While in the early days of Russia’s invasion of Ukraine, concerns over how the war would impact global supply chains were mostly focused on oil and natural gas, it quickly became apparent that the ramifications of drawn-out hostilities would stretch far beyond the global oil and gas sector.
With Ukraine considered the “breadbasket of Europe,” Russia’s invasion of the country stands to take a toll on the food supply chain. And, as the war enters its fourth week, the writing is on the wall: For European consumers, it’s 2020 all over again with empty shelves in the grocery store – just this time the run is not on the toilet paper aisle, but rather, pantry staples like flour and cooking oil.
On the critical minerals front, ARPN has discussed looming supply crunches and implications for the United States using the example of titanium, but effects of the war can be felt across the spectrum of critical minerals.
As a case in point, consider nickel. With Russia’s assault on Ukraine deepening, nickel prices jumped as much as 250% in just two days earlier in March, leading the London Metal Exchange to suspend trading for the metal. As Reuters’s Andy Home observed, “[w]hat Russia terms its ‘special operation’ has broken the LME nickel contract and forced the exchange to impose emergency measures across the rest of its core base metal contracts.” Nickel has since reached a decade high of $25,000 per ton.
A critical ingredient in lithium-ion battery technology, nickel’s abrupt price surge has analysts and investors worried about automakers’ electric-vehicle ambitions, which are at the heart of the global push for achieving net zero carbon emissions.
Even before Russia’s euphemistically self-proclaimed “special operation” in Ukraine, experts and stakeholders were raising the alarm about a likely supply shortage for nickel as automakers shifted to EV production, with warnings that global demand for EV battery grade nickel could outstrip supply by 2024. Perhaps most famous is Tesla founder and CEO Elon Musk’s call on global mining companies to boost production of nickel in early 2020, when he publicly announced:
“Any mining companies out there … wherever you are in the world, please mine more nickel. (…) Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way. (…) Don’t wait for nickel to go back to some high point you experienced five years ago (…).”
Thankfully, for U.S. consumers and manufacturers, the message appears to have begun to resonate, and while we can argue that it has taken far too long for U.S. stakeholders to realize the seriousness of the situation, there are indications for a momentum shift.
The Biden Administration last month announced several “major investments in domestic production of key critical minerals and materials, ensuring these resources benefit the community, and creating good-paying, union jobs in sustainable production,” following in the wake of the Administration’s 100-day supply chain report.
Meanwhile, with the stakes raised significantly in light of the war on Ukraine, U.S. Senators Lisa Murkowski (R-AK), Joe Manchin (D-WV), James Risch (R-ID), and Bill Cassidy (R-LA), sent a letter to President Biden last week urging the him to take congressional and Administration efforts to bolster mineral supply chains one step further and to “invoke the Defense Production Act (DPA) to accelerate domestic production of lithium-ion battery materials, in particular graphite, manganese, cobalt, nickel, and lithium.”
While President Joe Biden missed an opportunity to convey the urgency of the critical minerals supply challenge with the American people during his first State of the Union Address early this month, new reports that “US regulators are warming to approving new domestic sources of electric vehicle battery metals, as Washington bids to avoid a reliance on strategic minerals imports similar to that on crude oil,” are encouraging.
Mining Weekly cites U.S. Secretary of Energy Jennifer Granholm and other officials speaking at an energy conference earlier this week as stating that “the need to domestically produce more metals is rising as EV’s go mainstream, but that new mines must not harm the environment.”
The good news is that the mining industry is ready to meet this challenge. Having recognized “[its] responsibility and trying to meet the increased expectations of consumers, society and governments” to contribute towards the push towards a greener energy future, the industry has increasingly been harnessing advances in materials science and technology to help develop domestic critical minerals supplies while maintaining and advancing responsible mining practices.
ARPN has highlighted industry initiatives on numerous occasions, and will continue to do so.
In the nickel realm, Tesla’s recent deal with Talon Metals Corp comes to mind, in which Elon Musk chose the company’s Tamarack mining project site in Minnesota, “due to plans to make the electric vehicle battery metal in a way it considers more environmentally friendly.”
Followers of ARPN may recall that this is the mine site for which the U.S. Department of Energy recently announced a $2.2. million award to fund to a Rio Tinto-led project with joint-venture partner Talon Metals Corp. to achieve carbon capture by a process that mineralizes the carbon in rock – a process far more stable than methods that inject carbon, where it remains vulnerable to seepage and fracturing due to earthquakes.
As Senators Murkowski, Manchin, Risch, and Cassidy argued in their letter to President Biden:
“Allowing our foreign mineral dependence to persist is a growing threat to U.S. national security, and we need to take every step to address it. The 100-day report acknowledges the ‘powerful tool’ the DPA has been to expand production of supplies needed to combat COVID-19, as well as the potential the DPA could have to ‘support investment in other critical sectors and enable industry and government to collaborate more effectively.’ The time is now to grow, support, and encourage investment in the domestic production of graphite, manganese, cobalt, lithium, nickel, and other critical minerals to ensure we support our national security, and to fulfill our need for lithium-ion batteries – both for consumers and for the Department of Defense.”
