Washington's drive to make the United States a major global lithium producer is being held back by a confusing mix of state regulations that are deterring developers and hampering efforts to break China's control of the critical minerals sector.
March 25 (Reuters) - Washington's drive to make the United States a major global lithium producer is being held back by a confusing mix of state regulations that are deterring developers and hampering efforts to break China's control of the critical minerals sector.
Across Texas, Louisiana and other mineral-rich states, it's unclear who owns the millions of metric tons of lithium locked in salty brines underneath U.S. soils, how the battery metal should be valued by regulators and who ultimately should pay to process it into a form usable by manufacturers.
These legal ambiguities are the latest impediment - alongside technical challenges and sagging commodity prices - to America's plans to produce more of its own lithium and wean the country off foreign supplies, according to interviews with regulators from seven U.S. states, legal experts, politicians, landowners, investors, royalty firms, industry executives and consultants.
U.S. federal officials in Washington are largely powerless to force states to change regulations, leaving the Biden administration's aggressive electrification targets beholden to the pace at which local officials update outdated statutes.
Global lithium demand is expected to outpace supply by 500,000 metric tons annually by 2030. Unless the United States boosts its own production, the country's manufacturers will find themselves reliant on China and others for supply as the end of the decade approaches, analysts warn.
The Texas legislature, for example, last year approved a law - supported by Standard Lithium (SLI.V), opens new tab and Chevron (CVX.N), opens new tab - that instructed the state's oilfield regulator to craft regulations for lithium extraction from brines. But the regulator, known as the Railroad Commission of Texas, told Reuters is has no timeline for when it will finish that task.
"I don't even know where to start in terms of working with the local authorities to get brine mineral rights in Texas. It's confusing," said Brady Murphy, CEO of Tetra Technologies (TTI.N), opens new tab, which aims to produce lithium with partner Exxon Mobil (XOM.N), opens new tab.
The Railroad Commission of Texas told Reuters it plans to release its rules for public comment once they are formulated, and then the three commissioners will vote on them.