Piedmont Lithium turns to international ventures as U.S. mining plans hit snags

Even after the Biden administration laid out the red carpet for domestic lithium mining with federal incentives and loans, some American mining companies are hitting roadblocks that have pushed them toward global ventures.

Piedmont Lithium, a U.S.-based mining company that has supply agreements with Tesla and LG Chem, has faced significant challenges in launching its first mine in Gaston County, N.C. Piedmont Lithium is pursuing opportunities abroad amid the U.S. setbacks.

"It wasn't always the plan. Our plan has evolved," Patrick Brindle, COO of Piedmont Lithium, told Automotive News.

After objections from the local community, mounting costs and permitting hurdles, the company expanded its portfolio of mines to include Ghana in addition to Canada and the U.S.

Piedmont is not alone in pursuing concurrent international and domestic mining endeavors. Albemarle Corp. is developing a mine in Kings Mountain, N.C., but has lithium operations in Western Australia, and American Lithium Corp. has mining plans in Nevada and Peru.

Despite the initial rush, companies cooling on domestic lithium mining for electric vehicle batteries poses a challenge for the U.S. Battery suppliers and automakers are hankering for locally sourced lithium, but they still rely on international suppliers, which leads to high freight costs, complicated supply chains and tariff issues.

Domestic lithium could be a boon, but the U.S. has the second-longest timeline for developing mines, averaging 29 years for lithium from discovery to production, according to S&P Global.

The Inflation Reduction Act allocated about $11.7 billion to the Department of Energy Loan Programs Office to support new energy projects, including lithium mines. Despite growing demand, the global lithium market is in a slump.

The price of lithium used in batteries fell from $80,000 per metric ton in April 2022 to $12,000 per metric ton by July 2024, according to S&P Global, against a backdrop of softening demand for EVs. Declining prices make it hard for companies such as Piedmont Lithium to generate revenue and kick-start pricey U.S. projects, said Lukasz Bednarski, principal research analyst of lithium and battery metals at S&P Global Commodity Insights.

Piedmont Lithium plans to weather the pricing downturn, preserve its assets and build up its global portfolio, Piedmont Lithium CEO Keith Phillips said during a second-quarter investors call Aug. 8.

Piedmont Lithium, initially an Australian company, began buying land in Gaston County in 2016 and moved its headquarters to North Carolina in May 2021. Local residents opposed the mining plans, primarily because of environmental concerns and limited communication.

"It was the worst economic development rollout that I have ever seen in my time as a commissioner," Chad Brown, chairman of the Gaston County Board of Commissioners, told Automotive News. "It wasn't that it was a bad project, it was a project that we didn't know anything about."

Brindle told Automotive News that Piedmont communicated with the county board, other government officials and community members and asked for input as its plans evolved.

"We value our relationships with local stakeholders and are committed to ongoing discussions as we move forward with the development of the Carolina Lithium project," he said.

Piedmont shifted its focus to international operations while it worked to address apprehension within Gaston County. It partnered with mines in Quebec and Ghana by mid-2021.

Piedmont secured deals with major battery manufacturers through a partnership with Sayona Mining in Quebec. It has a 25 percent stake in the mine, which supplies lithium to Tesla. Piedmont plans to provide 125,000 metric tons of concentrated spodumene — crystals containing lithium — through 2025, with an option for a three-year extension. LG Chem invested $75 million in Piedmont through a "subscription agreement" and committed to 200,000 metric tons of spodumene concentrate from the Canadian mine..

Piedmont's Ghana project, in partnership with Australian-based Atlantic Lithium, is awaiting parliamentary approval for a mining lease received last year.

The original plan was to ship spodumene from Ghana to a processing facility in Tennessee, which is fully permitted and supported by a $141.7 million grant from the Department of Energy.

But Piedmont halted operations at its lithium hydroxide conversion facility in Tennessee because of "market conditions," Phillips said on the earnings call. The company plans to consolidate lithium processing at its site in North Carolina.

U.S. lithium companies are strong producers abroad but struggle with domestic operations, Bednarski said. Only Lithium Americas' Thacker Pass site in Nevada is fully permitted and set to start mining lithium in 2028, while other U.S. projects, including Piedmont's, remain in nascent stages.

Extensive permitting and conflicting stakeholder interests often delay projects, which exacerbates pressures on American manufacturers that are striving to shorten the battery supply chain as tariffs increase on Chinese imports of lithium and production ramps up for EVs.

Piedmont had planned to start lithium production in Gaston County by 2026 or 2027, according to its 2022 10-K filing, but the timeline is now uncertain. The company intends to begin rezoning in 2025, depending on funding, partnerships, project plans and market conditions, according to its 2024 second-quarter earnings report.

High costs and permitting complications can worsen delays. "These projects are highly capital-intensive; they take a lot of people and resources," Brindle said.

Piedmont is grappling with substantial financial woes, reporting a net loss this year of nearly $37 million through June. It cut 28 percent of its workforce and intends to reduce operating expenses by $10 million annually and delay 2024 capital spending to 2025.

"Ultimately, higher lithium prices will be required to support the development of lithium projects," Phillips said.

The company is evaluating further reductions, Piedmont CFO Michael White said during the earnings call.

Piedmont is seeking investments from future lithium buyers as well as government incentives under the Inflation Reduction Act, Brindle said.

If the mine can commence operations in North Carolina, it is expected to have a life span of just 11 years, based on preliminary investigations of deposits at the site — significantly below most mines' life span of 15 to 20 years, according to S&P Global Commodity Insights.

"Every mine is different; some small ones only expect to produce for a few years, others have mine lives over a century," said Kevin Murphy, research director at S&P Global Commodity Insights.

Piedmont Lithium chose the site for its position within the tin-spodumene belt that stretches through North Carolina and South Carolina. The company is determined to become a leading "integrated lithium chemicals producer," with plans to mine, crush and process spodumene ore directly on-site, Brindle said.

Automakers are working to shift their entire supply chain to the U.S. to reduce the environmental impact of EV production and to qualify for incentives.

All the while, Piedmont continues to face hurdles in obtaining water and air quality permits and approval from the Gaston County Board of Commissioners. It also must secure capital for construction in Gaston County from investors and from supply contracts.

For now, Piedmont will prioritize improving operating costs and cash flow at its site in Quebec, Brindle said. The company will move on to projects in North Carolina and Ghana, he said, "when we clear all of the regulatory hurdles, and the market and strategic partnerships tell us it's a good time to take those next steps."