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Professor of Economics at North Carolina State University
President of Walden Economic Consulting

Lithium Mining in NC- The Last Piece of a Complete EV Battery Supply Chain?

“The notion of the severance tax is a win-win: have the economic benefits of the lithium mining but account for the negative environmental externalities.”

Mike Walden

Mike Walden


Dr. Walden recently completed a study supported by the North Carolina Collaboratory titled: “A Proposal to Estimate the Economic Impacts of Mineral Mining in North Carolina: Matching Benefits and Costs.” North Carolina is positioned to be a national leader in the electric vehicle (EV) battery supply chain, helping propel the transition from fossil fuels to renewable energy sources. The main battery used in EVs today is called a lithium-ion battery. NC happens to have a mile-wide band of lithium known as the Carolina Tin-Spodumene Belt which runs through Gaston County and has more than 80% of known lithium ore in the United States.

Companies are rushing to take advantage of this natural resource. VinFast Automotive is putting its EV manufacturing plant in Chatham County and Toyota is building their first North American EV battery facility outside of Greensboro. NC also has the largest high-purity quartz mine in the world, a mineral that is crucial to the making of computer chips which are crucial to the clean technologies these companies are making. One can see how NC has the perfect recipe for a complete EV battery supply chain.

Another significant benefit of developing EVs in NC is mitigating the urban-rural divide. Due to the decline of rural-dominated industries like tobacco and textiles in the 21st century, many rural workers have lost jobs over the years, causing an economic divide between rural and urban populations. Many of the new companies coming here would bring jobs to communities that really need them. Dr. Walden touched on some of the main components of his study into this matter in an interview below.

What minerals did your study focus on and what did you find about their mining potential in NC?

While we import a lot of the metals we use for electric batteries, North Carolina actually has large natural deposits of many of these. There are four minerals my study looked at- lithium, phosphate, silica, and pure quartz. As for lithium, there are already two proposed mines in Cleveland and Gaston County. The second mineral is phosphate, which helps make lithium-phosphate batteries (an alternative to lithium-ion). We have a large amount of phosphate rock on the coast, with Beaufort County having the largest integrated phosphate mine in the world.

Phosphate can produce the lithium-phosphate battery, an alternative to the traditional lithium-ion battery. The third mineral is silica, from which high-purity quartz is derived. High-purity quartz is a key mineral for computer chips. WolfSpeed announced last year that they are establishing a factory to make chips in NC and there was legislation passed at the federal level last year with financial incentives for companies to make these computer chips. High-purity quartz is one of the key components of pretty much any modern technology and it’s hard to find, but it turns out Pine Spruce, NC has the largest mine producing it in the world. So in short, NC has significantly high amounts of several key minerals for an EV battery supply chain.

What were your findings about the economic impact of proposed mineral mining?

We’re talking about the annual impact on the state economy in the billions. I looked beyond just the direct economic impacts (what the lithium factory makes in revenue), but also incorporated the indirect impacts. For instance, the lithium factory hires workers who are going to spend money at retail stores, which will have downstream impacts. There will also be new tax revenues to local and state governments in the millions. One of the job sectors that might benefit from the mineral mining is transportation as heavy-duty trucks will be needed to transfer the minerals. Trained mining workers will also be needed. Even retailers like restaurants will benefit because of the economic activity generated by the workers in the area.

What is a severance tax and how might it apply to this issue?

A severance tax means applying a tax to a natural element that’s involved in a beneficial activity that has a negative result. A severance tax allows a compromise- to continue the beneficial activity but account for and mitigate the negative effect. In this instance, lithium mining would be the beneficial activity, bringing lots of jobs to the community and helping NC be a leader in the EV space. The negative externality involved is the environmental and local effects that mining can have, including water pollution, sedimentation, and noise pollution. For every dollar of output or lithium mined we can apply some tax rate (probably within 0.15-1%) on the mining company and send that money back to the local government to use to reduce the environmental impacts. The notion is a win-win: economic benefits while also taking care of the negatives that creating those benefits produce. However, after looking at the taxes in other states, I found no measure that enforces the tax to be strictly spent on mitigating pollution and other environmental effects. That would definitely be a talking point for the crafters of the legislation establishing the tax.

How is your research going to help the citizens and policymakers of NC?

North Carolina has the opportunity to have almost a complete supply chain of EV batteries from the metals to the batteries to the automobiles. Do we want the lithium to come from the US or other countries? Our state can contribute to a domestic source of lithium while creating thousands of jobs and millions of additional tax dollars. While there is an issue with environmental side effects, this report is looking at a way we can compromise and have the mining take place in a way that accounts for the environment.