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Friday, December 2, 2022
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Piedmont Lithium’s electrifying potential

Tesla-powered miner Piedmont Lithium wants to make Gaston County a rock-solid link in the auto supply chain.


Shell Gas globes sit atop hand-cranked pumps in front of Beam’s Service Station in Cherryville. Now a museum, it’s a snapshot of the 1930s when, in a back room here, Grier Beam founded Carolina Freight Carriers with $500 and a used truck. It would grow into the nation’s fifth-largest trucking company before its sale in 1995.

Though he didn’t realize it, Beam was present at the dawning of the golden age of fossil fuels.

Now, east of Cherryville where Beaverdam Creek winds through fields and forests, drillers poke holes in the earth of northwest Gaston County. With a low growl, their machines bring up 3-inch cores of gray, variegated rock. To Piedmont Lithium CEO Keith Phillips, whose company plans a $545 million regional investment, this is the future of transportation — cars, trucks, buses or otherwise. It’s not fossil fuel.

“Lithium is the dominant technology and will be for decades to come,” he says. “Our transportation industry, electronics — our whole economy — is electrifying, and it’s all going to be based on batteries.”

He’s more at home on Wall Street than in the brambles of the Tar Heel countryside 40 miles west of Charlotte, but investors are betting hundreds of millions that Phillips is correct. Before leading Piedmont Lithium, he spent three decades tending the global mining investments of Bear Stearns, Merrill Lynch, JPMorgan Chase and others.

Now, after nearly five years of assembling land — more than 2,300 acres — exploratory drilling and legal footwork, Piedmont Lithium is preparing to pump out copious amounts of lithium that could create a major new industry. Production could begin as early as 2023. The initial plan is conservative — “the total could be in excess of $1 billion,” Phillips says. Piedmont Lithium could create as many as 300 jobs with its surface mines and nearby chemical processing plant, he adds.

Economic-development experts hope Gaston County’s lithium will become the nucleus of manufacturing industries that create battery systems that power vehicles, smartphones and many other devices. Other uses include storing renewable energy, an essential step to break the dominance of fossil fuels.

Some N.C. Department of Commerce officials believe Piedmont Lithium’s progress could finally tip the state’s long quest for a major car manufacturing plant. The processing plant and proximity to Charlotte’s airport, rail and highway transportation systems could make it a favored location for automakers as electric vehicles gain market share.

 

London-based Arrival in March said it will open a 250-employee factory in west Charlotte that will assemble as many as 10,000 zero-emissions vans annually for shipping giant UPS and other customers. It previously announced a similar venture in nearby Rock Hill, S.C., to make electric buses. BMW Group, which operates an 11,000-employee factory 70 miles south in Greer, S.C., says it expects half of its 10 million annual global deliveries by 2030 to involve electric vehicles.

Meanwhile, General Motors vows to abandon internal combustion vehicles altogether by 2035, and Ford is spending $22 billion converting to electric-vehicle production by 2025. It’s also considering making its own batteries, which could favor proximity to lithium sources.

PRIZED DIRT

“What makes our deposits here so special is, there’s just so incredibly much of it in the ground,” says Bart Cattanach, an N.C. Geological Survey geologist in Asheville. “It’s primarily hardrock spodumene (a lithium-rich ore), and these are some of the best reserves in the world.” Spodumene is abundant in a 40-mile geological belt from the South Carolina line near Kings Mountain north to Lincoln County.

Piedmont Lithium, despite never having produced the powerful but lightweight battery material, has captured the ardor of investors. Australian investor Taso Arima and N.C. native Lamont Leatherman raised several million dollars to recapitalize a shell company in 2017. Shares of the business initially traded for about $15 in mid-2018, then soared to more than $70 earlier this year. In early June shares sold for about $73 for a market value of $1.1 billion.

The company received a quantum boost in late 2020, when Tesla, the globe’s highest-profile manufacturer of electric cars, announced it would be Piedmont’s first customer. The Palo Alto, Calif.-based company committed to buy a third of Piedmont’s initial 180,000-ton annual output of lithium hydroxide at about $13,000 a ton for five years, starting probably in late 2022. The deal is potentially worth more than $300 million.

Lithium hydroxide is rapidly replacing lithium carbonate used in earlier automotive batteries because of its greater energy density and mileage range. It’s the choice of Tesla, which produces more than half of the electric vehicles made in the U.S. — nearly 300,000 in 2020. Tesla officials declined to comment.

“That removes a lot of uncertainty,” says Steve Byrne, a Bank of America equity analyst who follows the global chemical industry. He tracks Charlotte-based Albemarle Corp. and Philadelphia-based Livent, both well-established lithium industry powers. “Most new entries in lithium have a hard time getting contracts, and most end up with short-term contracts.”

GROUND ZERO

The seemingly placid Gaston County countryside is a potential battleground in a global power play. The U.S., once the world’s undisputed automobile titan, is wrestling with China for leadership in electric cars. The Asian superpower is in front, controlling extraction for many key minerals and processing two-thirds of the world’s lithium. Anxious to avoid excessive reliance on other nations, President Joe Biden issued an executive order in February to review the supply chain for critical raw materials.

