this time, he was working for Merrill Lynch's global equity capital markets group as its business manager for the Europe, Middle East, and Africa region. He would eventually become chief operating officer of the company's energy and power group.
“While many of the political battles that the U.S. has waged in the Caspian have been held in the energy and security arenas, Washington has also given some limited attention to the social condition of the people of these regions. This has consisted of a fairly low-profile attempt at improving the social situation,” wrote Page in that chapter.
“However, perhaps the element of U.S. policy that has been most challenging has been seen in the shortfall in attempts to bolster observance of human rights … In most instances, these objectives have lagged behind the broader geopolitical goals of increasing oil reserves and enhancing security in Central Asia.”
In the chapter, Page also calls for increased “negotiation, understanding and co-operation” between the U.S. and the Central Asian states, which he correctly points out have troubled human rights records.
Climate Change in Paris and Fossil Fuels in the Caspian
Before the December 2015 United Nations climate negotiations in Paris, France, Page wrote an article for the Global Policy Journal, in which he expressed both concern over climate change and his take on some solutions.
“Just as protesters have historically expressed impatience with the current status quo and related policies, the growing momentum surrounding clean energy innovation can be observed in many civil society and business initiatives being unveiled in Paris,” Page wrote.
“Given the potential stakes of the future manifestation of catastrophic climate change, this field increasingly offers a rare case study of collaborative interaction across diverse states given the fertile ground for international cooperation. Political solutions based on respect and understanding might only be ripe for progress when the shared risks are so high.”
Before entering academia, Page served as an International Affairs Fellow at the industry-funded and influential Council on Foreign Relations (CFR), “where his research focused on the economic development of the former Soviet Union and the Middle East, with an emphasis on Caspian Sea energy resource issues,” according to his biography published in the 2004 book.
According to a transcript from a 2007 CFR event, Page then “represent[ed] the companies” aiming to tap into the oil and gas reserves near the Caspian Sea. The companies involved in onshore drilling in Kazakhstan’s Tengiz field include ExxonMobil, Chevron, Kazakhstani state-owned company KazMunayGas, and Russian state-owned company LukArco (then co-owned by BP), which together created a joint venture named Tengizchevroil.
While at the Naval Academy, Page also worked as a research fellow for the House Armed Services Committee from September 1992 to May 1993. He worked on behalf of U.S Rep. Les Aspin (D-WI) (who represented the district now represented by House Republican Majority Leader Paul Ryan) and then U.S. Rep. Ron Dellums (D-CA). Aspin went on to serve as President Bill Clinton’s first Secretary of Defense.
During the transition period between the George H.W. Bush presidency and the Bill Clinton presidency, Page worked on the Clinton transition team. After graduating from the Naval Academy, Page worked on nuclear affairs and international policy at the Pentagon.
“It has been a long time,” his senior thesis advisor, U.S. Naval Academy political science professor Steve Frantzich, told the publication Brightest Young Things in a recent interview. “Whatever one thinks of his politics, Carter is a very bright and capable individual.”
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.
Already, the four companies that in 2015 provided 88 percent of the world’s lithium can’t keep up: Lithium contract prices have increased from $4,000 per metric ton in 2014 to as high as $20,000 today. “From a lithium standpoint, we are pretty much sold out,” Albemarle Chief Executive Officer Luke Kissam told investors on an earnings call last year.
That’s why a host of junior entrants are scrambling to get into the game. Whoever can figure out the extraction and chemistry required to get lithium out of the ground and into batteries stands to capture a significant share of the market. But as with any commodity, it’s a precarious business.
One company that encapsulates the potential—and potential pitfalls—of lithium development is Vancouver-based Lithium X Energy Corp. In mid-2015, after GeoXplor had been hunting in Nevada for five or six years, Rud’s partner, Ashworth, who lives in Vancouver, asked his son to set up a meeting with a high school acquaintance, a 27-year-old college dropout and former retail broker named Brian Paes-Braga. Paes-Braga was learning the ropes of venture capital from Frank Giustra, a former CEO of Yorkton Securities Inc., a major resource-development finance company. Ashworth pitched Paes-Braga on getting into lithium, and soon after, Paes-Braga took the idea to Giustra while they vacationed in Greece. The idea was to establish a public company that would combine top mining assets and top management in a well-capitalized company.
