The following is a guest post by ARPN expert panel member Chris Berry, Founder, House Mountain Partners. His expertise focuses on, but is not limited to, energy metals including Lithium, Cobalt, Graphite, Vanadium and Rare Earths.
The Executive Order recently signed by President Trump to prioritize domestic natural resource development couldn’t have come at a better time. Though the idea of foreign dependence on critical raw materials such as rare earth elements, lithium, and cobalt is not a new one, globally synchronized economic growth and a new Administration in Washington have many thinking that “this time could be different” and a new approach and attitude towards domestic raw material extraction and processing has increased in importance.
Technology has traditionally been a deflationary “force for good” specifically in the energy industry (think about how hydraulic fracturing and horizontal drilling in the oil and gas business has put OPEC on its heels and allowed a US-based oil and gas business to compete anew). The leadership that the US has shown in this industry is in no small part due to the research and development funding from the US Government in past decades. It is not a stretch to expect the same deflationary phenomenon to affect the mobility and energy storage industries underpinned by lithium ion batteries.
Technologically-driven cost deflation can be seen in other industries such as the lithium ion battery business where the cost per kilowatt-hour (KWh) has fallen by roughly 10 to 14% per year since 2000. This has massive implications for both the energy industry (renewable energy deployment and grid integration) and automobile industry (electric vehicle adoption). Most experts expect cost parity between a full electric vehicle and a traditional internal combustion engine early in the next decade. What are we in the United States doing to get ready for this massive shift with respect to security of supply of raw materials?
We are clearly at a tipping point for these industries, as their increasing need for critical minerals and metals intersects with an aggressive China, making security of supply of raw materials a small but highly significant Achilles Heel of supply chain management. The United States has numerous well known deposits of critical minerals, such as lithium and cobalt, many of which at today’s prices are economic to extract and process. So what are we waiting for? What we have lacked historically is the political will to find a balance between national security, commerce, and environmental concerns. President Trump’s Executive Order is a welcome, though controversial, first step in reckoning with this challenge that has profound consequences for US competitiveness and job creation going forward.
