Treasury's Yellen tours lithium plant to bolster Biden's economic case

By Howard Schneider and David Lawder

BESSEMER CITY, North Carolina (Reuters) -U.S. Treasury Secretary Janet Yellen traveled to North Carolina on Thursday to tout hundreds of billions of dollars in clean energy investments enabled by federal tax incentives as President Joe Biden struggles to win credit among voters for his economic record.

Yellen toured a Livent facility in Bessemer City, North Carolina, that processes lithium hydroxide, a key ingredient in electric vehicle (EV) batteries. The plant near Charlotte is doubling its capacity due to increased demand for EVs spurred by consumer tax credits of up to $7,500 in the 2022 Inflation Reduction Act (IRA), adding cutting edge technology to an area hard hit when legacy industries like textiles left for other countries.

Yellen, who spoke in front of one-ton bags of lithium hydroxide at a Livent warehouse, said the "battery belt" arising across the U.S. Midwest and South showed the administration's strategy is working and contributing to current low rates of unemployment and ongoing economic growth.

"Scaling up our domestic manufacturing capacity - particularly in new industries - can help create well-paying, middle-class jobs for Americans across the country, serving people and places that have too often been left behind," Yellen said.

"GDP growth and the labor market are strong and inflation is now down substantially from its peak ... That strength isn't just apparent in aggregate statistics. It reflects contributions from consumers consuming more and businesses investing more, as our economy's overall strength is translating to higher real household incomes."

Yellen said investments similar to those made by Livent were taking place across the country, with $614 billion worth of clean energy investments and manufacturing projects announced since the Biden administration took office in 2021. These include $142 billion in EVs and batteries and $71 billion in clean energy manufacturing, and she attributed much of the investment to tax credits in the IRA.

It's a development that will bolster U.S. energy security and reduce American dependence on China's EV battery supply chain, said Yellen, who was joined on her tour by North Carolina's Democratic Governor Roy Cooper, highlighting the state's importance in next year's presidential election.

During the tour, Yellen visited a control room, where she started one of the plant's machines, a bagging area where lithium hydroxide is packed for storing, and a research and development facility - at one point commenting "that's amazing" as workers explained their latest lithium project.

The Biden administration in coming days is expected to release new guidance on the levels of Chinese content that EV batteries can have and still qualify for IRA tax credits. The Livent plant processes lithium brine largely from Argentina and Canada.

Yellen said the bulk of investments spurred by the legislation was flowing to counties with below-average college graduation rates, providing good jobs "where they are most needed."

STRONG GROWTH, LITTLE CREDIT

Increased investment in new manufacturing projects, machinery and warehouses, which also include new semiconductor plants, helped the U.S. economy to grow at a torrid 5.2% annual pace in the third quarter, defying predictions earlier this year that it was headed for a recession.

But Biden has struggled to win voter confidence in his handling of the economy, with polls earlier this month showing Republican front-runner Donald Trump ahead in five of the six most important battleground states.

Voters remain deeply scarred by the higher living costs brought about by post-pandemic inflation, said Larry Sabato, director of the University of Virginia's Center for Politics. It will take time for this to fade and for people to feel the benefits of higher wages, he added.

"People are hearing that things are getting much better, inflation is coming down and we're not coming into a recession," Sabato said. "But in their lives every week, when they go to the gas station or into the grocery store, they still perceive higher prices, and their minds are oriented to bad news. And people are going to blame the president."

(Reporting by David Lawder and Howard Schneider; Editing by Chizu Nomiyama and Paul Simao)