resource dependence

While the coronavirus pandemic may no longer occupy the top of the hour slot in news broadcasts, the supply chain challenges it unearthed for many of the materials we rely upon are here to stay.  And as the global push towards net zero carbon emissions gets kicked into high gear, nations are increasingly realizing their own limitations and dependencies when it comes to meeting their industries’ metal and mineral needs to implement the sought after green energy transition.

With socio economic pressures and geopolitical tensions rising, nations are increasingly embracing comprehensive approaches to mineral resource policy, as piecemeal, ad-hoc policy making is fading into the background.

One large piece of the all-of-the-above comprehensive approach to mineral resource security ARPN has long been touting along with many other policy experts is cooperation with allies.

The latest case in point is the Canadian-South Korean partnership announced after a meeting between Canada’s Prime Minister Justin Trudeau and South Korean President Yoon Suk-yeol last month.

In a joint statement, both countries agreed to work towards launching a high-level dialogue on economic security, which will, among other things, focus on deepening their “strategic partnership on supply chain resiliency,”  and positioning “both countries as globally competitive players in the critical minerals supply chain and battery and EV (Electric Vehicles) value chains in ways that support our collective prosperity and security, while raising labour and environmental standards.”

A memorandum of understanding “to enable the building of value chains in Canada and Korea to support clean energy transition and energy security, including with respect to critical minerals,” is in the works.

While high-level bilateral agreements on critical minerals are becoming more commonplace – we’ve featured a few the U.S. has entered into —multilateral frameworks are also being built out.

The Mineral Security Partnership (MSP) between the United States and currently ten other allies launched in June of 2022 is an initiative to bolster supply chains that aims “to ensure that critical minerals are produced, processed, and recycled in a manner that supports countries in realizing the full economic development potential of their mineral resources.”

During a meeting in September convened on the margins of the United Nations General Assembly High-Level Week partners discussed “priorities, challenges, and opportunities in responsible mining, processing, and recycling of critical minerals.”

Aside from the MSP partners Australia, Canada, Finland, France, Japan, the Republic and Korea, Norway, Sweden, the United Kingdom, the United States and the European Union, additional minerals-rich countries were in attendance, which included Argentina, Brazil, the Democratic Republic of the Congo, Mongolia, Mozambique, Namibia, Tanzania and Zambia.

According to the U.S. State Department, “the MSP is currently considering promising critical minerals projects that could be of interest to one or more MSP partners, promoting innovation, developing a joint approach on ESG standards, and engaging both project operators and minerals-producing countries.”

As the push towards net zero carbon emissions and away from China as a lead supplier/processor intensifies, cooperative efforts — in the context of a comprehensive approach to resource security as outlined above — will only increase, and ARPN will continue to track them.

The Russian invasion of Ukraine and subsequent additional supply chain challenges have prompted the European Union — already grappling with strained supply chains in the wake of the coronavirus pandemic — to step up its critical minerals game.

During her State of the Union address on September 14, European Commission President Ursula Von der Leyen announced plans to introduce legislation to identify potential strategic critical raw material projects along the supply chain and build up reserves in areas where supply is at risk.

Highlighting that almost 90% of rare earths and 60% of lithium are currently being processed in China, Von der Leyen said “[a] single country currently dominates almost the entire market. We must avoid becoming dependent again, as with oil and gas.”

She added:

“We know this approach can work. Five years ago, Europe launched the Battery Alliance. And soon, two third of the batteries we need will be produced in Europe.

Last year I announced the European Chips Act. And the first chips gigafactory will break ground in the coming months.”

The announcement is more than timely.  The European Union expects its own demand for rare earths alone to increase fivefold by 2030.  And the latest analysis by ARPN’s friends at Benchmark Mineral Intelligence finds that more than 300 new mines for graphite, lithium, nickel and cobalt would “need to be built over the next decade to meet [global] demand for electric vehicle and energy storage batteries,” and that is already taking into account the recycling of raw materials — without factoring in closed loop solutions, the number shoots up to almost 400.

