Search Results

Chilean President Gabriel Boric’s April announcement of his plan to nationalize the country’s lithium industry to boost the Latin American nation’s industrial base and protect the environment may have prompted observers to declare his action a “shock move,” but as ARPN outlined in our last post, the “shock seems to result from global observers who are still learning to appreciate the importance of parts of the Periodic Table more critical to economic growth than ever before.” 

To those dialed into the issue, Boric’s move was hardly shocking. For one, he had made his plans known before he even assumed office. Furthermore, Boric’s announcement ties into an overall trend of countries resorting to resource nationalism, a trend which has certainly been noticeable in Latin America, an area with a historic penchant for nationalist policies, but also in other parts of the world.

Globally, recent steps taken by governments to nationalize their mineral resources have involved

• Myanmar, where the ethnic minority Wa militia has announced the suspension of work at mines in areas it controls beginning in August – a move that has led to a surge in tin prices with the Wa-controlled region estimated to account for over 70% of the country’s tin production;
• Indonesia, where the government has enacted an export ban on nickel and was exploring a ban on tin exports, with a scheduled bauxite export ban scheduled to take effect in June of this year, and more export bans for other materials to be announced in the coming years;
• Zimbabwe, where the government imposed a ban on unprocessed lithium in December of 2022, reportedly to prevent artisanal mining projects from taking the minerals across borders.

And then of course, as followers of ARPN well know, there is China, a country with traditionally tight state control over its resource sector. Beijing has been tightening its reins on its critical mineral supply chains, specifically for the country’s lithium battery supply chain, and has established a new state-owned group to serve as a “consolidated hub for the country’s iron ore trade,” with the mandate for “China Mineral Resources Group” covering mining, ore processing and trading.  As ARPN recently discussed, Beijing is currently considering prohibiting exports of certain rare-earth magnet technology, bringing back the specter of trade weaponization as tensions between China and the West soar.

But even in the Western world, government involvement in the critical minerals sector is on the rise.

While modern Western democracies are typically hesitant to embrace more state intervention in the critical minerals sector, many believe that in order to succeed, the United States and its allies need to learn “how to stomach more state intervention [themselves].” 

As Nabeel Mancheri, Secretary General of the Belgium-based Rare Earth Industry Association recently stated, “The EU is still reluctant to have state-oriented investment in the mining sector, but in certain cases, we have to do it.”

In the U.S., calls for a more robust industrial policy have also gotten louder – a recent piece in National Defense Magazine is a case in point – and recently passed legislation like the CHIPS and Science Act as well as the Inflation Reduction Act exemplify a more active government role in this sector as stakeholders increasingly acknowledge the importance of critical minerals to their nation’s economic wellbeing and national security.

As the Western world continues its quest to decouple from China, we can expect to see more active government involvement in the critical minerals sector.

For nations to prosper in this brave new world, the challenge will be to balance domestic and global policy approaches and public and private sector involvement with economic and security concerns to reflect today’s political and geopolitical realities.

As the cliché goes, the global economy is inextricably interconnected.  Easy to say, but still surprising to see it unfold in front of us – especially when the nation illustrating the truism is the world’s 44^th largest economy, with a GDP roughly the size of Indiana.

But small size belies the multiplier effect of Critical Minerals, which can have an outsized impact on the global economy.

On April 20, 2023 Chile’s President Gabriel Boric announced his plan to nationalize the country’s lithium industry to boost the Latin American nation’s industrial base and protect the environment.  Falling short of full nationalization, the proposals envision majority state-owned partnerships with private companies for lithium exploration and production, and would require that the two lithium miners currently operating in the country, Chile’s SQM and U.S. company Albemarle, “negotiate an unspecified state participation in their existing concessions, which run to 2030 and 2043 respectively.”

Considering that Chile is the world’s second largest lithium producer, observers called Boric’s announcement a “shock move,” but in all reality, Chile is only the latest in a series of countries resorting to resource nationalism at a time when critical mineral demand is soaring.  As for the shock effect, Boric’s plans to nationalize mineral operations were well-known.  The shock seems to result from global observers who are still learning to appreciate the importance of parts of the Periodic Table more critical to economic growth than ever before.

But there is something new under the Latin American sun.  As Peter Schechter and Juan Cortiñas outlined in a February 2022 piece for Marsh McLennan’s Brink News ARPN featured at the time, the shunning of laissez-faire economics, particularly in Latin America, is not new. “What’s different this time,” they say, “is that these new interventionist policies are not only focused on the traditional energy sector. Instead, the region’s attention is turning to increasingly valuable minerals that are key to the new green economy quickly gaining momentum across the world.” 

