China

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 that with the rules in place, 67% of new light-duty car purchases will be electric by 2032.

The move comes at a time when geopolitical and trade tensions between the United States and our allies on one hand, and China on the other are soaring, and observers argue that the ambitious plans could play into Beijing’s hands.

While the United States has taken several important steps to decouple its critical mineral supply chains from China, Beijing, having systematically built out its dominance across the entire value chain from mining over processing to manufacturing, still has a chokehold on the EV battery supply chain, and the latest USGS Mineral Commodity Summaries report confirmed that for all of the recent U.S. policy efforts, our dependencies still persist.

In case anyone needed a reminder, here is an infographic from last November, compiled by our friends at Benchmark Mineral Intelligence clearly visualizing China’s dominance of the battery supply chain.

The Biden Administration has, in recent weeks, stepped up its friend-shoring initiatives to bolster U.S. supply chains, with recent trade deliberations having yielded a free trade Critical Minerals agreement with Tokyo and a likely similar accord between the U.S. and EU. U.S.-Canadian critical minerals cooperation has also seen a boost.

Embedded into a comprehensive “All of the Above” strategy, these friend-shoring initiatives can play an important role in strengthening critical mineral supply chains.  And yet there are mounting concerns that the Biden Administration, in spite of verbal affirmations of wanting to responsibly expand domestic resource development and processing, continues to cater to the “not-in-my-backyard” sentiment, which still runs strong in discussions on resource development.

This 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.”

It’s not that there is a lack of promising domestic resource development projects, especially for the Battery Criticals — lithium, cobalt, graphite, nickel, and manganese.

ARPN recently looked at each of these materials, now deemed under President Biden’s DPA determination to be “essential to the national defense,” and the U.S.-based projects working to urgently needed new supply into production. [See our discussions linked here: Lithium, Cobalt, Graphite, Nickel, Manganese]

And let’s not forget copper, which has increasingly been recognized – most recently by the EU — as a critical raw material in light of its key role in the green energy transition, and for which a push to have the metal added to the U.S. Government Critical Minerals List is currently underway.

As ARPN has previously pointed out, lofty goals of net carbon neutrality – and that includes the just released proposed EPA emission standards –  will not be achievable if we don’t embrace a push to secure critical mineral supply chains from “soup to nuts” to borrow a term used by Energy Secretary Jennifer Granholm.

After all, as we’ve noted often at ARPN, the first word in supply chain is… supply.

The world breathed a collective sigh of relief when Chinese drills in the seas and skies surrounding Taiwan wrapped up without further incident this Monday.

Nevertheless, tension between the U.S. and China over the island, which some analysts consider “the most dangerous standoff between global superpowers, even as the war in Ukraine rages,” remain high, and a recent development in the trade arena may add further fuel to the fire.

The territorial dispute over Taiwan may make for the flashiest headlines, but, as followers of ARPN well know, the trade dimension of the geopolitics of critical mineral supply chains have emerged as a new frontier in the tech wars between Beijing and Washington, D.C., and conflict has been smoldering over the past few years, particularly over Rare Earth Elements (REEs).

When reports of Chinese threats to “play the Rare Earths card” – to escalate its trade dispute with the then-Trump administration to include rare earths minerals — surfaced in 2019, ARPN’s Daniel McGroarty argued the move could galvanize support for legislation or further executive actions to reduce U.S. overreliance on foreign supply and processing of critical metals and minerals.  By July 2019, then-President Trump issued a Presidential Determination under the Defense Production Act of 1950 designating all links in the rare earth permanent magnet supply chain as “essential for the national defense,” and eligible for U.S. Government funding and support.

But the wheels of government grind slowly.  A pandemic, a new war, and several supply chain shocks later, the United States and its allies have indeed taken a number of steps to decouple from China and shore up its own critical mineral supply chains.  As a result, China’s share of global REE production, which stood at roughly 90% a decade ago, has dropped to 70% last year, according to the USGS, though most processing is still under Chinese control.

Western nations have also secured a number of trade deals to decouple from China marking a “huge realignment in trade – one that goes by names like ‘friendshoring’ and ‘nearshoring’ – and having occurred “so rapidly that they’ve wrongfooted Beijing,” as Mary Hui writes in a three-part series for Quartz.