Giustra, who was one of Vancouver’s first Tesla owners, remembers thinking, “I don’t know a lot about lithium, but as a Tesla driver I know I’m never going back to a gas-fired car.” He’s in a conference room at the offices of his Fiore Group, on the 39th floor of the BMO building in Vancouver; on his wrist is a Shinola watch with the presidential seal, a gift from his pal Bill Clinton.
Paes-Braga proposed looking for lithium in Clayton Valley. “My view about exploration is it’s a tough gig,” Giustra told his young friend as they sat by a pool overlooking the Mediterranean. “If you’re only going to do exploration, you’re rolling the dice—it’s not that often that economic ore bodies are found.”
“Clayton Valley is just a stepping stone,” Paes-Braga countered. The long-term plan was to go to South America’s “lithium triangle,” a region straddling Argentina, Bolivia, and Chile that provides more than half the world’s lithium, via companies such as Albemarle, Philadelphia-based FMC Corp., and Chile’s SQM.
“You have to know your way around these jurisdictions, and that’s sometimes a little tricky,” Giustra replied. “How are you going to go about this?”
Paes-Braga mapped out a plan by which the prospective company’s presence in Clayton Valley helped it raise money it could use to invest elsewhere. “I liked that idea,” Giustra says now.
A month or two after returning from Greece, Paes-Braga booked a flight to Las Vegas and drove up to Goldfield to meet Ashworth and Rud. They showed him claims they’d staked adjacent to Albemarle’s and tried to sell Paes-Braga on acquiring them. “Starting at 900 feet down to 1,200 feet, there’s a gravel layer,” Rud explained. “It’s got a huge amount of brine to it.”
Lithium can be mined from rocks, as in Australia and China, but in Clayton Valley and the lithium triangle it’s extracted from briny aquifers. Wells are drilled to get the brine out, then it’s evaporated naturally in large ponds. Sometimes quicklime is added to remove undesirable minerals, such as magnesium, from the liquid; magnesium leaves a film on the surface of the pond, inhibiting the sun’s work and slowing evaporation, which increases operational costs. Clayton Valley’s brine has a low lithium concentration compared with other sources, but also a low magnesium ratio. “The grades are only in the 60s”—parts per million that are lithium—“but the quantity is large,” Rud told his potential clients. And the lithium could be concentrated relatively cheaply, because the water holding it would evaporate fairly quickly in western Nevada’s sunny, dry climate.
Rud had by then staked tens of thousands of acres in the valley, far above Albemarle’s 11,000. They were also well located; some newcomers were claiming turf along the mountainsides, where little to no lithium is likely to be found. Rud had already leased 9,500 acres to Pure Energy Minerals Ltd., another Vancouver-based pure-play lithium company, which around the same time as Paes-Braga’s visit entered into a deal to supply Tesla Inc.’s Gigafactory, 200 miles from Clayton Valley.
When Paes-Braga’s tour was over, the men negotiated a deal that gave Lithium X access to what Rud says he believes is some of the richest ground in Clayton Valley, hard up against the claims from which Albemarle has been producing lithium for more than 50 years. GeoXplor would also run operations for the startup, starting with drilling into the gravel layer and testing whatever Rud and Ashworth and their contractors managed to pull out of it.
With the deal in place, Paes-Braga returned to Vancouver, where Giustra opened doors for him at investment banks so he could raise money for Lithium X. Paes-Braga was also looking for talent. In November he hired as executive chairman Paul Matysek, a Vancouver geologist who’d founded, built, and sold mining companies valued at $2.5 billion over the years, including Lithium One Inc., which had interests in deposits in Argentina. On Nov. 30, Lithium X listed on the Toronto Stock Exchange.
The following March, Paes-Braga’s vision of expanding beyond Nevada—and beyond exploration—was realized with the acquisition of 32 claims on about 20,000 acres in Argentina’s Sal de los Angeles, inside the lithium triangle. To exploit it, and pave the way for success in Nevada, the company would need technical expertise. “That meant getting Eduardo Morales,” Matysek says.
