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As geopolitical tensions between China and the West are on the rise, and critical mineral supply chain pressures continue to mount against the backdrop of the accelerating green energy transition, U.S. Senator Tom Cotton (R-AR) sent a letter to U.S. Secretary of Energy Jennifer Granholm demanding information from her department regarding recent reports that the Department of Energy (DOE) may provide taxpayer-funded support for a proposed lithium mine with ties to the Chinese Communist Party (CCP).

Lithium Americas, a Vancouver, Canada-based company is, according to its website, “focused on advancing lithium projects in Argentina and the United States to production,” and the company is looking to advance its Thacker Pass projection in Humboldt County, Nevada.   In order to finance it, the company has applied for a loan under the DOE’s Advanced Technology Vehicles Manufacturing Loan Program, which is part of the recently enacted Inflation Reduction Act (IRA).

Writes Sen. Cotton:

“Worryingly, media reports indicate that Lithium Americas’ largest shareholder is Ganfeng, a Chinese company with direct ties to the CCP. Ganfeng is currently acquiring lithium mines around the world, which, according to former Secretary Mike Pompeo, is part of a ‘clear intention by the Chinese Communist Party to control the entire supply chain for green energy.’ The United States should be reducing its dependence on China for these critical inputs, not opening the door for China to ‘gain a foothold in America on lithium mining,’ as reported.”

He adds:

“The U.S. government should apply strict oversight regarding potential federal funding of CCP-owned or -controlled entities. DOE’s loan for the Thacker Pass mine would be substantial and reportedly cover the majority of the project’s capital costs. As the government continues to invest in battery supply chain programs, it is critical that DOE ensure taxpayer funding does not go to corporations with CCP ties and does not increase U.S. mineral dependence on China.”

Specifically, the Senator demands that the department use its leverage to “incentivize Lithium Americas to part ways with Ganfeng. Ganfeng and any other Chinese entities with CCP ties should divest their stakes in Lithium Americas before the company is offered this loan.” He further urges the department to reject Lithium Americas’ application for the ATVM if the company refuses to end its Ganfeng relationship.

Senator Cotton seeks clarification from Secretary Granholm on the following questions:

1. Is DOE aware of Lithium Americas’ application for the Advanced Technologies Vehicles Manufacturing (ATVM) Loan Program and the company’s partial ownership by entities closely tied the CCP?
2. What safeguards or requirements are in place to ensure the ATVM program is not funding other companies owned or controlled by the CCP or other adversaries?
3. Does DOE agree that the United States must reduce its dependence on China for critical minerals like lithium and should invest in domestic production of such minerals? If so, does DOE believe that funding deeper CCP control of the U.S. critical mineral supply chain is counterproductive to this goal? If not, why not?
4. Has DOE raised with Lithium Americas the possibility that its loan application for the Thacker Pass project may be harmed by the company’s partial ownership by Ganfeng or that its application may be improved if Ganfeng divested in the company?

Senator Cotton closes:

“The United States urgently needs domestic critical mineral production to supply its technology sector and reduce its dependence on China; the United States does not need and should not fund possible attempts by the CCP to deepen its control over the U.S. critical mineral supply chain.”

It will be interesting to see how the Department of Energy responds, as it was precisely the realization that our nation (and the Western world) is overly-reliant on adversary nations for its critical mineral needs across the entire value chain that led the United States to finally focus on securing its supply chains.

Whether Chinese influence over this project proves to be definitive or not depends on the facts of the matter, but Senator Cotton’s point that questions of foreign control deserve to be fully investigated before the U.S. Government confers funding seems unarguable. Government programs intended to alleviate worrisome foreign resource dependencies should not unwittingly strengthen those dependencies at the expense of the American taxpayer – and American national security.

While the coronavirus pandemic may no longer occupy the top of the hour slot in news broadcasts, the supply chain challenges it unearthed for many of the materials we rely upon are here to stay.  And as the global push towards net zero carbon emissions gets kicked into high gear, nations are increasingly realizing their own limitations and dependencies when it comes to meeting their industries’ metal and mineral needs to implement the sought after green energy transition.

With socio economic pressures and geopolitical tensions rising, nations are increasingly embracing comprehensive approaches to mineral resource policy, as piecemeal, ad-hoc policy making is fading into the background.

One large piece of the all-of-the-above comprehensive approach to mineral resource security ARPN has long been touting along with many other policy experts is cooperation with allies.

The latest case in point is the Canadian-South Korean partnership announced after a meeting between Canada’s Prime Minister Justin Trudeau and South Korean President Yoon Suk-yeol last month.

In a joint statement, both countries agreed to work towards launching a high-level dialogue on economic security, which will, among other things, focus on deepening their “strategic partnership on supply chain resiliency,”  and positioning “both countries as globally competitive players in the critical minerals supply chain and battery and EV (Electric Vehicles) value chains in ways that support our collective prosperity and security, while raising labour and environmental standards.”

A memorandum of understanding “to enable the building of value chains in Canada and Korea to support clean energy transition and energy security, including with respect to critical minerals,” is in the works.

While high-level bilateral agreements on critical minerals are becoming more commonplace – we’ve featured a few the U.S. has entered into —multilateral frameworks are also being built out.

The Mineral Security Partnership (MSP) between the United States and currently ten other allies launched in June of 2022 is an initiative to bolster supply chains that aims “to ensure that critical minerals are produced, processed, and recycled in a manner that supports countries in realizing the full economic development potential of their mineral resources.”

During a meeting in September convened on the margins of the United Nations General Assembly High-Level Week partners discussed “priorities, challenges, and opportunities in responsible mining, processing, and recycling of critical minerals.”

Aside from the MSP partners Australia, Canada, Finland, France, Japan, the Republic and Korea, Norway, Sweden, the United Kingdom, the United States and the European Union, additional minerals-rich countries were in attendance, which included Argentina, Brazil, the Democratic Republic of the Congo, Mongolia, Mozambique, Namibia, Tanzania and Zambia.

According to the U.S. State Department, “the MSP is currently considering promising critical minerals projects that could be of interest to one or more MSP partners, promoting innovation, developing a joint approach on ESG standards, and engaging both project operators and minerals-producing countries.”

As the push towards net zero carbon emissions and away from China as a lead supplier/processor intensifies, cooperative efforts — in the context of a comprehensive approach to resource security as outlined above — will only increase, and ARPN will continue to track them.

Underscoring the importance of the green energy transition to modern society, the U.S. Senate earlier this week passed a resolution, the U.S. House of Representatives  introduced a corresponding resolution, and several governors issued their own declarations designating September 26th through 30th “National Clean Energy Week.” National Clean Energy Week is billed as an annual week-long “celebration of clean energy innovation” to “help solve [...]

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