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American Resources Policy Network
Promoting the development of American mineral resources.
  • Congress “Net-Zeroes” in on Energy Security, Supply Chains for Critical Minerals – A Look at the Inflation Reduction Act

    As countries and corporations continue the global quest towards net zero carbon emissions, the U.S. Congress has passed what some consider landmark legislation to address climate change and bolster our nation’s economic and national security.

    The clean energy provisions in the Inflation Reduction Act negotiated by Senators Chuck Schumer (D-NY) and Joe Manchin (D-WV) — which passed the U.S. Senate on August 7, 2022, was approved by the U.S. House of Representatives on August 12, 2022 and is now headed for U.S. President Joe Biden’s desk – include combined investments of $369 billion aimed at reducing carbon emissions by roughly 40% by the end of this decade.

    A swath of significant clean energy tax credits aims at increasing domestic energy production while at the same time accelerating energy innovation abroad.

    Among them are:

    • $30 billion in production tax credits to accelerate domestic critical minerals processing as well as manufacturing of batteries, solar panels and wind turbines
    • $10 billion in investment tax credits to build manufacturing facilities for EVs, wind turbines and solar panels
    • $500 million to use the Defense Production Act to accelerate critical mineral production among other defense priorities
    • $2 billion in retooling grants for existing auto manufacturing facilities to transition to the manufacture of EVs
    • Up to $20 billion in loans for the construction of new clean vehicle manufacturing facilities
    • $2 billion in materials science research funding for the National Labs

    The package further includes funding for tax credits and rebates for consumers buying electric vehicles, installing solar panels or making other energy-efficiency upgrades to their homes, including, a credit of $4,000 for lower-and middle-income individuals purchasing used EVs, and up to $7,500 tax credits for EVs.  These represent a renewal of the existing $7,500 electric vehicle Federal tax credit starting in January of 2023, and carrying it through until the end of 2032. The former 200,000-vehicle cap is removed and all manufacturers will have access to the credits if they comply with the other requirements in the package.

    However – and of considerable interest for followers of ARPN — a new requirement is that qualified cars must be assembled in North America, and adhere to mandated “escalating levels of critical minerals to be sourced from the U.S. or a country with a free-trade agreement with the U.S.”

    Green Car Congress summarizes the escalating levels of sourcing requirements for applicable battery critical minerals (with the bill defining an extensive list of applicable minerals) as follows:

    “40% for a vehicle placed in service before 1 January 2024;

    50% for a vehicle placed in the service during calendar year 2024;

    60% for a vehicle placed in service during calendar year 2025;

    70% for a vehicle placed in service during calendar year 2026; and

    80% for a vehicle placed in service after 31 December 2026.

    The bill places similar restrictions on the percentage of value of the components, but leading up to a 100% requirement for vehicles placed in service after 31 December 2028.”

    While experts like John Adams, U.S. Army brigadier general (ret.), believe that the sourcing requirements for the battery materials contained in the package are key to addressing “emerging energy security vulnerabilities before they are intractable crises,” others have cautioned that because the auto industry is so heavily reliant on battery materials and components from China – as evidenced by the latest supply deals inked by Tesla – the requirement will represent an almost insurmountable challenge. Says Simon Moores, chief executive of Benchmark Mineral Intelligence:

    “Considering it takes seven years to build a mine and refining plant but only 24 months to build a battery plant, the best part of this decade is needed to establish an entirely new industry in the United States.” 

    The challenge is certainly real as, in the words of General Adams: “China has worked diligently to turn mineral supply chains into an economic leg up but also an enormous source of geopolitical leverage — not unlike how Russia has leveraged its energy trade with Europe.”  He maintains however, that “the mineral sourcing requirements in the reconciliation bill – coupled with other incentives to encourage domestic mining, mineral processing and recycling– are precisely the bold measures needed to address this alarming vulnerability.” 

    Also of note for followers of ARPN, the package places an emphasis on a concept which, as Reuters columnist Andy Home recently suggested, “could allow some to move beyond [carbon] neutrality to become net carbon negative:” a set of incentives to substantially expand carbon capture technologies that capture carbon dioxide and either store it underground or ship it for reuse.

