Last week, against the backdrop of mounting pressures on U.S. critical mineral supply chains, U.S. President Joe Biden invoked the Defense Production Act (DPA) to encourage domestic production of the metals and minerals deemed critical for electric vehicle and large capacity batteries.
The move is a sign that “America is finally taking the battery metal shortage seriously,” as the headline of the latest piece by Tsvetana Paraskova for OilPrice.com indicates.
Amidst the cheer, some caution, however, that invoking the Defense Production Act does “nothing to streamline the permitting process,” which remains mired in redundancies and red tape. Writes Joe Deaux for Bloomberg News:
“It takes a about seven to 10 years to get a mine up and running in the U.S., compared to two to three years in neighboring Canada, according to the U.S. business group National Mining Association. The omission will frustrate mining companies when Biden is pushing to revive domestic production capacity while embracing a shift in the U.S. economy to less polluting energy.”
Deaux cites National Mining Association President Rich Nolan, who told Bloomberg News via email that “[u]nless we continue to build on this action, and get serious about re-shoring these supply chains and bringing new mines and mineral processing online, we risk feeding the minerals dominance of geopolitical rivals. We have abundant mineral resources here. What we need is policy to ensure we can produce them and build the secure, reliable supply chains we know we must have.”
Meanwhile, pointing to recent regulatory action taken by the Biden Administration to block a proposed copper mining project in Minnesota and to slow another one in Arizona, the Wall Street Journal editorial board this week laments contradictions in the White House’s energy policy, stating that “President Biden on Thursday invoked the Defense Production Act to subsidize the mining of certain minerals in the U.S. that his own Administration is using regulation to block.”
All of which ultimately 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.”
With the political campaign season upon us, the Biden Administration’s balancing act to reconcile its green credentials with the acknowledged need for domestic resource development will likely not get any easier, but Russia’s invasion of Ukraine has raised the stakes for mineral resource security – already high in the wake of the global coronavirus pandemic unearthing massive supply chain challenges – to a whole new level.
As Ruth Demeter, Senior Director of Policy, Global Energy Institute at the U.S. Chamber of Commerce pointed out:
“The war in Ukraine and sanctions imposed against Russia have once again underscored the precarious nature of America’s growing dependence on critical minerals—and lack of homegrown supply.”
Nonetheless, writes Bloomberg’s Deaux, “[t]he Defense Production Act would be a huge step in bringing legitimacy to U.S. companies with battery-metals projects seeking to attract more capital to expand businesses and help create a self-sustaining domestic industry.”
To be leveraged most effectively, however, its invocation should be embedded into a truly comprehensive “all-of-the-above” approach across the entire value chain that ARPN and others have been calling for.
We can, and should, harness partnerships with allies, expand recycling capabilities and work on “closed-loop solutions”– but, as we’ve stated elsewhere, we will not be able to meet vastly increasing mineral needs and safeguard our national and economic security without leveraging and expanding domestic production and processing capabilities.
