When I first read about the discovery of a vast new deposit of lithium in a volcanic crater along the Nevada-Oregon border, I can’t say that I was surprised. Not because I know anything about geology — but because, as an economist, I am a strong believer in the concept of elasticity of supply.
Before I get to that, it’s worth dwelling on the significance of this find, which could help limit climate change and ease geopolitical tensions. The find, estimated at between 20 million and 40 million tons, would be larger than the current largest, about 21 million tons beneath the salt flats of Bolivia. (The discovery awaits final confirmation, but at least one company says it expects to start mining this supply in 2026.)
And lithium is of course a crucial ingredient in batteries for electric vehicles, demand for which is surging and which are an important part of any plan to fight climate change.
Yet U.S. policymakers have been nervous, both because lithium is scarce and because the U.S. did not seem to have major deposits of its own. Major lithium supplies are not commonplace, and many of the known deposits are not in North America but in Chile, Bolivia, Argentina, China and Australia. If this discovery is validated, U.S. investment in EVs will no longer be so fraught with national security concerns.