Morales had run the world’s most productive lithium deposit, the Salar de Atacama in Chile. At 12,000 feet above sea level, the Atacama Plateau contains the highest-grade lithium brine deposits in the world. Thirty-six years ago, the Chilean government began to recognize the potential riches locked beneath its northeast reaches. An agency set up to develop the resource was looking for engineers, and Morales had recently graduated with a degree in chemical engineering.
On the unforgiving plateau, Morales recalls, “there were no roads, no electricity, nothing—only an Indian village.” He and a few other young Chilean engineers worked for years testing the purity of brines in the lab, piloting a plant that could take the slurry that comes out of the evaporating ponds and process it into battery-grade lithium carbonate or lithium hydroxide. He developed a technique for treating the Atacama brine through fractional crystallization, concentrating it step-by-step and precipitating out the undesirable salts. Eventually, the site became an industrial-scale operation. But it wasn’t easy. “Nothing works well at 12,000 feet,” he says.
Then there was the bureaucracy. “The Chilean government office that was evaluating the project was coming and saying, ‘We’re not sure about the economics of this project, and we don’t see the return, so we should stop.’ ” Morales remembers. “I said to them, ‘Are you aware this is the finest deposit of lithium in the world? What is the meaning of “good” for you?’ The guys had no answer to that, so the project went ahead. And it’s been the most successful project in the history of the agency.”
When Lithium X moves beyond exploration work in Clayton Valley, Morales’s experience will be crucial to characterizing the brine and designing a process to recover its lithium and produce lithium salts. For now, the newer companies there are only beginning to encounter the technical and logistical challenges that producers in South America have overcome.
Prime among these for Lithium X is figuring out, with GeoXplor’s assistance, how to get at the brine. A used drilling rig goes for about $250,000; new ones are between $2 million and $3 million. “Then you have to buy all the stuff that goes with it, which comes to another 2, 3 million,” Rud says. Drilling in Clayton Valley’s soft sediments also requires skill and experience. “You’ve got to get through it without bringing everything in from the side,” he explains. “If you get to a sand layer, it’s easier for the air to go out the side than go up the hole.” That creates a cavern, which can’t support the weight of the drilling rig. “You could tip your rig over,” Rud says. “Total disaster. We have gone through our share of that.”
Lithium X is probably a couple of years behind at least one of its Clayton Valley competitors. Pure Energy Minerals is soon expected to complete its preliminary economic assessment, a statement required by the Toronto Stock Exchange. But even something as apparently innocuous as the liner of the evaporation pond can mess with the concentration process, causing costs to rise. Profitably pulling lithium from the ground and processing it to a quality level battery-materials manufacturers can use is more complicated than panning for gold. “Not everybody can start a plant producing lithium carbonate or lithium hydroxide,” says the vice president of Albemarle’s lithium division, David Klanecky. “There’s a lot of know-how involved in the complexity of the processes—running the chemistry, getting it to concentrate, different specs required by companies we supply to.”
The best hope new entrants have of catching Albemarle lies in a process being developed by Tenova SpA, an Italian engineering company. This method, which strips the lithium using an ion-exchange system and returns the water to the ground, would allow companies to skip evaporation ponds, slashing production time from months to hours while yielding a higher concentration of lithium. Pure Energy has a small pilot plant, but so far no one has been able to make the process work at scale. Albemarle isn’t trying it because it’s concerned that returning water to the aquifer under high pressure could damage the resource or the surrounding environment. But if the technology proves effective and safe, it could help the industry meet the expected wave of demand.
Three hundred miles due south of Rud’s claims, across the Palmetto Mountains and Death Valley, is a former manufacturing hub on the outskirts of Los Angeles County, a small city called Lancaster. Mayor R. Rex Parris, a Republican who believes in climate change, started working years ago to make his city greener. Lancaster set a target to become the first North American municipality to get its carbon emissions to “net zero”—producing from renewable sources as much energy as it consumes—and began pushing to get its workforce, 20 percent of which was unemployed, into green industries. Parris touted the city’s skilled labor base, which formerly made parts for the aerospace industry, among other things, in persuading the Chinese battery and auto manufacturer BYD Co. to build its first American bus factory there. The facility, a 125,000-square-foot former RV assembly plant, opened in 2013.
