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When it comes to the metals and minerals underpinning the green energy transition, and specifically the EV battery revolution, much of the spotlight has fallen on lithium — and for good reason, as we will discuss in a forthcoming post.  However, as ARPN’s latest review of the “battery criticals” against the backdrop of the just-released latest iteration of the USGS Mineral Commodity Summaries (see our posts on graphite, manganese and cobalt) shows, they are equally “critical” in their own ways. The same holds true for the next battery critical in our lineup – Nickel.

While Nickel’s biggest traditional application is in alloying, particularly in the production of stainless and heat-resisting steels, it is its ability to achieve good storage capacity and higher energy density in batteries at an affordable cost that has sent the material’s star soaring in recent years.  It has also sent demand projections soaring, as nickel’s role in the EV revolution takes center stage.

At the end of 2021, nickel was only one of two new metals (the bulk of the expansion of the list from 35 to 50 minerals and metals was owed to the fact that the Rare Earths and Platinum Group Metals were now listed individually) to be added to the revised U.S. Government List of Critical Minerals. As Reuters’s Andy Home wrote at the time, while a “relatively benign supply profile kept nickel off” in the past, there are two reasons for including it on the updated list:

Pointing to the only domestic operating nickel mine in the U.S. and a single producer of nickel sulphate (which only produces Nickel as a co-product), Home said “the USGS has expanded its criticality criteria to look beyond trade dependency to domestic supply, particularly what it calls ‘single points of failure.’”

The second reason, according to Home, was “nickel’s changing usage profile from alloy in stainless steel production to chemical component in electric vehicle batteries.”  The rapid uptake of EVs as a key to the net-zero carbon transition has propelled nickel onto the critical minerals list, and has sent carmakers like Tesla and others to embark on missions to secure their own supply chains.

This push gained new urgency with Indonesia’s investment minister hinting at the possibility of Jakarta pursuing the creation of an OPEC-like cartel for nickel (and other key battery materials) last fall.  What is resource nationalism to some is supply risk to others, and that’s clearly part of the narrative around nickel.

The looming specter of battery material cartelization – first introduced earlier this year by South American Lithium producers — along with soaring demand scenarios provided fresh impetus for U.S. stakeholders to kick the buildout of domestic battery supply chains into high gear wherever possible, and efforts to this effect are currently underway.

According to USGS, in 2022, the underground Eagle Mine in Michigan – currently the only U.S. primary nickel mine in operation – “produced approximately 18,000 tons of nickel in concentrate, which was exported to smelters in Canada and overseas. Nickel in crystalline sulfate was produced as a byproduct of smelting and refining platinum-group-metal ores mined in Montana. In Missouri, a company produced nickel-copper-cobalt concentrate from historic mine tailings and was building a hydrometallurgical processing plant near the mine site.”

But with the Eagle project entering its final years, Michigan’s near-neighbor Minnesota holds promise for strengthening the U.S. domestic nickel supply chain.

The first recipients of federal funding disbursed under the 2021 infrastructure law to “supercharge” U.S. manufacturing of batteries for electric vehicles and the electric grid included the Tamarack Nickel Project in central Minnesota.  Talon Metals’ subsidiary Talon Nickel was one of 20 processing and manufacturing companies in 12 states chosen for a combined $2.8 billion award to “expand domestic manufacturing of batteries for electric vehicles and the electric grid.” 

Talon, which had previously signed a six-year agreement with Elon Musk’s Tesla under which Tesla would buy 75,000 metric tons of nickel concentrate, is looking to use part of the government grant to further its plans to construct an ore-processing facility in Mercer County, situated in the east-central region of North Dakota.

As ARPN has noted, the Tamarack project had previously been awarded  $2.2 million to fund an effort 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. Bringing the supply chain home could not only inoculate the U.S. from trade issues on the critical minerals front but could also help reduce the industry’s — arguably large — carbon footprint.

The project is expected to start the environmental review process this year, a process that will be closely watched in particular in light of the Biden Administration’s recent decision to withdraw northeastern Minnesota’s Boundary Waters Canoe Area Wilderness from future mining – a move that could effectively kill another nickel and copper project, the proposed Twin Metals Minnesota underground mine, which has seen an ongoing legal and regulatory battle over the years.

A third proposed copper-nickel project in northeastern Minnesota — the PolyMet mine near Babbitt and Hoyt Lakes, just saw PolyMet Mining and Teck Resources finalizing a joint venture earlier this month to develop PolyMet’s copper-nickel deposit along with another larger ore body controlled by Teck. The project – a 50-50 venture, will be called NewRange Copper Nickel.

With the Tamarack and NewRange Copper Nickel projects situated in different watersheds, they are not affected by the Biden Administration’s Boundary Waters decision; however, as followers of ARPN well know, the not-in-my-backyard sentiment is a firm staple in the discourse over bolstering domestic supply chains, and brings us back to the “inherent irony” or “paradox of the green revolution” Reuters columnist Andy Home has invoked in several instances when covering critical mineral resource supply chains for the very materials underpinning the green energy transition — the paradox that “public opinion is firmly in favour of decarbonisation but not the mines and smelters needed to get there.”

As ARPN has previously pointed out – lofty goals of net carbon neutrality will not be achievable if we don’t embrace a push to secure critical mineral supply chains from “soup to nuts” to borrow a term used by Energy Secretary Jennifer Granholm.  That means “all of the above,” including domestic production and processing of metals and minerals like nickel.

After all, as we’ve noted often at ARPN, the first word in supply chain is… supply.

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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