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- It is probably not too much of a stretch to say we are approaching the last days of the obsession that we have had with this public health crisis called COVID-19.

So if that's the case, how do we refocus on the issues at hand before all of this started.

In a moment we'll ask our panelists and later on, he is the CEO of one of the largest lithium producers in the country and in the world, Keith Phillips from Piedmont Lithium joins us, stay with us, please.

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(rousing soft music) On this edition of Carolina Business Review, Antjuan Seawright from Blueprint Strategy, Dr. J Michael Bitzer, Chair of the Department of Politics at Catawba College and special guest Keith Phillips, president and CEO of Piedmont Lithium.

(rousing soft music) - As we now face down a world post COVID, I think it's probably fair to say, what are the priorities now?

We've been so obsessed over the last year, plus with the idea of the public health crisis called COVID-19, that now we have to refocus.

Joining us is Antjuan Seawright, our friend from South Carolina and our friend from North Carolina, also in policy is Dr. Michael Bitzer.

Gentlemen, welcome to the program.

Antjuan, I wanna start with you, this idea that we've been so obsessed with our public health and all of the things that connect to that.

What happens now?

- Well, first of all, thank you for having me.

Always a pleasure to be with you, but I'll say this, I've always said about COVID-19 is a marathon, not a sprint and our recovery direction will be more important than speed.

And I think that's where we are.

Make no mistake, just because we are easing out of the COVID phase, does not mean the impact of COVID is over.

In fact, I would argue that for some communities, particularly the more consequential communities, the COVID 19 pandemic has only made the burden worse from economic, to housing, to health care and also what it did, Chris, it really got a chance to shine a bright light on some of the realities that exist in certain communities.

We have to make this thing called access to The Great American Experiment, accessible and affordable.

What COVID did, it showed us that that is not the case and not even reachable for certain communities around certain public policy issues.

- Michael, what's your take?

- I would completely agree with everything.

I think the divide has gotten even deeper within society and government has to address some of these issues head on.

I think like the virus, like the vaccines that have been developed, this is again going to be another marathon issue and we are not sure where things are going to go.

The biggest concern that I have right now, is in regards to those who have gotten vaccinated and this past week got some good news, we don't unnecessarily have to wear masks anymore, but for a significant segment of the population, those who are unvaccinated, whether because of hesitancy or whether because they don't believe in the vaccine, the concern that I have is, will that only continue to potentially drag this pandemic out even further, and what does that do to the economy?

What does that do to public issues like we have discussed so far, can we bridge that divide that has developed over this time period, or will public policy still continue to grapple with a group of Americans that choose not to be vaccinated and continue this onslaught on the American society?

- Well, if you don't mind me saying to both of you, I had a different take when I was asking the question and both of you sound, and I hope I'm not putting words in your mouth, but you sound almost alarmist that the gap for the at-risk families, I won't call them marginal because that's somehow diminishes something, but the at-risk families, kids, communities, is getting even greater and the risk is higher, is that right?

- Absolutely, it's the conversation of the haves and the have nots.

And I think Dr. Michael would agree with me, the have nots struggle even more during the pandemic.

And so coming out of the pandemic, recovery will look a lot different than those who will fall under the have category.

All you have to do is take the issue called healthcare.

You look at communities who had access to in medical facility, or even access to the virus, versus those who did not.

That's the reality.

You look at the digital to do that that exist in our communities.

We saw that on first hand.

You look at just access to business capital and what that means.

I mean, pick an issue, infrastructure, pick an issue.

All of those things I think will and have gotten worse.

And I think having recovery towards those issues, I think we'll be very, very challenging.

It's going to take some real investments and real partnerships or real trust and government working for the people again, in order to help try to attempt to level the playing field.

- And I think one of all of those issues, I think are critical and foundational.

The thing that I'm really concerned about is education.

What has happened to a group over the past year that has basically lost the opportunity for education and knowledge in ways we know that works and they have tried their best, but are we talking about a potential group of young people that have been so adversely impacted?

