PC: Bloomberg

The world’s largest manufacturer of electric vehicles, Tesla, is examining the viability of building a refinery for lithium hydroxide off the coast of Texas.

According to a recently published letter to the Texas Comptroller’s Office, Tesla stated that the factory would concentrate on the creation of “battery-grade lithium hydroxide” and be “the first of its kind in North America.”

According to the application, the business would transform “raw ore material into an useable state for battery production” and then transport lithium hydroxide to multiple Tesla battery production facilities.

Elon Musk, the CEO of Tesla, stated in April that the company could need to enter the lithium refining business because the price of the metal had “gone to absurd heights.”

An index used for tracking lithium prices published by Benchmark Mineral Intelligence shows a 120% increase in price this year.

The action by Tesla is probably an attempt by the company to diversify the sources of the lithium and batteries it uses. The United States only controls 1% of the world’s processing and refining of lithium, while China controls more than half of it.

The business stated in its Texas application that it is also taking into account “additional battery materials processing, refining and manufacturing and ancillary manufacturing operations in support of Tesla’s sustainable product range.”

Construction may start in the fourth quarter of 2022 if Tesla’s proposal is accepted, the company said. By the fourth quarter of 2024, the project will be in “commercial operations.”

Tesla stated that “only very preliminary development operations have begun” and that it is still “considering the feasibility of this idea.”

According to Tesla, no contracts have been reached or signed for engineering, construction, or procurement, and no licences have been received.

Tesla claimed it is considering a competitive site in Louisiana while Musk’s firm stated the project could be built “anywhere with access to the Gulf Coast shipping channel.”

Tesla said that Texas’s law must grant them tax benefits in order for this project to be financially feasible.

The application states that the choice to engage in the proposed project in Texas “would be based on a number of commercial and financial reasons, including the capacity to seek relief with respect to local property taxes.”

For batteries used in everything from electric automobiles to cellphones, lithium is an essential element. Washington has been concerned that Beijing could cut off vital supply of lithium and other elements due to the strategic importance of such rare earth metals and China’s supremacy in their mining.

To catch up with China, the United States is trying to expand its own rare earth mining and refining sector.