About 350 miles northwest of Montreal, amid a vast pine forest, is a deep mining pit with walls of mottled rock. The pit has changed hands repeatedly and been mired in bankruptcy, but now it could help determine the future of electric vehicles.
The mine contains lithium, an indispensable ingredient in electric car batteries that is in short supply. If it opens on schedule early next year, it will be the second North American source of that metal, offering hope that badly needed raw materials can be extracted and refined close to Canadian, U.S. and Mexican auto factories, in line with Biden administration policies that aim to break China’s dominance of the battery supply chain.
Having more mines will also help contain the price of lithium, which has soared fivefold since mid-2021, pushing the cost of electric vehicles so high that they are out of reach for many drivers. The average new electric car in the United States costs about $66,000, just a few thousand dollars short of the median household income last year.
But the mine outside La Corne, operated by Sayona Mining, an Australian company, also illustrates the many hurdles that must be overcome to produce and process the materials needed to wean automobiles from fossil fuels. The mine has had several owners, and some of them filed for bankruptcy. As a result, some analysts and investors warn that many mines being developed now may never be viable.
Dozens of lithium mines are in various stages of development in Canada and the United States. Canada has made it a mission to become a major source of raw materials and components for electric vehicles. But most of these projects are years away from production. Even if they are able to raise the billions of dollars needed to get going, there is no guarantee they will yield enough lithium to meet the continent’s needs.
Amid a vast pine forest in Quebec sits a deep mining pit with walls of mottled rock. The rock contains lithium, an indispensable ingredient in electric car batteries that is in short supply.
Elon Musk, Tesla’s chief executive, said in July that being a lithium supplier was a “license to print money.” But it is also a risky, volatile business. Ore buried deep in the earth may have insufficient concentrations of lithium to be profitable. Opposition from environmental groups or nearby residents can delay or kill projects.
Mines tend to be in remote locations. By industry standards, Sayona’s mine, which is at the end of a 12-mile gravel road, is just around the corner. Many other projects are far more inaccessible.
After the price of lithium fell by half from 2017 to 2020, the mine’s previous owner, the Chinese battery maker CATL, shut down operations and sought protection from creditors for the subsidiary that owned the property. Sayona, working with Piedmont Lithium, a lithium mining and processing company based in Belmont, N.C., bought the operation last year.
Sayona site sits at the end of a 12-mile gravel road about 350 miles northwest of Montreal.
Some investors believe the hype around lithium is overblown and have been betting against mining companies. They believe that some of the companies lack the expertise to blast ore, haul it out of the earth and separate the lithium from the surrounding rock. Lithium projects often suffer delays and cost overruns.
The risk is reflected in the gyrations of Sayona shares traded on the Australian Securities Exchange in Sydney. They peaked at 36 Australian dollars ($24) in April, plunged to 13 dollars in June and have recently traded at around 28 dollars.
“Those of us in the industry are quite confident that lithium will be in short supply for the next decade,” said Keith Phillips, chief executive of Piedmont Lithium, which owns 25 percent of the Sayona’s Quebec project. He added, “Others are taking a contrarian view.”
What’s in the Inflation Reduction Act
A substantive legislation. The $370 billion climate, tax and health care package that President Biden signed on Aug. 16 could have far-reaching effects on the environment and the economy. Here are some of the key provisions:
Auto industry. Until now, taxpayers could get up to $7,500 in tax credits for purchasing an electric vehicle, but there was a cap on how many cars from each manufacturer were eligible. The new law will eliminate this cap and extend the tax credit until 2032; used cars will also qualify for a credit of up to $4,000.
Energy industry. The legislation will provide billions of dollars in rebates for Americans who buy energy efficient and electric appliances. Companies will get tax credits for building new sources of emissions-free electricity. The package also includes $60 billion set aside to encourage clean energy manufacturing and penalties for methane emissions that exceed federal limits starting in 2024.
Health care. For the first time, Medicare will be allowed to negotiate with drugmakers on the price of some prescription medicines. The law also extends subsidies available under the Affordable Care Act, which were set to expire at the end of the year, for an additional three years.
Tax code. The law introduces a new 15 percent corporate minimum tax on the profits companies report to shareholders, applying to companies that report more than $1 billion in annual income but are able to use credits, deductions and other tax treatments to lower their effective tax rates. The legislation will bolster the I.R.S. with an investment of about $80 billion.
Low-income communities. The package includes over $60 billion in support of low-income communities and communities of color that are disproportionately burdened by climate change. Among the provisions are grants for zero-emissions technology and money to mitigate the negative effects of highways and other transportation facilities.
Fossil fuels industry. The legislation requires the federal government to auction off more public space for oil drilling and expand tax credits for coal and gas-burning plants that rely on carbon capture technology. These provisions are among those that were added to gain the support of Senator Joe Manchin III, Democrat of West Virginia.