Piedmont Lithium faces the usual hurdles of a startup and the vagaries of fickle financial markets. Its key competitors include Albemarle, a 5,400-employee specialty-chemical giant that also owns lots of lithium-rich land in Gaston County and has its worldwide technical center in Kings Mountain in adjacent Cleveland County. Both Albemarle and Livent process lithium in Gaston County, but they do not currently mine there.

Albemarle produces a third of the world’s lithium — it had 2020 sales of $1.4 billion — mostly in South America and Australia. In the 1950s, Foote Mineral opened a mine and production site of more than 800 acres near Kings Mountain, operating until shifting markets and weak prices prompted it to turn overseas. (Foote morphed into Albemarle in the 1980s.)

The company’s mine “has been idle since the 1980s, but it’s in the same spodumene seam Piedmont Lithium is exploring,” says Eric Norris, Albemarle’s lithium president. “It’s still probably the highest-quality, lowest-cost lithium resource in North America.”

That’s a potential competitive cloud dangling over Piedmont’s drillers near Beaverdam Creek. “We’ve spent about $30 million in the last several years evaluating restarting it,” Norris says. “We have a plan to do that, but two conditions have to be right.” One is streamlining federal mining regulations, and the other is increased domestic demand. Both seem imminent.

YELLOWSTONE REVELATION

History may be on Piedmont Lithium’s side.

Growing up in Lincoln County, Piedmont Lithium’s chief geologist and co-founder, Lamont Leatherman, 55, remembers the odd, greenish stone a neighbor used to gravel his driveway. It was spodumene aggregate, the crushed byproduct of nearby lithium mines. A 1983 graduate of Lincolnton High School, he took little notice, but after a trip to Yellowstone National Park, his interest in geology grew. He earned a degree in the subject at Appalachian State University in 1988.

For several decades, Leatherman plied geology in Canada and elsewhere, including stints north of the Arctic Circle, chasing gold, oil and other materials. He lives on Vancouver Island, Canada, and when markets for those commodities turned soft, he recalled the odd-colored rocks in his native Lincoln County.

“I came down in 2009, started poking around and taking some samples, and was able to get some funding,” he says. Despite the early promise, however, the mercurial lithium market followed gold and oil prices into the doldrums. Leatherman turned to raising blueberries in Canada.

“The downturn lasted until about 2016, when things picked up again,” he says. That’s when he contacted a potential investor, Taso Arima, who’d moved to the U.S. to possibly develop coal mines. The Aussie soured on prospects for fossil fuels, just as Tesla and other electric-vehicle makers kicked into high gear. “We met, drove around [for] a day or two in Gaston County, and decided to get the funding started.”

In 2017, Phillips signed on as CEO, giving Piedmont Lithium a prestigious link to Wall Street bankrolls. In March, Piedmont poached David Klanecky, formerly Albemarle’s lithium vice president, to become the company’s executive vice president and chief operating officer.

As a geologist, Leatherman knew the Carolina Tin-Spodumene Belt contained the world’s richest cache of lithium. He also knew the region’s long lithium legacy.

As early as the late 1940s, open pit mines in Gaston County produced lithium in vast quantities for nuclear weapons and other uses. It also was used in anti-anxiety drugs and lubricants and for ceramics such as stove cooktops. Underscoring its versatility, about 40% of Albemarle’s lithium now goes into non-battery uses, such as automobile grease, Norris says.

Piedmont isn’t intimidated. “We think this project, as important as it is in its own right, will be the foundation for something much, much bigger for North Carolina,” Phillips says. “This is the large mineral belt where the lithium industry had its birth from the 1950s on up through the 1990s. This is where virtually all of the world’s lithium came from.”

Lithium eventually declined in popularity, falling victim to economic trends and shifting technology. The region was left with gaping surface pits near Kings Mountain and Bessemer City.

Cattanach, the state geologist, says lithium in Gaston is contained in hardrock spodumene, which is mined, crushed and the lithium extracted and processed. It’s high-quality but expensive compared with the other source, lithium brine, pumped from deep in the earth and evaporated to access the lithium. The Foote Mineral mine in Kings Mountain shut down, for example, when the company was acquired by Albemarle and shifted production to Chilean brine.

Those same economics, plus world affairs, are now shifting attention back to Gaston County. The world produced about 300,000 tons of lithium last year, a third generated by Albemarle, says Bank of America analyst Bryne. Buoyed by demand for electric vehicles and other uses such as phones and battery-powered lawnmowers, that will soar to 1 million tons a year by 2025.

“That puts the value proposition in a different perspective from the 1950s,” Byrne says. “Historically, most of the supply was either from Argentina, Chile or Australia.” Much of the Australia hardrock output was partially refined but shipped to China as ore for further conversion to lithium hydroxide. “What Piedmont is doing is revisiting whether the ore deposits west of Charlotte are sufficient to be extracted and converted all the way to hydroxide, as opposed to what the Australians do.”