Chile’s move comes on the heels of a comprehensive lithium nationalization plan enacted by Mexico which culminated in President Andres Manuel Lopez Obrador signing a decree handing over responsibility for lithium reserves to the country’s energy ministry in February of this year.

Bolivia’s ruling socialists have also favored state control over the nation’s vast untapped mineral resources but are relying on Chinese partners to harness them.

Meanwhile, some speculate that had it not been for his ouster, Peru’s President Pedro Castillo, who won a narrow victory in 2021 and had initially pledged to nationalize much of the country’s mining sector, might have pursued an approach similar to Boric’s in Chile.

While Peru may have bucked the resource nationalism trend, and is now “watching from the sidelines” as it gains steam, for all its resource riches, lithium watchers have their eyes on the last remaining holdout against the region’s statist trend:  Argentina.  There, a number of lithium projects currently in development are open to foreign investment and capital.  But across the region, and with Chile joining Mexico and Bolivia, the Argentinian exception proves the rule.

With resource nationalism rising across the Latin America region, stakeholders in the U.S. must heed the lesson that the best approach to shoring up our own critical mineral supply chains is a comprehensive “All of the Above” approach.

The increasingly popular strategy of “friend shoring” is an important pillar of this approach, and of course, remains highly appealing to policy makers with “not in my backyard (NIMBY)” constituencies.  However, as we previously outlined:

“[Friend shoring] will not be sufficient to meet our vast material needs, particularly as NIMBY-ism is going global.

It’s time we come to terms with the fact that as much as we want to rely on our friends and allies, this can only be part of our critical mineral resource strategy.  To succeed and remain competitive in the 21st Century, we will also have to harness our arguably vast domestic resource potential across the entire value chain — from mine to manufacturing.”

 

The coronavirus pandemic and associated supply shocks, surging demand for critical minerals against the backdrop of an accelerating global push to net zero carbon emissions, as well as rising geopolitical tensions on the heels of Russia’s invasion of Ukraine and the looming tech war between China and the West have catapulted the issue of securing [...]

The Biden Administration has announced the “most aggressive” plan to curb tailpipe emissions to date, with new vehicle pollution standards proposed by the Environmental Protection Agency (EPA) and announced by the White House last week. If finalized, the proposed rules would require automakers to reduce carbon emissions by 56% in their 2032 models compared to 2026 models.  The expectation is [...]

Amidst growing tensions between the United States and China, the United States is stepping up its friend-shoring efforts in an attempt to diversify its critical mineral supply chains. Recent trade deliberations with Japan and the European Union have yielded a free trade Critical Minerals agreement to strengthen supply chains with Tokyo and will likely lead to a [...]

As ARPN outlined earlier this week, the European Union has dropped its response to the United States’ Inflation Reduction Act passed last summer: the just-dropped Critical Raw Materials Act (CRMA) paired with sister legislation, the Net Zero Industry Act (NZIA), which aims to support investment in manufacturing capacity in ‘net zero emissions’ technologies in Europe. The CRMA not only seeks to streamline [...]

With demand for critical minerals projected to increase dramatically against the backdrop of geopolitical tension and strained supply chains, the European Union has released its long-awaited action plan to “ensure the EU’s access to a secure, diversified, affordable and sustainable supply of critical raw materials.” The Critical Raw Materials Act (CRMA) presented to lawmakers in Brussels on March [...]

 Semiconductors have become indispensable components for a broad range of electronic devices. They are not only “the material basis for integrated circuits that are essential to modern day life” – the “‘DNA’ of technology” which has “transformed essentially all segments of the economy,” they are also essential to national security, where they enable the “development and fielding of advanced weapons systems and [...]

In a guest editorial for the Pennsylvania-based Patriot News, Gen. John Adams, a retired U.S. Army brigadier general, president of Guardian Six Consulting and a former deputy U.S. military representative to NATO’s Military Committee, writes that the war in Ukraine, following on the heels of a pandemic that unearthed massive supply chain challenges across many [...]

 In this post, we continue our review of the “battery criticals” (lithium, cobalt, graphite, nickel and manganese) against the backdrop of the just-released 2023 iteration of the USGS Mineral Commodity Summaries.  Next up:  cobalt. With the material accounting for up to 20% of the weight of the cathode in a typical lithium-ion EV battery, cobalt was considered the highest [...]