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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 and green energy transition faces an “existential threat.”

The forty-seven undersigned CEOs of European metal firms call on European Commission President Ursula Von der Leyen, European Parliament president Roberta Metsola and the President of the European Council Charles Michel to take fast and comprehensive action.

Pointing to “unprecedented curtailments” the sector has been forced to make in the last year, the CEOs express concern that “the winter ahead could deliver a decisive blow to many of our operations, and we call on EU and Member State leaders to take emergency action to preserve their strategic electricity-intensive industries and prevent permanent job losses.”

While voicing their support for the European Union’s “drive to improve Europe’s strategic autonomy for its energy transition” and the willingness to make “the long-term investments needed,” CEOs emphasize the mineral and metal intensity of our green energy future and caution that “all metals production needs affordable and available electricity and gas, whether aluminium and zinc today or lithium and cobalt tomorrow.”

They add:

“We are deeply concerned that Europe faces a critical situation for the foreseeable future, with a perfect storm of sky-high electricity prices, no energy market liquidity due to insecure gas supplies, a continued nuclear and coal-phase out, and the remaining power sources being insufficient to cover market needs. 

Europe cannot have a successful energy and raw materials strategy if its power and gas prices stay at today’s levels for a sustained period without relief. The long-term investment climate for all EU strategic metals operations and projects risks being decimated, and more closures will follow next year once companies are not protected by their 2022 hedging of the electricity price. Any further EU production loss will also increase global greenhouse gas emissions, due to replacement supply from more polluting regions.”

It is crucial, the CEOs say, that the European Union avoid adding “extra regulatory costs on suffering industries in this critical period,” and that action be swift and comprehensive.

The letter comes only days before Commission President Ursula Von der Leyen’s scheduled State of the European Union speech on September 14.

While looking at a number of short and medium term options, the European Union’s emphasis on the region needing “a new strategic thinking to defend the rules-based order,” which should start with ending dependency on Russian fossil fuels,” stands.

As Commission President Von der Leyen stated last month, “[o]ur increased need for other raw materials must not create new dependencies. We must diversify supply and build ties with reliable partners,” pointing to her planned trip to Canada this month, a country with which the EU set up a strategic partnership on raw materials in 2021.

From a U.S. perspective, Europe’s struggles and the non-ferrous metal sector CEOs’ letter should serve to underscore the urgency of now, and the need to support the industries fueling the sought-after push to net zero carbon emissions, because as Forbes contributor Wal van Lierop wrote last month, “without 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.” 

Against the backdrop of ongoing supply chain challenges around the globe, the urgency of untangling and securing critical mineral supply chains essential to a net zero carbon emissions future is becoming increasingly clear.

Following on the heels of the Biden Administration invoking the Defense Production Act for the “Battery Criticals” – lithium, cobalt, graphite, nickel and manganese – the energy provisions in the just passed Inflation Reduction Act are indications that this urgency has begun to resonate with U.S. policymakers, and sends a strong signal to investors that the U.S. is serious about “building the secure, responsible industrial base our economy and national security needs.”

Faced with mounting pressures in the global push towards renewable energy, automakers have been taking steps of their own to build out American EV battery manufacturing.

Toyota, which is building a cell-production facility in North Carolina, has announced an additional investment of $2.5 billion on top of the already committed $1.3 billion.  South Korean battery maker LG and Japanese automaker Honda have announced an investment of $4.4 billion into a joint venture in the United States, with mass production of advanced lithium-ion battery cells to start by the end of 2025.  Panasonic is considering a $4 billion investment into constructing a plant in Oklahoma, and north of the border, recent public filings indicate that Tesla is looking to set up a new advanced manufacturing facility in Canada.

Friends of ARPN can guess what comes next.  As the Wall Street Journal’s Stephen Wilmot wrote last week, “[a]ll this means car makers can perhaps start to relax where they will get EV batteries. The tougher question now is where they will get battery materials.” He adds: “[a]nother wave of investment in inputs such as processed lithium and nickel needs to follow – and with a new urgency.”