Hui cites a two-year old deal between U.S. and European rare earth firms which involves processing monazite sands in Utah to produce rare earth carbonates, then ship them to Estonia for processing, as well as another project in which REE ores from Canada will undergo preliminary processing there to then be shipped to Norway for further processing.  Meanwhile, Japan has strengthened its REE cooperation with Australia.

Those efforts notwithstanding, China still has substantial leverage, especially in the processing segment, and has in recent months kicked its efforts to consolidate its REE sector into high gear [see our post here] while doubling down on an aggressive investment spree overseas to re-establish an “abundant supply of rare earth, so [as] to have the world’s cheapest feed for China’s downstream industries.”

As tensions between China and the West, and specifically China and the United States have soured, the specter of export controls began rearing its head again.

In October 2022, in a move that observers have deemed a paradigm shift in U.S. export control policy toward explicit containment of China’s technological advancement, Washington, D.C. imposed a set of sweeping controls on advanced semiconductors and semiconductor manufacturing equipment to China, and has been able to secure Japanese and Dutch agreement to a deal restricting China’s access to advanced semiconductor manufacturing equipment.

While China until recently had yet to “substantively respond” to the semiconductor export controls, industry sources suspected “they’re likely going to use rare earths as a bargaining chip since rare earths are a weak point for Japan and the U.S.” – and these experts were proven right when Nikkei reported last week that Beijing was considering prohibiting exports of certain rare earth magnet technology through updates to a technology export restrictions list last updated in 2020.

According to Nikkei, “[t]he revisions would either ban or restrict exports of technology to process and refine rare-earth elements. There are also proposed provisions that would prohibit or limit exports of alloy tech for making high-performance magnets derived from rare earths. In all, there are 43 amendments or additions in the draft list first announced in December by the commerce and technology ministries. Officials have finished taking public comments from experts, and the changes are expected to go into force this year.”

As followers of ARPN well know, China is no stranger to playing the Rare Earths card, and they may recall the 2010 standoff between China and Japan in which Beijing blocked REE sales to Japanese users over a heated flare up in the context of the long-standing dispute over control of the Senkaku Islands in the East China Sea.

It’s not 2010 anymore. Dependencies have shifted, and a new global realignment has begun. It remains to be seen how this new chapter plays out, but it is clear that as the export restrictions ratchet is being tightened, the weaponization of trade in the tech wars is back on the menu.

In a new video clip, the Wall Street Journal explores one of the areas of competition between the two superpowers that is emerging as a key theater of the 21st century tech wars: EV battery supply chains. Followers of ARPN know all too well, and our friends at Benchmark Mineral Intelligence clearly visualized this fact in [...]

 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 [...]

Sometimes hailed the “fuel of the green revolution,” lithium has been the posterchild of the “battery criticals.”  Start with the fact that the leading battery technology underpinning the shift towards net zero carbon emissions is called “lithium-ion.” With its high electrochemical potential and light weight, the commercialization of the lithium-ion battery has transformed and accelerated the renewables shift.  Lithium is [...]

It is essential to the production of iron and steel. It is a key component of certain widely used aluminum alloys.  It’s considered a Critical Mineral by the U.S. Government, “essential to the national defense,” under the terms of the long-standing Defense Production Act.  And, perhaps most importantly today, it is one of the five battery criticals, with the [...]

If we needed any more reminders about the high-stakes nature of our ongoing (see ARPN’s post on the latest USGS Mineral Commodity Summaries report here) deep over-reliance on Chinese-sourced (and/or processed) critical minerals, the shooting down of a Chinese spy balloon in U.S. airspace and the subsequent downing of three other unidentified flying objects over Alaska [...]

Earlier this week, USGS released its latest iteration of the annual Mineral Commodity Summaries, a much-cited report that every year gives us a data-driven glimpse into our nation’s mineral resource dependencies. It’s fitting that ARPN reviews the report on Groundhog Day, February 2nd, because just like in the Bill Murray classic movie, in which the clock jumps [...]

We’re sticking with the visuals this week. In our last post, we featured a Visual Capitalist depiction of the lithium supply chain which underscored the urgency for the U.S. to build out our domestic lithium development capabilities. Our second featured graphic comes once more via Visual Capitalist, but this one takes a broader look at the [...]