On a recent morning, construction workers in hard hats and orange vests are building a 240,000-square-foot expansion to the plant. A few dozen of BYD’s 500 or so factory workers, many sporting Carhartt clothes, work boots, and elaborate tattoos, crowd around a food truck in the parking lot during their lunch break. These men are responsible for making 150 electric buses each year—capacity will grow to 1,000, postexpansion—for customers such as Long Beach Transit, Denver’s Regional Transportation District, Stanford University, and the University of California at Irvine. The buses are lithium-intensive; each uses about 8 times as much as an average electric vehicle, which in turn uses about 10,000 times as much as an iPhone.
To make the vehicles, lithium from Nevada or, likely, Argentina, is processed, sent to materials manufacturers to be converted into battery cathodes, then passed on to battery cell makers, and then to one of BYD’s battery assembly plants or the company’s home base of Shenzhen, before finally being stuffed under the buses for BYD America’s customers. The vehicles are more expensive than ones that run on diesel or natural gas, but only initially. After three to five years, “customers save $50,000 to $75,000 per year per bus on fuel and maintenance,” says Macy Neshati, senior VP for heavy industries. “The adoption curve for municipalities is really turning steep. Up and down California, it’s lighting up. The mayor of Albuquerque got involved as soon as he saw the numbers.”
As with coal and Italian soccer teams, the market for electric buses is stronger in China than in the U.S. Since 2015, the Chinese government has been paying half the cost of municipal transport agencies’ electric bus purchases, helping nationwide sales grow 315 percent, to 112,000 vehicles, from 2014 to 2015 (though Bloomberg News has reported that officials are considering reducing the subsidy). In Shenzhen, 20 miles north of Hong Kong, thousands of electric buses draw wind power from the grid overnight, when residential and business customers aren’t using it, and then disperse it during the day as they drive around the city.
A shift toward electric vehicles is under way in Europe, as well. BMW and Daimler AG have each invested hundreds of millions of dollars in electrifying their fleets, moves that help drive German policy, which in turn drives the European Union’s. And China’s broader electric auto market will soon dwarf them all.
Although electric vehicle adoption has been slower in the U.S. than expected, the price of battery packs has been dropping fast, to the point that auto industry observers see electric cars as poised to become cost-competitive with gas-powered vehicles—and thus to become popular outside the specialty markets of luxury buyers and those seeking green cred. Tesla’s soon-to-arrive Model 3 and the Chevy Bolt now in dealerships are priced at about $30,000 after subsidies, but a battery assembly that a few years ago might have cost Tesla $300 per kilowatt hour (a Model S uses 60 to 90 kilowatt hours’ worth of lithium ion batteries) today costs General Motors $145 per kilowatt hour for its Bolt. And the figure is hurtling toward $100, the number that HSBC Securities (USA) Inc. and consultant Wood Mackenzie Ltd. agree will make electric vehicles as cheap as gas-powered cars, freeing mass-market EVs from their current dependence on subsidies.
Observers of the energy and utility sectors are united in their belief that the Trump administration won’t slow the trends toward electrification of transport and broader reliance on renewables, even if the president follows through on his declared intentions to pull out of the Paris climate accords and to alter fuel efficiency standards finalized in the last days of the Obama administration. “Trump doesn’t have unlimited flexibility to eliminate the federal program, and furthermore, California has its own,” says Roland Hwang, director of the energy and transportation program at the Natural Resources Defense Council. He maintains—despite the administration’s announcement that it will do the auto companies’ bidding and EPA administrator Scott Pruitt’s refusal at his confirmation hearing to guarantee the waiver allowing California to shape its own emissions policies—that “they are in for a long, rocky road to roll back clean car standards.”
As for energy storage, on March 28, Trump issued an executive order aimed at nullifying Obama’s Clean Power Plan, which has been boosting the sector. But undoing those pollution standards will require a process just as arduous as the one that created them. And it will face fervent opposition at every step, from public comments to the courts. Batteries offer flexibility to the grid at a competitive price, and the president can’t simply halt solar and wind development in favor of nonrenewable sources such as coal and natural gas—and he certainly can’t do so in China, where much of the shift is occurring.
All of which means that lithium is likely here for the foreseeable future. In a few years, Nevada may be supplying a battery market that’s almost twice the size of today’s, and Lithium X and the other juniors could be chipping away at the big four’s domination of lithium production. If that happens, Rud and his Chihuahua will finally be able to settle down.