Norris says Albemarle operates on five continents including Australia and China, “but the precious stuff, the starting point, the lithium itself, none of that actually comes from China.” His company operates the sole source of lithium in the U.S., brine production in Silver Peak, Nev. It is expanding that operation with research assistance from the U.S. Department of Energy.

STORING ELECTRICITY

Other factors are thrusting Gaston County into the global lithium spotlight. About 100 miles west, on a wooded lot next to a substation in the small community of Shiloh in south Asheville, kids can be heard playing a few blocks away. Here, a dozen white, metal boxes the size of small SUVs sit silently behind a low chain-link fence.

This is North Carolina’s largest utility battery storage system, a 9-megawatt, $15 million Samsung installation owned by Charlotte-based Duke Energy. Another 40 miles to the north, high in the Great Smoky Mountains, Duke has a 4-megawatt system to guard against outages in remote Hot Springs.

“Lithium batteries are the go-to technology right now,” says Randy Wheeless, Duke Energy’s communications manager. “Other chemistries are talked about, but if you‘re going to build large battery storage in the country today, it’s probably going to be lithium.”

Lithium battery storage is also becoming critical to renewable-energy systems such as wind and solar to store energy for when there’s no sun or wind. The systems can be used to help meet demand spikes, preventing the need for more expensive gas-turbine peak-load plants.

Analysts and market watchers say there could be sufficient demand for existing and emerging lithium companies such as Piedmont Lithium, Albemarle and Livent. Among President Biden’s first acts was reinserting the U.S. in the Paris Agreement on climate change and proposing a $2.7 trillion clean-energy and jobs plan. In May, the International Energy Agency issued a report concluding that estimates such as Byrne’s — that today’s 300,000-annual demand will more than triple by 2025 — might be conservative. The agency predicts a sixfold increase in world mineral needs by 2040.

“Everything in the political environment is in our favor now, including a lot of bipartisan support for green energy,” Phillips says. It helps that there’s growing uneasiness about the nation’s critical auto, electronics and utility industries becoming hostage to a potentially hostile foreign supplier, China. The Asian nation is investing heavily in electric vehicles, hoping to compete effectively with Ford, GM, Tesla and other global automakers.

 

FEW OBJECTIONS

Like steps for a giant, the sides of the former Foote mine rise out of the earth. Looming behind is Kings Mountain, which is the pinnacle of the towering monadnock, a geological term for an isolated hill of bedrock that survived centuries of erosion. As drivers pass by on Interstate 85, few realize the once abundant, now abandoned lithium mine was there.

Lithium mining uses classic strip-mining techniques, says Cattanach, the state geologist. “You strip off the overburden, soil or whatever to lay open the mine, blast, move ore with heavy equipment, then crush and separate the spodumene to get the raw lithium.”

Piedmont says byproducts such as the spodumene gravel Leatherman saw as a kid paving driveways, along with quartz and other minerals, will be sold, augmenting income.

Similar strip mining for coal and other minerals has long raised environmentalists’ ire, but Piedmont Lithium’s plans have attracted little opposition in a county hungry for jobs and economic development. More than a year ago, the project received key permits from the N.C. Department of Environmental Quality and U.S. Army Corps of Engineers. Other threats might be more subtle.

Some question if other energy sources might supplant lithium as quickly as it’s rooting out its fossil predecessors. Several industry officials say that is unlikely considering the nearly universal swing to battery-powered vehicles.

“Hydrogen fuel cells have some advantages in large vehicles like trucks, trains and buses,” Byrne says. “But that’s probably low risk. Battery electric vehicles are so far down the path to being commercial, lithium’s prospects are not likely to be disputed. That’s why we’re looking at double-digit growth for the next decade.”

Long-established Albemarle and its lithium head, Norris, are only slightly more subdued. Cheaper, overseas brine forced the company’s Gaston mine to shut down three decades ago, Norris says. Lithium prices, though rapidly rising, are still marginal. Local lithium enthusiasts might be overselling the desire of upstream companies to be near their raw material, considering lithium’s light weight. Transportation is a relatively small part of the finished products’ cost.

“We have probably the highest-quality, lowest-cost resource in North America, but you have to have customers for it,” Norris says. Major carmakers often have long, binding contracts with Asian battery makers such as South Korea’s LG and Japan’s Panasonic, obtaining lithium processed by low-cost Chinese sources. “If I could snap my fingers and have Kings Mountain in production tomorrow, we’d still be shipping 100% of our production to Asia because there’s just not the demand in the U.S. for it right now.”

That’s changing. So is Gaston County, though Piedmont Lithium production is still likely two years off.

Summer shade begins to close in on tree-lined Glynlaurel Lane this time of year. Trucking company owner Lewis Guignard sold his land here to Piedmont Lithium and now lives in Wilkes County, 80 miles to the north.

“I’m a little farther out of town this time,” he says. “The land I owned had been mined back in the 1980s, but they found a better seam over near Kings Mountain. I’m glad they’re doing it, and it’ll make some people better off. But for me, it was like hitting the lottery without buying a ticket.”

That’s the same, Wall Street and investors apparently believe, for Gaston County’s and the state’s ambition to become the nation’s lithium capital. ■

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