West Virginia. The law is expected to bring big benefits to Mr. Manchin’s state, the nation’s second-largest producer of coal, making permanent a federal trust fund to support miners with black lung disease and offering new incentives to build wind and solar farms in areas where coal mines or coal plants have recently closed.
For many people in government and the auto industry, the main concern is whether there will be enough lithium to meet soaring demand for electric vehicles.
The Inflation Reduction Act, which President Biden signed in August, has raised the stakes for the auto industry. To qualify for several incentives and subsidies in the law, which go to car buyers and automakers and are worth a total of $10,000 or more per electric vehicle, battery makers must use raw materials from North America or a country with which the United States has a trade agreement.
Lithium is the lightest known metal; its ability to store energy makes it attractive for batteries.
The world will also need more refineries, the plants where raw lithium is processed into a concentrated form of the metal that goes into batteries. Most lithium is processed in China, and Piedmont and other companies plan to build refineries in the United States. But lithium processing requires expertise that is in short supply, said Eric Norris, president of lithium at Albemarle, a mining and processing company in Charlotte, N.C.
Lithium is the lightest known metal, and its ability to store energy makes it attractive for batteries. But lithium deposits come embedded in other metals and minerals. That is why extracting lithium can be incredibly difficult.
The mining industry “has not honed its ability, broadly speaking, to build conversion capacity repeatedly and consistently,” Mr. Norris said, noting that even his company, which has extensive experience, has suffered delays building processing plants.
Albemarle operates the only active lithium mine in the United States, in Silver Peak, Nev., where the metal is extracted from brine, a liquid found beneath the ground. Some Tesla batteries contain lithium from Nevada, but the site’s total annual output is enough for about 80,000 vehicles. Americans bought 370,000 battery-powered cars in the first six months of 2022, according to Kelley Blue Book, and sales are rising fast.
Albemarle also produces lithium in Chile and Australia. The company is working to reopen a lithium mine in Kings Mountain, N.C., and plans to build a refinery in the Southeast.
Even those large projects will not be enough to satisfy demand as California and other states move to ban internal combustion engines. “It’s going to take everything we can do and our competitors can do over the next five years to keep up,” Mr. Norris said.
One of the first things that Sayona had to do when it took over the La Corne mine was pump out water that had filled the pit, exposing terraced walls of dark and pale stone from previous excavations. Lighter rock contains lithium.
After being blasted loose and crushed, the rock is processed in several stages to remove waste material. A short drive from the mine, inside a large building with walls of corrugated blue metal, a laser scanner uses jets of compressed air to separate light-colored lithium ore. The ore is then refined in vats filled with detergent and water, where the lithium floats to the surface and is skimmed away.
The end product looks like fine white sand but it is still only about 6 percent lithium. The rest includes aluminum, silicon and other substances. The material is sent to refineries, most of them in China, to be further purified.
Yves Desrosiers, an engineer and a senior adviser at Sayona, began working at the La Corne mine in 2012. During a tour, he expressed satisfaction at what he said were improvements made by Sayona and Piedmont. Those include better control of dust, and a plan to restore the site once the lithium runs out in a few decades.
“The productivity will be a lot better because we are correcting everything,” Mr. Desrosiers said. In a few years, the company plans to upgrade the facility to produce lithium carbonate, which contains a much higher concentration of lithium than the raw metal extracted from the ground.
The operation will get its electricity from Quebec’s abundant hydropower plants, and will use only recycled water in the separation process, Mr. Desrosiers said. Still, environmental activists are watching the project warily.
Long Point First Nation, an Indigenous group, wants to do its own environmental impact study of lithium mines that it says are on its ancestral territory.
Mining is a pillar of the Quebec economy, and the area around La Corne is populated with people whose livelihoods depend on extraction of iron, nickel, copper, zinc and other metals. There is an active gold mine near the largest city in the area, Val-d’Or, or Valley of Gold.
Mining “is our life,” said Sébastien D’Astous, a metallurgist turned politician who is the mayor of Amos, a small city north of La Corne. “Everybody knows, or has in the near family, people who work in mining or for contractors.”
Most people support the lithium mine, but a significant minority oppose it, Mr. D’Astous said. Opponents fear that another lithium mine being developed by Sayona in nearby La Motte, Quebec, could contaminate an underground river.
Rodrigue Turgeon, a local lawyer and program co-leader for MiningWatch Canada, a watchdog group, has pushed to make sure the Sayona mines undergo rigorous environmental reviews. Long Point First Nation, an Indigenous group that says the mines are on its ancestral territory, wants to conduct its own environmental impact study.
Sébastien Lemire, who represents the region around La Corne in the Canadian Parliament, said he wanted to make sure that the wealth created by lithium mining flowed to the people of Quebec rather than to outside investors.
Mr. Lemire praised activists for being “vigilant” about environmental standards, but he favors the mine and drives an electric car, a Chevrolet Bolt.
“If we don’t do it,” he said at a cafe in La Corne, “we’re missing the opportunity of the electrification of transport.”