Tesla supplier Piedmont Lithium gets key North Carolina mining permit (updated)

Ioneer

15/04/2024 21:44

(Adds context in paragraphs 11,16)
    By Ernest Scheyder
       April 15 (Reuters) - North Carolina regulators have
approved a state mining permit for Tesla  TSLA.O  supplier
Piedmont Lithium  PLL.O  to develop one of the largest U.S.
sources of the key electric vehicle battery metal, although key
financing and local regulatory challenges remain.
    The approval from the North Carolina Department of
Environmental Quality, which was announced by the company on
Monday and is conditional on the posting of a $1 million
reclamation bond, removes one major hurdle to Piedmont's plans
to tap a large lithium deposit just outside Charlotte.
    Shares in the company, which first applied for the permit in
August 2021, rose 15.9% to close at $14.68 on Monday. The state
in 2022 had turned down an application from an unrelated company
to expand a quarry.  
    The go-ahead for the 500-foot-deep mine comes despite
widespread opposition from neighbors worried about water, noise
pollution and other potential problems.
    The years-long opposition to the project, which would become
one of the few lithium-producing sites in the U.S, illustrates
broadening tension in the country, as resistance to living near
a mine clashes with the potential of EVs to mitigate climate
change.
    Piedmont must still obtain a local zoning variance and
financing for the project, estimated to cost more than $1
billion. The company has applied for U.S. Department of Energy
loans via a program through which rivals ioneer  INR.AX  and
Lithium Americas  LAC.TO  have already obtained financing.
    Asked when Piedmont would pay the reclamation bond, Piedmont
CEO Keith Phillips told Reuters that the company is "taking
steps to put the bond in place as soon as possible." 
    Piedmont agreed to a deal with Tesla last year to supply
spodumene concentrate, a key raw material for making batteries,
to the auto giant through 2025, with an option to renew it for
another three years.
        
    CHANGES TO DESIGN
    The state review process involved the submission of
thousands of pages of documents, multiple requests for
additional information, and at least three deadline extensions
for Piedmont. 
    As a condition of obtaining the permit, state officials are
requiring the company to conduct regular water quality and water
table levels tests, and to line a waste storage pit with a
synthetic liner, a departure from the typical requirement for an
earthen liner.
    State officials had expressed "many concerns" about
Piedmont's plans to discharge chemicals into the public sewer
system, according to regulatory filings.
    Piedmont, which also is working on lithium projects in
Tennessee, Ghana and Quebec, must still obtain state air quality
and wastewater permits, both of which are routine for mining
projects in the state. 
    Importantly, Piedmont must also receive a zoning variance
from officials in Gaston County, where the project has been
opposed by several county commissioners. 
    Phillips told Reuters the company plans to "consider the
timing of our re-zoning effort in the context of multiple
variables," including financing as well as "the window of
opportunity with the current Gaston County Board of
Commissioners." Four of the board's seven members have terms
that will end this December.
    Phillips on Sunday had phoned Chad Brown, chair of the
county board of commissioners, to discuss the state's decision
and ask for a meeting. Brown said he was open to meeting with
Piedmont, but that the board would not consider the zoning
variance until July at the earliest due to the county's annual
budget review process. 
    "We will not rush into anything. We'll listen to Piedmont,
and we'll see what happens," Brown told Reuters. "This mine
would have a big economic impact on the county, but it also
could have tremendous environmental impacts."
    Despite spending years buying acreage, hiring investment
bankers and inking a supply deal with Tesla, Piedmont did not
approach county commissioners until July 2021 with its plans. 
    The company also did not apply for a state mining permit
until the following month. Those strategic missteps have fueled
mistrust across the county of roughly 220,000. Brown said he has
not spoken to Phillips since that 2021 meeting.
    Low lithium prices may also hobble Piedmont's financing
attempts, analysts said. 
    "Finding external capital for a new lithium project could
prove difficult at current lithium prices, though it will help
that Carolina Lithium is very low on the cost curve," said
brokerage TD Cowen on Monday.  
    Meanwhile Albemarle  ALB.N , the world's biggest lithium
miner, is hiring staff and buying land in a neighboring North
Carolina county amid plans to re-open a mothballed spodumene
lithium mine that would compete directly with Piedmont.

 (Reporting by Ernest Scheyder; additional reporting by Sourasis
Bose in Bengaluru; Editing by Anil D'Silva, Tasim Zahid, Jan
Harvey and Marguerita Choy)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))