EXCLUSIVE: Major Automakers Target Lithium Supply From American Battery Technology Co.

WASHINGTON — Amid the global search for lithium for electric vehicle batteries, major automakers are eyeing production from American Battery Technology Co. ABAT, CEO Ryan Melsert said this month at a mining conference.

The company is developing one of the largest lithium deposits in the United States at its Tonopah Flats mining and refining project in Nevada to provide lithium in addition to the company's battery recycling business.

American Battery Technology is funding its operations with revenue from recycling and U.S. Department of Energy grants but plans to augment that in the medium term with project financing and lithium offtake agreements with strategic partners.

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"We have the automakers on site almost every week," Melsert told Benzinga on the sidelines of a recent Benchmark Mineral Intelligence battery metals conference in Washington.

He declined to name the companies but said "it's all the automakers and manufacturers you would think of."

American Battery Technology already has a partnership with German multinational chemical company BASF BASFY, one of the largest battery cathode manufacturers in North America. Both companies have received a $2 million grant from the U.S. Advanced Battery Consortium, a subsidiary of the U.S. Council for Automotive Research, which is a collaborative automotive technology company for Ford Motor Co. F, General Motors Co. GM and Stellantis STLA.

EV Demand Increasing With No Short-Term Lithium Alternatives

Automaker interest in lithium from American Battery Technology comes as electric vehicle manufacturers around the world scramble to source lithium for batteries. 

If nations were to fully meet all their current national energy and climate goals, the International Energy Agency said in a recent report that it expects global lithium demand to rise from 165 thousand metric tons in 2023 to 1.6 million metric tons by 2050. The electric vehicle industry is projected to account for about 90% of this demand growth.

Meanwhile, the agency says that new mine projects beyond those already in production or announced will have to be developed to meet lithium requirements after 2030, when demand will outstrip currently projected production.

In their quest to secure sources of lithium, Ford, GM, Mercedes Benz Group MBGYY, Mitsubishi Corp. MSBHF and Tesla TSLA, have inked deals to buy directly from mining or refining companies or made direct investments elsewhere in the lithium battery supply chain.

Tesla CEO Elon Musk once said on social media that "lithium batteries are the new oil."

Melsert is no stranger to Tesla. He worked there from 2015 to 2019 as a founding member of the Gigafactory design team and battery materials processing research and development manager.

As a person familiar with battery technology, Melsert doesn't think lithium-based battery storage will go away anytime soon, despite research into alternatives.

The International Energy Agency agrees. "Lithium-ion batteries' role in fueling the growth of the EV industry remains unchallenged in the near term," the IEA said in its recent report. 

"Alternative technologies such as sodium-ion batteries and vanadium flow batteries begin to take some shares from lithium-ion batteries in low-range vehicles and storage markets, but they do not materially alter the prospects for lithium demand in climate-driven scenarios," the agency said.

Company May Face Less Environmental Angst Than Competitors

As global demand for lithium grows, western governments are trying to diversify supply chains for minerals critical to the energy transition. China dominates lithium refining and the electric vehicle battery market.

As the domestic lithium mining industry ramps up, tensions with conservationists and locals, including indigenous people, have increased in the American West, South America and Europe. In Nevada, Lithium Americas Corp.'s LAC Thacker Pass and Ioneer Ltd.'s GSCCF Rhyolite Ridge projects have faced opposition.

It appears that American Battery Technology's Tonopah Flats project may face fewer headwinds, at least in terms of conservationist concerns.

"When we look at places like Thacker Pass and Rhyolite Ridge, we see high levels of biodiversity," said Patrick Donnelly, a Nevada-based director with the Center for Biological Diversity. "Endemic species, greater sage-grouse and sensitive groundwater-dependent ecosystems are found at both sites. This is part of why they’ve engendered such pushback."

Tonopah Flats doesn't have those issues, or issues with surface water sources, Donnelly told Benzinga.

"Strictly from a biological point of view, there are fewer potential impacts to biodiversity from development in that area," he said.

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