An aerial view. Courtesy of Southern Virginia Mega Site.

Three things happened last week that might not appear connected but all form part of an economic big picture.

  • A North Carolina company announced it will build a $1.3 billion lithium hydroxide processing facility near Chester, South Carolina.
  • That same day, a Michigan-based battery recycler announced it will build a $300 million facility near Columbia, South Carolina (you may be starting to sense a trend here, but just hold tight).
  • A day later, President Joe Biden paid a state visit to Canada to meet with Prime Minister Justin Trudeau and speak to the Canadian parliament. 

Let’s look at how these things are related — and, more importantly, how they relate to our part of Virginia.

Part of the significance of the Albemarle Corp.’s decision to locate in South Carolina is that it didn’t locate in Virginia. The Southern Virginia Mega Site in Pittsylvania County was in the running for the 300-job plant. Gov. Glenn Youngkin personally lobbied the company CEO — see the story by Cardinal’s Grace Mamon — but ultimately the company decided to go with a site closer to its Charlotte, North Carolina, headquarters. As Del. Danny Marshall, R-Danville, said: “You can’t move geography. There’s not a thing we could do about that.” (Hold that thought about geography, too.) This is the second time in less than a year that the mega site has been passed over; last year, it was a runner-up to Savannah, Georgia, for an 8,100-job Hyundai electric vehicle battery plant. With this many close calls, you have to think that at some point the mega site is finally going to score the big one.

The other significance of that lithium plant is the lithium itself. Lithium is a key ingredient in batteries, one of what are now starting to be called “critical minerals.” Electric vehicles require six times the minerals that a gas-powered car does. For a long time, we didn’t worry that much about where these minerals came from. Between our concern for the environment, and just general “not in my backyard” sentiments, it was often easier for companies to mine these minerals overseas. Now we’re starting to rethink that approach. The pandemic has made us more sensitive to where our supply chains come from; so, too, has the general concern that China has been cornering the market on a lot of technologies. That was the driving force behind the CHIPS-Plus Act that Congress passed last year to encourage more domestic production of microchips. Lithium isn’t in microchips but it is in lots of other things: virtually every computerized device you own, for instance. 

Lithium is also the key component in electric vehicle batteries and, as I’ve pointed out before, the demand for electric vehicles is growing regardless of whether you like that or not. You can blame Virginia Democrats for linking our emissions standards to California, if you like, but ultimately they’re not the ones who will make you buy an electric car: It will be the carmakers themselves, all of whom are moving rapidly to get into the electric vehicle market, some of whom have already announced their plan to phase out gas-powered cars altogether. That means we’re going to need a lot more lithium. 

The Albemarle Corp. is the world’s largest lithium producer, with operations all over the world, including in China. Reuters reported earlier this year that the company plans to more than double its capital budget by 2027 as it ramps up production. More recently, Reuters says, Albemarle has “moved aggressively to expand in the United States, which it sees as its next major area of growth thanks to tax credits and other incentives offered by the U.S. Inflation Reduction Act.” Let us pause here to reflect upon a political irony: That act — also known as “the climate bill” — was opposed by every Republican in the U.S. Senate, yet here it’s a Republican-voting state that will benefit from the jobs being created by its passage.

Right now, the nation’s only active lithium mine is in Nevada but there’s a big deposit of lithium under Kings Mountain, North Carolina, and Albemarle would like to mine that — hence this new processing facility. It’s 42 miles from Kings Mountain to the new Albemarle site in Chester, South Carolina, but 160 miles from Kings Mountain to the Southern Virginia Mega Site. Nothing Youngkin could say could overcome that. 

Meanwhile, Albemarle also wants to recycle lithium from batteries. It’s not the only one, either. Cirba Solutions, the other company to announce on March 22 that it’s going to South Carolina, is also in the battery recycling business. Electrive, which covers the “electric mobility industry,” reports that “Cirba will extract materials such as nickel, cobalt and lithium from end-of-life batteries from electric and hybrid vehicles and electronic equipment and scrap from battery factories,” perhaps enough for 500,000 electric vehicle batteries annually. 