It could have ramifications in other public policy areas down the road that we just don't know about for potentially, I don't wanna sound too alarmist, but this could be a generational dynamic that really has long-term impacts in order for us to regain where we were before this pandemic.

- So when you both talk about this from the gap getting wider, and Michael back to your point about education and Antjuan certainly weighed into this issue.

When we use the term lost educational attainment, you're not talking about the broad body of students in the schools, you're talking about the kids and the families that were at a higher risk, that really have a much longer tail on the loss of the educational attainment.

Is that what I'm understand?

- Yes, I think that that has to be something that policymakers have to be concerned about, have to be able to address over the long-term and that's gonna require investments, whether we are willing to do so or not, I think is going to be the real struggle politically the way that I see it playing out over the next several years.

- Antjuan, let me ask you this.

Our blueprint for political engagement in recent years has become more and more acute.

That's not a surprise to anyone, but how does this issue that we're talking about, whether it's lost educational attainment or just the gap becoming wider for the families and the kids at risk, how does it not become politically weaponized and we can figure out a way to all agree that there is a greater need than there even was before COVID and become something that everyone sings out of the same page of the hymnal?

- Well, Chris, I think everything is political.

The question is, broke people make a (indistinct).

Big difference, and all I would tell you is, you pick an issue, all the quality of life issues that we flirted with up to today, the reality is, we have to get back to a place or even get to a place where we whisper about the things that we disagree about and yell about the places we agree on.

I think we can yell about the fact that education is the great equalizer.

It is the only way we can effectively compete in an ever changing global society.

We can create all the jobs in the world.

We can raise wages, we can address some of the challenges at Washington DC and down in the Carolinas want to address, but if we do not have an educated and a prepared workforce to compete in an ever changing global society, it really does not matter.

And it starts with foundational investments in education.

It starts with making sure broadband access is a reality.

It starts with making sure we're paying our teachers, is making sure the kids have the necessary equipment in the schools, but also making sure that our kids really are not focused on one track when it comes to education because all of them learn differently.

And I'm a prime example of that.

I am Chris, a second generation high school graduate and only a first generation college graduate.

There so many other Antjuan students out there who are gonna face a world at lot different than their parents and grandparents.

- Quick 30 seconds, for both of you.

I don't wanna ask specifics, in North Carolina, Michael, one of the big issues in the general assembly was business liability around COVID.

Do you expect that they're going to have some salient decision about that?

- I think so certainly.

And the big question is gonna be, where does the governor stand on this and how can the legislature and the governor work together?

I think that there is a greater sense between the two branches, even though they're divided politically to work towards some common issues.

That could be potentially one of the big ones.

- In the State House in South Carolina, Antjuan, as you're well known, not telling you anything, session is over as of just a past couple of days, hate crimes didn't seem to make it.

Would you expect that hate crimes can be addressed later on and the General Assembly in South Carolina will do something about that?

- I think the word later on is subjective versus objective, depending on who's asking the question and who's answering it.

I would find it hard pressed to be addressing our statewide election year, next year, where you find the legislative session.

I do think at some point we will get there.

I just pray and hope it does not take another tragedy like the Charleston shooting in order for us to get there to have to develop a strategy to address this issue.

- A recent article in The New York Times called the electric-vehicle race actually a gold rush for lithium.

Lithium obviously part of the lithium ion battery.

Joining us now is the CEO of what is being called one of the largest lithium operations in the country, if not the world.

And it's called the cradle of the industry.

His name is Keith Phillips and he is CEO at Piedmont Lithium.

Keith, welcome to the program.

- Thanks for having me on Chris.

- Keith, am I right to assume that, did I read that right that the deposits for lithium are nowhere more concentrated than they are in the Piedmont region of North Carolina?

- Yeah, it's interesting.

I hadn't realized until I got involved with this company, but essentially all of the world's lithium came from North Carolina from the 1950s to the 1980s, there is a very large mineral belt called the Carolina Tin-Spodumene Belt.

