Piedmont Lithium CEO: The ‘biggest issue facing the EV business’ is battery production

Piedmont Lithium President and CEO Keith Phillips joins Yahoo Finance Live to discuss Piedmont Lithium's deal with LG Chem, sourcing EV battery materials, and headwinds for the EV industry.

Video transcript

- Piedmont Lithium shares. Look at that. Up just around 1 and 1/2% today after inking an investment deal with LG Chem. Now, the deal was spurred by the Inflation Reduction Act, which has stipulations about where products and EV batteries come from. That has certainly been a boon to companies like Piedmont Lithium, whose shares are up huge year to date and up huge, really, over the past year.

We want to bring in Keith Philips, Piedmont Lithium CEO. Year to date, you're looking at gains of just about 68%. Keith, it's great to have you here. Certainly, a huge deal for your company. Talk about the significance of this and where we are just in terms of the adoption of energy that we need in order to meet some of the goals laid out from the Biden administration.

KEITH PHILLIPS: Well, listen, thanks for having me. We're very excited. LG Chem, as you may know, they're the biggest battery producer outside of China. They're making massive investments in the US in battery capacity and cathode capacity. So to have them become one of our biggest shareholders, investing in our business and partner with us as our biggest customer for the time being is really exciting. They're great.

The project we're a partner of in Quebec is called North American Lithium. The spodumene concentrate we produce there goes into lithium hydroxide that goes into batteries. And having LG as a customer is fantastic. It will the first new producer of battery raw materials in North America in decades. So it's great news for us.

- Good to see you, sir. So we're about a year removed from some really bold comments from RJ Scaringe, the CEO of Rivian, when he said in terms of the existing supply chain for the EV batteries we're going to need, 90% to 95% of the supply chain does not exist. Are we much closer to meeting those goals?

KEITH PHILLIPS: Not really. I mean, we're making progress. It's interesting. I heard your prior conversation about charging infrastructure and everything else. The biggest issue facing the EV business is not demand. It's not charging. It's not EV production. It's battery production and the raw materials that go into the batteries. It takes a couple of years to build a car plant. It takes a couple of years to build a battery plant.

It generally takes a decade or more to advance a lithium project, to get a mine permitted, funded, engineered, and built and ramped up. It takes a long time. So I think the industry-- I think you'll see demand for electric vehicles will outstrip supply for decades to come. The supply will be held back because people won't be able to get the lithium and other battery materials they need for the cars.

- Wow. So, Keith, then how long I guess until the US battery supply chain is self sufficient in the US? From your projection, it sounds like we could be decades away from that.

KEITH PHILLIPS: Yeah. Maybe not decades. And I think it's a global issue. It's not just a US issue. I mean, right now, 85%, 80% of the lithium raw material comes from Australia and Chile. A lot of that material, particularly the Australian material, goes to China to be processed. There are a lot of projects in the US and in Canada and Africa and South America, really all over the place, to bring material online.

It will generally take time. We're lucky. This project in Quebec is a brownfield project. It was built about a decade ago. It's operated off and on in the past. It will come online pretty quickly here in the next several weeks. The next one in line is probably a couple of years behind. And then there are several kind of slotted to come. But those are just playing catch up to demand. I mean, right now, we think we're going to need about 40 times more lithium hydroxide in the US by the second half of this decade than we produce today. 40 times more.

So a lot of that will have to come internationally. Some of it certainly can come from friendly countries like Canada, like Ghana, where we have a project, and like Australia. So it'll be a battle. I think if you look out to the 2040s, I think you're going to have a lot of discoveries and lithium projects advance. I think lithium will be a market like copper, growing nicely with a good opportunity for people to invest between now and then. I think you're going to see supply shortages, elevated prices, and for those that can get into production, an opportunity to really generate cash flow for shareholders.

- Really interesting conversation. Piedmont Lithium CEO Keith Phillips, appreciate you being with us, sir. Thanks.