Electrive says it’s no accident that both these companies went to South Carolina. It sketches out a “battery belt” arising in the Southeast, “where more than 15 new lithium-ion battery gigafactories or expansions have been announced since 2021.” I’ve written before about how the economic shape of the electric vehicle industry is being decided now; this is part of that. Electric vehicles are basically big batteries on wheels and we’re seeing many of these plants go to South Carolina and Georgia. Both the companies that our mega site lost out on (that we know of) were electric vehicle-related companies — Albemarle went to South Carolina, Hyundai went to Georgia. North Carolina last year landed a 7,500-job electric vehicle plant. Yet another political irony: Democrats have been the ones pushing electric vehicles the most but it’s Republican-voting states that have profited the most from the new electric vehicle market. The governor most vocal about how electric vehicles are good for the economy isn’t Democrat Gavin Newsom of California, it’s Republican Brian Kemp in Georgia, with Republican Hugh McMaster in South Carolina not far behind. On the day he was able to announce not one but two EV-related companies locating in his state, McMaster crowed: “South Carolina has worked hard to create a business environment where the electric vehicle industry can thrive, and with announcements like this it is most certainly paying off.” You don’t see these Republicans mocking electric vehicles, you see them cashing in. 

We can all speculate why the Carolinas and Georgia are doing so well with this sector. Michigan and other traditional auto-producing states are certainly unhappy about this; the lack of a strong union tradition in the South probably plays some role in this. However, at some point things achieve a momentum of their own; we’re seeing the rise of a whole new economic cluster in this battery belt. If this is where electric vehicles are being built, it makes sense for battery-makers and others in that supply chain to be nearby. Maybe Albemarle felt tethered by that prospective lithium mine near Kings Mountain, North Carolina, but Cirba could likely have gone anywhere — but it certainly makes sense to be somewhere in the Southeast. 

Here’s where we begin to tie things back to Virginia: If this new “battery belt” runs from Georgia to the Carolinas, why can’t it run just a wee bit further north to southern Virginia? That’s a question I don’t immediately have an answer for, but I offer it up for consideration by those who know more than I do. Youngkin has proposed more nuclear research in the state; part of his goal is to make nuclear energy a bigger part of our energy mix. In that same spirit, should we be pushing for more research related to electric vehicles? It’s not as if we lack an EV industry; Volvo in Pulaski is turning out electric trucks and now there’s an EV startup called Trova nearby — see the story by Randy Walker from last September. Do we need a battery research center in Danville, for instance, to help make the mega site more attractive for the next company?

While you’re pondering that, let’s turn our attention north to Biden’s visit to Ottawa. Canada is such an afterthought to Americans (except when an Alberta clipper blows through) that we often forget about it. A presidential visit to Canada often seems more of a courtesy than a summit of significance. This time was different, though. 

Politico zeroed in on that significance this way: “Canada has the minerals required for electric vehicles, solar panels and other clean-energy technologies. The United States wants them.” The Biden administration sees Canada as a reliable source for many of those critical minerals we need. The Trudeau administration sees the United States as a good source of funding to help Canada extract them and process them. Put more simply: They have the minerals, we have the  money. That’s what this summit was about. “Canada is the only Western nation that has an abundance of cobalt, graphite, lithium and nickel, which are essential for electric vehicles and their batteries,” Politico reports. “It also is the world’s second-largest producer of niobium, an important metal for the aerospace industry, and the fourth-largest producer of indium, a key input in semiconductors and many materials needed for advanced vehicle manufacturing.” Politicians are starting to learn the importance of geology. (Geology teachers everywhere should rejoice at this and consider it a teaching moment.)

Our supply chains of the future may have a lot more to do with Canada’s Quebec province than with China’s Qinghai province. That would be a good thing. The question is whether those supply chains will wind up in the Carolinas and Georgia, or whether any will wind up in Virginia.

Yancey is editor of Cardinal News. His opinions are his own. You can reach him at