Spodumene is the mineral that most people are after that contains lithium.

And here are other sources, but this is a belt that's about 40 miles long, stretches from Lincolnton in North Carolina, down into South Carolina.

It's about a mile, a mile and a half wide, produce a lot of lithium again, from the 50s through really the 90s.

And then the two mines that were operating were depleted and shut down.

And there hasn't been any mineral activity on this belt since, and we hope to correct that.

- So how do you manage the, well, clearly is exponential growth, not just around lithium, but because of the knock-on phenomenon of what Tesla has done for the electric vehicle and clearly everything lithium related because that's the energy source.

How do you manage that kind of growth?

- It's a challenge for the whole industry.

So you think about it, every car company is now all in on lithium.

Ford is saying there'll be all electric in Europe by 2030.

GM's saying they'll be all electric in the world by 2035.

These are really until you own or drive one of these cars frequently, it's hard to appreciate the benefits of them, but I like to say they're smoother, quieter, faster.

I drive a Tesla Model 3, best car I've ever owned.

It's a lot of fun to drive.

It's also very, very affordable, leaving aside any government subsidies, it's cost far less to charge, plug it in your garage into the grid that it does to pay for gasoline even in normal times and there's no maintenance, essentially.

I've had this car since November, 2018.

I've never been to a service station and probably overdue, but there are no oil changes, there's not a lot of that stuff to do.

So they're superior vehicles.

Everybody will eventually figure that out.

Everybody will want one.

And I like to say, I think demand will go vertical.

I think by 2025, everybody including people on this show, if they're in the market for a vehicle at that time, is gonna wanna get an electric vehicle.

They're gonna be less expensive to buy, far less expensive to fuel and maintain, and they're gonna be better.

They're gonna be faster, they're gonna be better.

It's gonna be very, very, very hard for the industry to keep up with that demand, it's frankly gonna be impossible for a few different reasons.

And it's not like there's one grand big company out there that has to manage its growth.

It's dozens and dozens and dozens of businesses that have to grow simultaneously.

So this whole industry kind of has to grow.

You need electric vehicle plants to be built, and that's happening.

You need battery plants to be built,, and that's happening.

There was one Gigafactory in the world three years ago that was the Tesla and Panasonic factory in Nevada.

There are now I think 175 under development around the world, some in the U.S., most elsewhere, but the U.S. is catching up.

You need cathode capacity to be built.

You need cathode to go into the battery and you need raw materials like lithium, nickel, cobalt, manganese other raw materials to be developed at scale that hasn't happened before, particularly in lithium.

And lithium is, we think the most exciting place to be is the one irreplaceable element in a battery, VW calls lithium the irreplaceable element of the electric era.

You can make batteries without nickel, or manganese, or cobalt, or iron, or whatever.

You can't make them without lithium.

Every battery needs lithium, every lithium-ion battery.

And we're very happy.

Most of the lithium in the world now is processed in China.

We're gonna be doing it in North Carolina and we're very excited about that.

We think that's great for us, for our shareholders, for the community and for the country, frankly.

- Antjuan.

- Well, Kieth, thank you for what you're doing.

I think to move us toward that more perfect game that we all dream about and hope to get there.

What role will government play in terms of education, in terms of investments, in terms of pushing us towards what my friend John Lewis would always say, more cleaner and greener piece of real estate called America.

- Yes, good question.

I guess what I would say is, I haven't been involved in a lot of growth industries like this.

This is pretty unique.

I mean, we're talking 20 to 30%, top line growth in demand for the next two decades, is really quite staggering.

And in any nascent industry, you start with a point where electric cars today, with probably the exception of Tesla.

I think Teslas are less money to buy than an internal combustion car, but when Ford brings their F-150 out next year, it's gonna cost more to buy the electric one than the internal combustion version.

