Tesla is evaluating a lithium refinery in Texas for electric car batteries

Elon Musk previously suggested that Tesla could move into large-scale lithium refining as the cost of the metal, a key component in battery manufacturing, has risen. If Tesla’s application in Texas is approved, construction of a lithium hydroxide refining facility could begin in the fourth quarter of 2022.

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Electric car giant Tesla is evaluating the feasibility of a lithium hydroxide refining facility on the Gulf Coast of Texas.

Tesla said the plant would focus on developing “battery-grade lithium hydroxide” and would be “the first of its kind in North America,” according to a recently released letter to the Texas Comptroller’s office.

The company would process “the raw ore into a usable state for battery production” and then ship the lithium hydroxide to various Tesla battery manufacturing plants, according to the application.

In April, Tesla CEO Elon Musk said the company might need to get into lithium refining because the cost of the metal had “reached insane levels”.

The price of lithium has risen 120% this year, according to a tracking index from Benchmark Mineral Intelligence.

Tesla’s move is also likely an attempt to diversify the supply of its lithium and battery production. China controls more than half of the world’s lithium processing and refining, and the United States only 1%.

As part of the Texas application, the company said it is also considering “additional processing, refining and manufacturing operations for battery materials and ancillary manufacturing in support of the company’s sustainable product line.” You’re here”.

If Tesla’s application is approved, construction could begin in the fourth quarter of 2022, the company said. The project will reach “commercial operations” by the fourth quarter of 2024.

Tesla said it is “still evaluating the feasibility of this project” and that “only very preliminary development activities have begun.”

No engineering, construction or supply contracts have been negotiated or signed and no regulatory permits have been obtained, Tesla said.

Musk’s company said the project could be located “anywhere with access to the Gulf Coast shipping channel.” Tesla said it was evaluating a competing site in Louisiana.

Tesla said the only way this project would be viable is for Texas to give it tax breaks under its law.

“In the case of investment in this proposed project in Texas, the decision will be based on a number of business and financial considerations, including the possibility of obtaining relief from local property taxes,” according to the application.

Lithium is an essential metal for batteries that go into everything from electric cars to smartphones. Given the strategic importance of these rare-earth metals and China’s mining dominance over them, Washington feared Beijing could cut off critical supplies of lithium and other materials.

The United States is looking to develop its own rare earth refining and mining industry to catch up with China.