Highlights
- U.S. is aggressively developing domestic lithium resources with key deposits in Arkansas, Nevada, and California, challenging China’s current market dominance.
- Major oil companies, such as ExxonMobil and Chevron, are entering the lithium extraction market from oilfield brines, signaling a potential strategic shift in energy production.
- Despite promising resource estimates, lithium production faces significant challenges, including environmental regulations, tribal pushback, and complex economic viability assessments.
A recent opinion piece by veteran Indian journalist Kajal Basu (The New Indian Express, May 28, 2025 (opens in a new tab)) highlights the intensifying geopolitical rivalry between the United States and China over lithium, a mineral critical to electric vehicle (EV) batteries and the broader energy transition. While the article draws attention to major U.S. discoveries and Big Oil’s entry into lithium extraction, Rare Earth Exchanges cautions against interpreting speculative resource figures and assumptions of near-term U.S. dominance.
On the Money
Basu accurately captures a growing shift in U.S. lithium ambitions. Backed by the U.S. Geological Survey (USGS) and key federal agencies, both the Biden and Trump administrations have prioritized domestic lithium development through accelerated permitting and targeted financing. Key prospective deposits in Arkansas (Smackover Formation), Nevada (McDermitt Caldera), and California (Salton Sea geothermal brines) are real, though still largely at the resource stage—not yet confirmed reserves under standard economic viability definitions.
The article also correctly highlights China’s longstanding dominance in lithium refining and battery component manufacturing, which is backed by approximately $100 billion in cumulative state support from 2009 to 2019. As of 2024, China controls over 60% of global lithium chemical refining and roughly 77% of global battery cell manufacturing capacity. In contrast, the U.S. currently operates one commercial-scale lithium mine (Silver Peak, Nevada) and is in the early stages of expanding its upstream and midstream lithium supply chain.
Some Questions
Basu suggests U.S. lithium resources may total 43–57 million metric tons (mmt)—well above the USGS’s 2025 official estimate of 19 million short tons (~17.2 mmt). These larger figures likely include inferred or undiscovered hypothetical resources, not confirmed, extractable quantities. Rare Earth Exchanges notes that these numbers should not be treated as economically proven reserves.
The article further suggests that a lithium oversupply is likely to occur before 2030, citing cumulative global resource estimates. However, REEx stresses that resource availability does not translate to marketable supply. Delays from permitting, ESG litigation, capital bottlenecks, and refining limitations, particularly in the U.S., will constrain throughput. In contrast, state-influenced Chinese firms retain tighter control over project execution timelines.
Key Insights for Stakeholders and Investors
- Domestic Extraction Acceleration: U.S. lithium development is entering a critical phase. The Thacker Pass project (Lithium Americas) is slated for commercial production in 2026, backed by a $2 billion DOE loan commitment (opens in a new tab) and a $900 million letter of interest from the Export-Import Bank (opens in a new tab) (as of April 2025).
- Environmental & Tribal Pushback: As noted in Basu’s piece, projects such as McDermitt Caldera face ongoing legal challenges from Indigenous communities, including the Fort McDermitt Paiute and Shoshone Tribes. Such resistance could delay or alter timelines. However, at least one judge ruling (opens in a new tab) went against the tribe.
- Big Oil’s Entry: ExxonMobil and Chevron have announced plans to extract lithium from oilfield brines, leveraging wastewater from legacy hydrocarbon operations. These approaches offer potential cost advantages but remain in the early stages and unproven at scale, with full commercialization still years away.
Conclusion
While Basu’s article presents a plausible vision of U.S. resurgence in lithium supply, Rare Earth Exchanges (REEx) cautions that resource announcements alone do not translate into production dominance. For investors, policymakers, and industry strategists, the global lithium race remains both strategically vital and commercially uncertain, driven as much by geopolitical execution and regulatory reform as by geology itself.
REEx, along with rare earth elements, tracks lithium developments alongside broader critical mineral markets, offering data, project intelligence, and geopolitical analysis.
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