And what other countries have done, the U.S. has to some extent, but what China has done, what the EU have done, is offer pretty meaningful subsidies to really get over, get to that tipping point, get to the tipping point where enough of these things are being made that they're actually, the economic speak for themselves and they stand on their own two feet and we're in that transitional period.

So I think the Biden administration is looking at a lot of alternatives in that front.

So for instance today, the U.S. federal subsidy is $7,500 for electric cars tax rebate.

So number one, you only get it if you pay taxes.

So if you're at a point where you don't have $7,500 of tax liability, you don't get the credit and you... And it only applies for the first 200,000 cars sold of any manufacturer.

So if you're Tesla and you're the industry leader, you've already exhausted that.

So Tesla buyers don't get that credit which I think is sort of silly, so that's something that's being looked at.

And then also in the EU and in China, they've been stricter with respect to emissions controls.

And so you've seen in the EU, so China has the world's biggest vehicle market and China until 2019 was the world's biggest electric car market.

Europe surpassed it last year.

And it was impart by the CO2 emissions penalties kicking in and it was, and really compelling these car companies to make cleaner vehicles.

And it was impart by some additional subsidies they offered during the early stages of COVID, which really drove demand.

So in December in the EU, 21% of the cars sold had a battery in them versus three or 4% here in the U.S..

So policies like that make a difference.

And I think I think the industry isn't that far away from being at a point and I'm talking about the electric vehicle industry, not the lithium industry, but the electric vehicle industry is not that far away from the point where these cars will be less expensive to produce as companies get better at it.

And it's really just that, and produce more at scale.

- Michael.

- I'm curious, because you talk about the government subsidies, the issues at the national level, being in North Carolina, what can state governments do in particular to support this burgeoning industry, but also, I guess a kind of follow up is with gas taxes and the revenue that's generated from that, are state's gonna have to look at different models now to replace that potential hole in their budgets coming through?

- Well, yeah, those are both good questions.

So I think on the second question, there's a lot of talk these days about how do you address that?

If you're in the world where you have two or three or 4% of the cars are electric, it really doesn't (indistinct), but most people think we'll be at 10% or more electric vehicle penetration.

So 10% more of sales will be electric by 2025, 20, 30, 40% by 2030.

I am actually more optimistic than that.

You get to a point where, if we pay for our interstate highway systems through gasoline taxes and we're only buying cars that don't use gasoline, then you have to find a different quick way to fund that.

And that's a problem that's kind of above my pay grade, but that's something I think people will be thinking about that, and the different objectives are, on the one hand, I think most people agree that it's a good idea to incentivize the purchase of electric cars.

So putting a tax on the user of electric car for the highways would be a disincentive, but I get the logic on both sides.

In terms of what states can do, it's interesting.

So in our business, we're gonna be, our plan is to extract, have a coring operation essentially to take lithium bearing rock out of the ground and upgrade it to totally concentrate and then further process it into lithium hydroxide.

In theory, we could put the hydroxide plant anywhere.

Today, all of the world's hard rock lithium mining happens in Australia.

All of the concentrate they produce is shipped to China and converted in China.

So we could in theory produce our mineral concentrate in, where the ore body is.

You can't do it anywhere else.

You have to do it with ore body is and ship that material somewhere else to be processed.

Our strong preference is to do it onsite locally as big cost advantages, environmental advantages is the right thing to do.

So we certainly plan to do that in North Carolina as we think about growing as a company and looking at third-party raw material sources.

So another way we can grow, we can have our quarrying operation grow, but we can also buy other people's mineral.

We can buy mineral from Australia bringing it into North Carolina or South Carolina or somewhere else, to be honest.

And that's something we're gonna be evaluated more and more over the next, over the coming months and years.

I think you're gonna see a competition just like you do for Amazon offices or other opportunities where different states sort of compete to be the home of that next enterprise.

You will see over time, and again right now, all the minerals produced in Australia, it all goes to China to be processed.

That will change.

China will still be probably a leader if not the leader, but there'll be downstream processing in Europe.

