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Decarbonization Goals Expose Bottleneck in Critical Mineral Supply Chains — Us

[Note from Sandra Wirtz: As ARPN digs through the White House Supply Chain Report, we are completing the week with posts that “preview” metals and minerals prominently mentioned in the Report – beginning with copper.]

“The road to decarbonisation will be paved with copper (…) and a host of other minerals, all critical for electric vehicles (EVs), solar panels and wind farms,” writes Andy Home, whose work we’ve highlighted here before, in a new piece for Reuters.

Reporting from a European perspective, Home writes that stakeholders have begun to realize that levels of import reliance for these critical minerals on nations like China is not “sustainable,” and access to raw materials (from production to refining) is viewed as “strategic” by the European Commission. He says the big problem, however, is “Us” — meaning that “[t]he paradox of the green revolution is that public opinion is firmly in favour of decarbonisation but not the mines and smelters needed to get there.”

Home points to the United States, where, by way of example, global miner Rio Tinto has been “trying for over a quarter century to win approval for its Resolution copper mine in Arizona” against “stiff opposition” from Native Americans and environmentalists in what is a traditional mining state and generally considered a mining-friendly jurisdiction. As friends of ARPN will know, the U.S. is presently import-dependent for 35% of its annual copper demand or 650,000 metric tons a year — and growing: According to the recent IEA Report, driven by the Electric Vehicle revolution, copper demand will be 25 times greater in 2040 than it was in 2020.

Environmental concerns are a legacy issue the mining industry has been grappling with. Technological advances and commitments to more sustainable practices are changing the landscape, but, as Home writes, “[i]t’s not hard to understand why the political desire to reshore critical minerals production is running into popular resistance,” which is why European Commission plans to accelerate mine permitting are being drawn up in the context of a “responsible resourcing code in a bid to win hearts and minds.”

Home points to a recent CSIS study which contends that while fully decoupling from China “is impossible today (and) in the future, it is improbable and likely expensive,” and that Western nations should instead focus on areas where they can “compete in parts of the green technology supply chain and accept a level of inter-dependence with China.”

He concludes that dealing with a certain level of quid-pro-quo with China might be “unlikely to please those who contend that the United States and Europe must completely reshore their minerals production. But it may be no more than a statement of fact until we collectively accept the need for more mines and metals plants somewhere close to our back yards.” In other words, we are the “human bottleneck in critical mineral supply chains.”

Our idea of having our cake, and eating it, too, will have no place in the post-petro Tech Metals Age. The hard truth is that achieving decarbonization goals while at the same time reducing the U.S.’s over-reliance on critical minerals from China will require an “all of the above” approach we’ve come to know from the energy debate, a notion that is supported by the IEA study on achieving carbon neutrality goals by 2050.

This is why we’re encouraged by the Biden Administration’s just-released 100 day review report of critical supply chains — which, in the Department of Defense’s outline of policy recommendations to alleviate critical mineral supply chain vulnerabilities, explicitly calls for embracing such an approach: “Reliable, secure, and resilient supplies of key strategic and critical materials are essential to the U.S. economy and national defense. The United States needs an ‘all of the above’ comprehensive strategy to increase the resilience of strategic and critical material supply chains that both expands sustainable production and processing capacity and works with allies and partners to ensure secure global supply.”

Recent media reports had indicated that the Biden Administration might not incorporate new domestic critical minerals production into its strategy and rather focus on the processing side of the supply chain relying on imports from allied nations. However, the just-released review report does see a role for new — sustainable — domestic mining, which, as we’ve previously pointed out, is feasible with industry having made strides towards reconciling environmental concerns with meeting supply needs.

There is a lot to unpack in the 250-page report, and we will take some time to analyze it more thoroughly, but, as we stated earlier, it appears that the message that in our Tech Metals Age, minerals and metals are the indispensable ingredients to securing supply chains vital to advanced manufacturing, renewable energy, public health and national security has registered, and it is good to see that the Biden Administration appears willing to unkink the bottlenecks.

To learn more about the “all of the above” approach, which ARPN’s Daniel McGroarty recently discussed at a congressional virtual forum, click here.