In the U.S., the energy provisions in the recently passed Inflation Reduction Act, following on the heels of the invocation the Defense Production Act for the “battery criticals” lithium, cobalt, nickel, graphite and manganese, are expected to send a strong signal to investors that the United States, too, is serious about “building the secure, responsible industrial base our economy and national security needs.”

However, many issues remain.

One of them is the “costly and inefficient permitting process” making it “difficult for American businesses to invest in the extraction and processing of critical minerals in the United States,” as Ford Motor Company’s chief government affairs officer Christopher Smith lamented in a recent letter to the U.S. Department of Interior.

The other challenge is an “inter-departmental tug-o-war” that hinders actual progress.  As Shane Lasley  wroterecently for North of 60 Mining News:

“While the departments of Commerce, Defense, and Energy are forging ahead with programs and investments aimed at ensuring America has the minerals and metals needed to support the clean energy objectives outlined by the White House, and enabled by the Bipartisan Infrastructure Law and Inflation Reduction Act, DOI is pumping the breaks on a domestic project that would produce the requisite raw materials.”

It remains to be seen if stakeholders on both sides of the Atlantic are able to advance their critical mineral ambitions, but one thing, in the words of Forbes contributor Wal van Lierop, is clear: “[W]ithout massive investments in base metals and key minerals, Europe and North America will fail to meet their carbon emission targets and face a new form of energy insecurity.” 

As Europe’s already high energy prices continue to soar due to fallout of Russia’s invasion of Ukraine, and EU energy ministers are gearing up to meet this Friday for an emergency summit, the corporate leaders of Europe’s non-ferrous metals sector have sounded the alarm in an open letter warning that the industry that underpins the energy sector [...]

Just as a new federal law – the Inflation Reduction Act of 2022 – may send a much-needed investment signal to the underdeveloped critical mineral supply chains for EVs and other 21st  century technologies, many of which are rife with underinvestment, political risk and poor governance – lawmakers and policy experts gathered for a two-day two-day conference hosted by the [...]

Mere months after widespread lockdowns in China over coronavirus outbreaks, factories in Sichuan province are shutting down again – this time over an intense heatwave and drought across China’s south.  Meanwhile, Russia’s war on Ukraine shows no signs of slowing down, and tensions between the United States and China over Taiwan continue to flare. As the [...]

In a new piece for Canada’s Globe and Mail, Niall Mcgee discusses China’s quiet but systematic campaign to corner the critical minerals segment in Canada and stakeholder reactions in Ottawa, or more precisely, the lack thereof. Citing the 2019 acquisition of the Tanco Mine in Manitoba, known as one of the world’s few sources of cesium [...]

As pressures continue to mount, U.S. stakeholders are beginning to realize the urgency of building supply chains “that are safer, more secure and not beholden to a country that has multiple human rights violations, predatory lending practices, and vast national security complications.”  For now, however, too often, automakers still have to turn to Chinese suppliers to meet [...]

Followers of ARPN are well aware that China has long dominated the global mineral resource wars on the development and processing fronts, and the United States in recent months has taken a series of unprecedented steps in an effort to decouple U.S. critical mineral supply chains from China. A recent paper published by the American [...]

Your mind may not immediately jump to semiconductors when you think about national security, but “a steady source of uninterrupted, trusted chips is necessary for the security of the nation – supporting the readiness of the U.S. military and protecting critical infrastructure like the electric grid,” writes Zachary A. Collier, Ph.D., an assistant professor of management at Radford University and a visiting scholar [...]

A confluence of factors — pandemic-induced supply chain shocks, increasing resource nationalism in various parts of the world, and Russia’s invasion of Ukraine extending into its second month — has completely altered the Post-Cold War geopolitical landscape and mineral resource security calculus. Responding to the resulting growing pressures on critical mineral supply chains and skyrocketing [...]