There'll be downstream processing in Canada.

There'll be more downstream processing in the U.S.. And I think it will be, it'll be interesting to see where people choose to locate that capacity given different incentives and taxes and customer bases and everything else.

- Keith, as you described this gold rush in lithium, we also know that some people have said that, well, this is a national security strategic initiative or this is a globally competitive strategic initiative.

And all of those things are true.

For decades, open-pit mining had this environmental antithetical relationship, and I know this is not gonna be news to you, but how do you not Piedmont Lithium and you, how do you not sidestep the economic, I'm sorry, how do you not sidestep the environmental toll?

How do we not push that to the side while we're still trying to be globally competitive and make sure that we do and are and that you are doing the right things based on what our current contemporary ethics are around the environment?

- Yeah, it's a good question.

I think importantly, the U.S. is, I don't know if it's by far, but it's certainly at the leading edge of being the most rigorous from a mining approval perspective, the permitting process.

Very difficult to get mineral operations permit in the U.S.. And when I say that, I think that's a good thing.

And I think when I say that, I think that's a good and it means that anybody who does get permitted and we've received our permits from the federal government, we haven't yet applied for the North Carolina State permit, is obviously doing things right, doing things that would be accepted anywhere if they're accepted here.

So the standards are quite high.

So the other things I would say is, as you think about mining, the things people tend to worry about understandably are, impact on the local water supply, et cetera.

And you think about how...

When most people think about mining, and I'd say there's really two kinds.

I like to distinguish the mining and quarrying.

So anywhere you're building subdivisions, highway, shopping malls, apartment buildings, there's gonna be a mineral quarry nearby.

Otherwise you can't have rock.

You need an aggregate to build roads.

You need to aggregate for the footings and then the building.

People like Martin Marietta and Vulcan are very large companies with big operations in North Carolina, in Charlotte, right around Charlotte.

Our mining operation would be a lot like those.

You're basically taking the rock out of the ground and then you're processing it.

You think about mining for say gold or copper.

And I did a lot of work with companies (indistinct) nickel.

There's a leaching process where you take a ton of rock out of the ground to get a gram of gold, literally.

The only way to get that gram is to use acid to leach it out of the rock.

We're not gonna do that.

So what you're doing, is you're taking a ton of rock in the case, you're leaching it all with acid.

And you're taking that gram of gold out and you're putting it into somebody's wedding ring, that's great, the other, the rest of the ton is staying there, but it's been leached with acid.

And then they have to do something with it.

That's called tailings.

So those tailings are typically put in tailings ponds where, which are environmentally challenging as something has to be mediating over decades.

We're not gonna have that.

So we don't have any leaching.

We're not gonna have any tailings ponds.

We're basically taking rock, crushing it down into the sand and gravel, physically separating the lithium battery elements the extent we can, then putting them in the chemical refinery.

The remaining rock is just inert sand, essentially.

And it will be co-disposed with the kind of waste material we generate during the process.

- What, and literally we have 30 seconds left.

I mean, it goes that quickly when it's this interesting, in 30 seconds, how much of the of a lifespan do you think you have in that Piedmont Lithium operation just outside of Charlotte?

- Well, we put out a study a year ago, we're updating it in a couple of weeks, that showed a 25-year project life.

We've since grown our middle resource by 40%.

So that either means we're gonna produce more each year and stay at around 25 years or we're gonna be producing for longer.

It's a very large belt, and we hope to grow (indistinct) time and- - Okay.

- This operation can go for a long time.

- Keith, sorry to cut you off.

Wish we had more time, but very interesting.

Best of luck going forward.

I mean, you've clearly- - Thanks.

- Haven't talked about the tail and seem to be chasing it down, but good luck to you and safe travels.

Antjuan- - I appreciate it, thanks for the time.

- Absolutely, Antjuan, nice to see you again- - Nice to see you too.

- And Michael best commencement up at Catawaba College.

Until next week, I'm Chris William, hope your weekend is good, good night.

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