    As ARPN previously pointed out“experts believe that harnessing the natural chemical reactions that convert captured CO2 into rock and store it underground, as currently done at large scale by carbon mineralization company Carbfix at its Coda Terminal in Iceland (see our piece on the issue here), could become an important asset in the push to meet global climate goals.”

    The emphasis on carbon capture in the package is consistent with the U.S. Department of Energy’s recent $2.2. million award to fund to a Rio Tinto-led project with joint-venture partner Talon Metals Corp. at the Tamarack Nickel Project in central Minnesota to achieve carbon capture by a process that mineralizes the carbon in rock – a process considered far more stable than methods that inject carbon, where it remains vulnerable to seepage and fracturing due to earthquakes.

    Some caution, however, that “while the new bill may appear helpful on a theoretical basis, both carbon capture and storage and direct air capture could face some serious headwinds over the course of the next decade and beyond,” possibly in the form of opposition to the construction of necessary pipelines.

    Any new law this wide-ranging will require federal guidance on the way to implementation – and spark follow-on efforts by resource development opponents to roll-back some elements even as resource development proponents look to build on this new legislative initiative.

    All of which is good reason to be hopeful that the bill’s requirements will help jumpstart a more comprehensive push towards domestic sourcing and processing, onshoring, friend-shoring, and harnessing the materials science revolution, which are important components of a comprehensive “all-of-the-above” resource development approach.

    As the bill proceeds to the president for signature, ARPN will continue to monitor what may well be, as General Adams phrases it“a critically important leap forward to build the secure, responsible industrial base our economy and national security needs.”

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  • Latest Tesla Deals with Chinese Suppliers Underscore Critical Mineral Supply Chain Challenges

    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 their material needs.

    Underscoring the extent of China’s chokehold on critical mineral supply chains, especially for the “battery criticals” lithium, cobalt, nickel, graphite, and manganese, Tesla Inc. signed two new long-term contracts with two of its existing Chinese battery materials suppliers, according to Bloomberg.

    The company signed pricing agreements with Zheijang Huayou Co. and CNGR Advanced Material Co. for supplies, specifically ternary precursors used for energy storage, until the mid-2020s.

    As followers of ARPN know, China dominates not only the resource development segment of the EV battery supply chain, but also the processing segment for the battery criticals.  As Manhattan Institute senior Fellow Mark Mills told the Daily Caller News Foundation: “If you want to build EVs, one needs access to the entire suite of specialty chemicals, and the vast majority of those are produced in China – the issue is not the mining per se, but the refining wherein China utterly dominates most relevant chemicals. Or else one could wait 5 to 10 years – if you’re lucky – for non-Chinese refineries to be built.”

    Amidst the global push towards net zero carbon emissions, demand for EVs will continue to soar, in the U.S. fueled in part by the adoption of an ambitious climate agenda by the Biden Administration, further driving up demand for critical minerals.

    The question becomes whether the net zero transition deepens dependency on Chinese and foreign-sourced Critical Minerals – or galvanizes a push to provide new sources of supply in the U.S..

    Thankfully, positive policy developments that could help reduce our over-reliance on China are underway.

    U.S. President Joe Biden in March of this year invoked the Defense Production Act to encourage domestic production of the metals and minerals deemed critical for electric vehicle and large capacity batteries, including nickel, and the Administration has acknowledged that “the need to domestically produce more metals is rising as EV’s go mainstream, but that new mines must not harm the environment.”   The development followed the adoption of a broader “all-of-the-above” approach to supply chain security on the part of the Biden Administration in 2021, and may be strengthened with the adoption of provisions contained in the Inflation Reduction Act just passed by the U.S. Senate.

    The package would require that by 2024, 40% of the minerals used in EV batteries would have to be extracted, processed or recycled in the U.S. or by a free trade partner — a requirement that increases to 80% by 2027 – and 100% for battery components by 2029. According to John Adams, U.S. Army brigadier general (ret.), the sourcing requirements for the battery criticals could be key to addressing “emerging energy security vulnerabilities before they are intractable crises.” 