As ARPN already pointed out, the Inflation Reduction Act’s requirement that will exclude EVs with material inputs from “foreign entities of concern” from eligibility for the $7,500 tax credit included in the bill, poses a serious challenge because the auto industry is so heavily reliant on battery materials and components from China.  With China being the global hub for battery-mineral refining, says Wilmot, “this will be hard for automakers to work around.”

Not surprisingly, automakers are increasingly lobbying governments to reform the U.S. mine permitting system.  Metal Tech News’s Shane Lasley points to a recent letter penned by Ford Motor Company’s chief government affairs officer Christopher Smith to the U.S. Department of Interior, in which he laments that “[t]oday’s lengthy, costly and inefficient permitting process makes it difficult for American businesses to invest in the extraction and processing of critical minerals in the United States.” Smith calls on the federal government to alleviate the challenges within the U.S. mine permitting framework, which Ford considers “unacceptable and well beyond the requirements facing Australian and Canadian companies, where responsible mining is a given and a prerequisite for obtaining mining permits.”

However, this is far from the only challenge automakers and the mining sector are faced with in their quest to support the green energy transition, as an inter-departmental “tug-o-war” is adding fuel to the fire.  As Lasley writes in an equally insightful piece:

“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.

The Interior Department’s yanking of the permits to build a road that would connect the rich deposits of cobalt, copper, zinc, and other metals in Alaska’s Ambler Mining District to markets demanding sustainable supplies of these mined materials underscores a disconnect within the Biden Administration.”

Alaska Governor Mike Dunleavy had lamented DOI’s lack of acknowledgement of Alaska as a potential source and blasted the Ambler Mining District decision and called for federal permitting reform during the recent critical minerals summit held in Alaska, which we covered here:

“This administration must speak with one voice. It wants critical minerals, or it doesn’t. It wants the lower energy prices, or it doesn’t.  It wants to create jobs in the U.S. or it doesn’t.  It wants to protect the environment or it doesn’t. It cares about human rights, or it doesn’t. (…) The disjointed federal permitting process doesn’t just hurt Alaskans (…), it hurts every industry, and every state. (…) 

If we set ambitious goals for EVs or renewables without permitting the production of critical minerals here, those minerals will still be produced, they just won’t be produced in here in America or Alaska, they’ll be produced by child labor, potentially, they’ll be produced without environmental standards, potentially, they’ll be produced at the expense of the American worker, to the benefit, potentially, of our adversaries.”  

As for the IRA bill, the Wall Street Journal points out, “[h]ow far and how fast EV and battery makers need to scramble [to meet the law’s requirements] depends on how the Treasury Department interprets the Inflation Reduction Act. This process, which will be subject to intense lobbying over the coming months, could weaken some of the strings attached.”

However, the pressure to diversify supply chains away from adversaries is here to stay – and with that, the federal government will have to take steps to foster greater predictability in the mining sector to unleash the United States’ mineral potential.  As U.S. Senator Lisa Murkowski told attendees of last month’s Alaska critical minerals summit, the rest of the world won’t wait for us, and “other countries” are moving now to implement “longer-term policies that allow them to focus on what it means to be sticking with a policy, and a view, and a vision towards dominance.”

In a new piece for Canada’s Globe and Mail, columnist Robert Muggah zeroes in on the geopolitics of mineral resource supply, which have, in his view, triggered a new “Great Game” – a term coined by British writer Rudyard Kipling to describe the “fierce competition between Victorian Britain and Tsarist Russia, both of which sought to control South Asia (…) more

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 (…) more

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 (…) more

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 (…) more

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) — (…) more

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 (…) more

As nations and industries grapple with the global push towards net zero carbon emissions, researchers  from India’s Bengaluru Jawaharlal Nehru Centre for Advanced Scientific Research (JNCASR) have discovered a new material called “single-crystalline scandium nitride (ScN)” that is able to “emit, detect, and modulate infrared light with high efficiency making it useful for solar and thermal energy harvesting (…) more

In a new piece for RealClearEnergy, John Adams, U.S. Army brigadier general (ret.), argues that the newly proposed Inflation Reduction Act, negotiated by Senators Chuck Schumer (D-NY) and Joe Manchin (D-WV) is not only the most ambitious climate bill in U.S. history, but also represents an opportunity to bolster our nation’s economic and national security.  General (…) more