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As we have outlined, last month’s executive order on critical minerals could have far-reaching implications for our national security and economic wellbeing.  If you needed a case in point – look no further than Lithium.

One of the hottest commodities of the day, Lithium, as ARPN expert panel member and managing director of Benchmark Mineral Intelligence, Simon Moores recently outlined, “is coming of age in a big way. It’s the core ingredient to 99 percent of electric vehicles and as a result, demand is going through the roof.”

Meanwhile, China has long been jockeying for pole position in the EV industry segment, and is “outpacing the U.S. and other countries in a global race to secure supplies of [Lithium - ] an all-important element for electric cars.”

In global terms, Moores’s company sees a 10-fold increase in the industry’s demand profile over a ten-year timeframe.  Currently, Lithium supplies are largely sourced from Chile, Argentina and Australia, and processed into battery grade material in China and the U.S.

Against the backdrop of surging demand, a few months ago, professor emeritus of mining engineering at the University of Nevada, Jaak Daemen, lamented that the reason the U.S. was unprepared to meet demand was not a lack of resources, but rather “a regulatory approach that endlessly delays bringing mines in production.”

The executive order may help change that.

Nevada is one of the states with known Lithium reserves. As the Las Vegas Sun recently outlined, “[b]uoyed by Nevada’s enormous potential reserve of lithium and the opening of Tesla’s Gigafactory nearly 200 miles to the north, 25 mining companies and investor-backed speculators have staked more than 13,000 placer claims, covering almost the entirety of the Clayton Valley and 18 hydrographic basins.”

Meanwhile, much of these companies’ activities in the state are still exploratory, and as Jim Faulds, geologist and director of the Bureau of Mines and Geology at the University of Nevada in Reno has pointed out, “Lithium has not been studied in much detail in Nevada to really understand how much might be out there.” 

As a direct consequence of the executive order, Secretary of the Interior Ryan Zinke has already signed a secretarial order directing initial steps to producing the first nationwide geological and topographical survey of the U.S. in modern history, and in doing so marking a first step towards “really understanding how much might be out there” – not just Lithium and not just in Nevada, but materials across the critical minerals spectrum and across the United States. Coupled with other reforms outlined by the executive order, including permitting reform which has hampered domestic mineral resource development for too long, this survey may help yield a comprehensive federal action plan that can significantly reduce our over-reliance on foreign mineral resources.

While it is unlikely that the U.S. will become self-sufficient for its Lithium needs, there is no good reason why we should not harness our domestic resource potential to the fullest extent possible, and in doing so make the U.S. stronger, more competitive, and safer.

Late last month, international automakers made headlines when pledging “to uphold ethical and socially responsible standards in their purchases of minerals for an expected boom in electric vehicle production.”

As Reuters reported, a group of 10 car manufacturers have formed an initiative to “jointly identify and address ethical, environmental, human and labor rights issues in raw materials sourcing.”

Members of the so-called “Drive Sustainability” partnership include Volkswagen, Toyota Motor Europe, Ford, Daimler, BMW, Honda, Jaguar Land Rover, as well as Scania and Volvo.  According to Stefan Crets of the CSR Europe business network, the alliance will “assess the risks posed by the top raw materials (such as mica, cobalt, rubber and leather) in the automotive sector (…)” which will “allow Drive Sustainability to identify the most impactful activities to pursue” as automakers tackle supply chain-related issues.

While a commitment to ethical and socially responsible standards is certainly welcome, followers of ARPN will understand that it is fraught with challenges and raises the question of where materials will come from.

Take Cobalt, for example: Roughly 62 percent of global refined Cobalt is sourced in the Democratic Republic of the Congo (DRC), where production conditions are commonly known to involve child labor and poor environmental standards.

Supply issues relating to other critical materials carmakers require – which include not only the above-referenced Mica, Cobalt, Rubber and Leather, but also Graphite and Lithium, as carmakers invest more in electric vehicle (EV) technology – are less well known but equally challenging.

Case in point:  Lithium Ion batteries, a key component of EV technology, use both naturally-mined flake Graphite as well as synthetic Graphite, in which the former accounts for roughly 60% of inputs, and the latter for roughly 40%. According to Simon Moores, Managing Director of Benchmark Minerals and member of the ARPN panel of experts, China – arguably not a leader in environmental standards – dominates natural flake mining at 62% of global production in 2016, followed by Brazil at 23%.  A similar scenario unfolds for refining, most of which also takes place in China.  China’s graphite mining standards have come under fire and were featured in an in-depth Washington Post piece last year.

Mica sourcing is another problematic area.  Used in car paint and coveted for its ability to reflect and refract light, Mica has raised red flags in the past for child labor issues in its supply chains. The U.S., which is 100% import dependent to meet its sheet Mica needs (but only 48% import dependent for scrap and flake Mica), is fortunate to import most of its supply from close ally Canada, but once again, a large portion of imports are sourced from China (32%), which also accounts for the majority of global Mica output, followed by India (13%).

Automakers are not the first ones to pledge ethically and socially responsible sourcing of materials – problems relating to Cobalt have previously prompted tech giants like Apple and Tesla to rethink their sourcing strategies, with Apple even going as far as announcing their goal of working towards a “closed-loop supply chain where products are built using only renewable resources or recycled material.”

In their quest to meet pledged goals, automakers should join forces with those who promote efforts to create policy frameworks that foster both recycling and the responsible mining of mineral resources we need today, and will increasingly rely on in the future.

Earlier this month, Simon Moores, Managing Director of Benchmark Mineral Intelligence and member of the ARPN panel of experts testified before the full U.S. Senate Energy Committee on opportunities and risks in the energy storage supply chain.   We’re titling his observations as Moores’ Law — which is his for the taking, given the placement [...]

Just last week, we highlighted the surge in EV technology and its implications for mineral resource supply and demand.  A timely subject – as evidenced by the fact that the U.S. Senate Committee on Energy held a “Full Committee Hearing “to Examine Energy Storage Technologies” this week. Simon Moores, Managing Director of Benchmark Mineral Intelligence [...]

A recent piece for InvestorIntel zeroes in on a metal which, due to its growing use in battery technology, coupled with a challenging supply scenario is increasingly afforded “critical mineral” status – Cobalt. A co-product of Nickel and Copper, the metal’s recent history, as author Lara Smith argues, has been “chaotic.” ARPN agrees that about sums it up. Criticism regarding the [...]

At a time when mineral commodities have been slumping, one material is proving to be the exception to the rule, leading many to hail lithium as “a rare bright spot for miners, amid cratering prices of raw materials tied to heavy industry such as iron ore to coal.”  Via our friend Simon Moores, managing director [...]