    On the supply side, the mining industry is ready to meet this challenge and has increasingly been harnessing advances in materials science and technology to help develop domestic critical minerals supplies while maintaining and advancing responsible mining practices.   A case in point we recently highlighted was  Tesla’s  deal with Talon Metals Corp, developing a new nickel project in Minnesota, which Elon Musk singled out“due to plans to make the electric vehicle battery metal in a way it considers more environmentally friendly.”

    As we outlined, this is the mine site for which the U.S. Department of Energy recently announced a $2.2 million award to fund to a Rio Tinto-led project to achieve carbon capture by a process that mineralizes the carbon in rock – a process far more stable than methods that inject carbon, where it remains vulnerable to seepage and fracturing due to earthquakes.

    These are positive developments, but more must be done. Until then, there will be more announcements of automakers signing deals with Chinese companies — certainly not an ideal scenario at a time when tensions between the U.S. and China are mounting over Taiwan.

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  • New “Critical” in the Crosshairs — NGOs Call on Automaker to Terminate Nickel Investment Plans in Indonesia

    Already burdened with increasingly volatile supply chains in the wake of the coronavirus pandemic, rising geopolitical tension and Russia’s war on Ukraine, automakers’ drive towards net zero emissions is facing an additional challenge as environmental, social and governance pressures on the industry increase. The latest case in point concerns one of the new materials on [...]
  • Russia’s War on Ukraine Hits Critical Mineral Supply Chains: A Look at Nickel

     While in the early days of Russia’s invasion of Ukraine, concerns over how the war would impact global supply chains were mostly focused on oil and natural gas, it quickly became apparent that the ramifications of drawn-out hostilities would stretch far beyond the global oil and gas sector. With Ukraine considered the “breadbasket of Europe,” Russia’s invasion [...]
  • Materials Science Profiles of Progress: DoE Funds Carbon Capture Project in Minnesota

    As the global push towards a low carbon energy future intensifies, the mining industry has been taking significant steps towards reducing its carbon footprint. As friends of ARPN will appreciate, the catalyst is the materials science revolution redefining how the world uses scores of metals and minerals for technology applications unknown just a few years [...]
  • Silver Linings: Materials Science Revolution Marches On Amid Pandemic

    The coronavirus pandemic may have torn through communities, brought public life to a halt, thrown markets into turmoil, and laid bare the extent of our complex and deep critical mineral resource dependencies. It has not  — thankfully, considering the materials challenges we’re up against — stopped the ongoing materials science revolution. As policy makers and industry [...]
  • Materials Science Revolution Continues to Yield Breakthroughs – a Look at Scandium

    Did you turn on the TV to watch the SpaceX Crew Dragon take off en route to the International Space Station yesterday only to be disappointed?  The long-awaited historic first launch of American astronauts from U.S. soil in nearly nine years has been postponed due to weather, but there’s a still good chance we will [...]
  • 2019 in Review – Towards an “All-Of-The-Above” Approach in Mineral Resource Policy?

    We blinked, and 2020 is knocking on our doors. It’s been a busy year on many levels, and mineral resource policy is no exception. So without further ado, here’s our ARPN Year in Review. Where we began: In last year’s annual recap, we had labeled 2018 as a year of incremental progress, which had set [...]
  • Materials Science Profiles of Progress: REE Extraction and Separation From Phosphoric Acid

    The tech war between China and the United States over who will dominate the 21st Century Technology Age is heating up. Earlier this week, China’s rare earth producers, who control the vast majority of global REE output, put out a statement declaring they are ready to “use their dominance of the industry as a weapon in [...]
  • Materials Science Profiles of Progress – Penn State University Launches Center for Critical Minerals

    Against the backdrop of a growing awareness of our over-reliance on foreign mineral resources — one need to look no further than the current coverage of China’s threat to play the “rare earths card” — Penn State University is launching a Center for Critical Minerals. Under the auspices of the College of Earth and Mineral [...]

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