Demand from battery makers drives search for lithium

Exploration for lithium is ratcheting up in Nevada, but a cumbersome permitting process is bogging down activity, one state administrator says.

Demand for lithium worldwide is expected to increase exponentially with the advent of lithium-based batteries for hybrid and electric vehicles.

Two smaller exploration companies recently are advancing projects in the state.

Lithium Corporation will begin a drilling program in 2010 at its Fish Lake Valley project in northern Esmeralda County, and the company also has begun preliminary exploration at its Fish Creek Caldera property south of Battle Mountain in Lander County. Lithium Corporation incorporated in Reno and eventually could locate its headquarters here, President Tom Lewis says.

Black Hawk Exploration of Fox Island, Wash., plans to begin exploration drilling at its Blue Lithium 56 claim in the Clayton Valley of Esmeralda County. The claim is near the Chemetall-Foote Silver Peak lithium mine, which has been in production since 1966.

The two companies join Western Lithium Corporation of Vancouver, which seeks to develop a clay-based lithium carbonate mine at its Kings Valley project 54 miles northwest of Winnemucca in Humboldt County.

The Chemetall-Foote Silver Peak mine currently is the only operating lithium mine in the United States. Increasing domestic lithium supplies is of paramount importance, Lewis says, and companies such as Western Lithium, Black Hawk and Lithium Corporation seek to enter the market now in order to be well-positioned as demand rises.

But their efforts are being hampered by a push for renewable energies, such as geothermal, says Alan Coyner, administrator with the state's Department of Minerals. Bureau of Land Management officials, he says, are tied up expediting geothermal projects, and permitting for lithium has taken a back seat.

"The BLM is moving at a glacial pace," Coyner says. "The BLM nearly has been overwhelmed. Especially the lithium guys are feeling the effects of the geothermal business the BLM's marching orders are to expedite renewable energy at all costs, and those projects are coming to the top of pile."

Mel Meier, assistant deputy state director, minerals, says the BLM is adding staffing in Nevada to deal with increased workloads.

"Mining and exploration beyond the notice level requires a plan of operation and compliance with the National Environmental Policy Act," Meier says. "The NEPA process can be complex and laborious. Permitting often requires gathering baseline data, testing and analysis all of which are time intensive. BLM Nevada is committed to a multiple-use mission, and lithium mining remains an important part of that portfolio."

Despite the angst associated with permitting, Lithium Corporation's Lewis says the state's geology and regulatory climate make lithium exploration in Nevada much more feasible than it is in neighboring states.

"Nevada has probably the best track record for a company to find something and be able to put it into production," he says. "California pales in comparison."

And some areas are ripe for new discoveries. Kevin Murphy, chief executive officer of Black Hawk Exploration, likens a lithium claim in the Clayton Valley, where the Silver Peak mine is situated, to having a gold claim in the Comstock Lode.

"If I want to be involved in lithium brines, I want to be next door to Chemetall-Foote," he says. "There is no reason Chemetall-Foote would be the only operation in that valley. If they have been successful for the last 45 years, we believe we, too, could be successful."

Black Hawk is working its way through the permitting process and expects to begin a drilling program to identify the extent of lithium resources by the first of the year. The company has committed $1 million to advance its project, Murphy says, and the privately held company has received many offers from the investment community to raise additional capital.

"We are in the right market, and we are there at the right time."

Says Murphy: "Lithium is a lighter-weight, long-storage mineral that is taking over the replacement for nickel-cadmium. We haven't found anything that is better, and the market is increasing. It is a demand-driven market."

Lithium typically is mined in two ways: from a brine or extracted from a clay-like mineral called Hexite. Extracting lithium brine pumped up from wells is the most cost-effective way to mine lithium. The brine is pumped to holding ponds, where it evaporates in 18 to 24 months and then is chemically processed from a liquid into a powder known as lithium carbonate. Mining and extracting lithium from clay-based minerals requires much more mine site infrastructure and capital investment.

Al Di Stefano, director of global business development with the Nevada Commission on Economic Development, says lithium was one of the state's top exports to Japan in 2008. Exports totaled $2.1 million dollars, down from $3 million in 2007. The global recession has impacted lithium exports to Japan this year through the first quarter exports totaled just $136,000.

Lithium exports to China totaled $829,000 in 2008, Di Stefano says. But he expects export levels to rise with the possibility of new lithium sources coming online and the increasing need for lithium-based batteries for Japanese-made electronics.