China

We’ve named it the year of the Supply Chain, noting that others said “2021 is the year ‘supply chain’ went from jargon to meme.”

While an increased focus on the supply chain was undoubtedly a critical development in the mineral resource realm, and several steps to increase supply chain security for critical minerals were taken in 2021, overall mineral resource dependency trend lines remained largely unchanged.

On the day urban legend identifies as the point in the new year’s calendar where we are most likely to abandon our New Year’s Resolutions, we take our first  look at the latest hot-0ff-the-press USGS Mineral Commodity Summaries report released this Monday, shows that we are still 100% import dependent for 17 of the metals and minerals included in the USGS report — a number that remains unchanged from the previous year and the year before that.   If we left 2021 resolved to make supply chains a priority in 2022, the new USGS report shows this is a resolution we’ve made before.

And looking ahead to February 2, it’s a little like Bill Murray’s classic “Ground Hog Day” in the Critical Minerals world, where the clock clicks to the same day all over again – in the Critical Minerals movie, to a situation of deep dependency on foreign sourced metals and minerals.

Once more, we can’t help but observe that this represents a stark contrast to our import reliance for metals and minerals in 1984, when we were 100% import reliant for just 11 mineral commodities.

A deeper look at the chart depicting U.S. Net Import Reliance — or the “Blue Wall of Dependency,” as we have dubbed it based on the many overly blue bars showing our significant degree of import dependence, reveals that the number of metals and minerals for which we are 50% or more import dependent is also once again unchanged over last year — with the report pegging it at 47.

A few changes, however, are notable and significant, particularly in the context of the accelerating global green energy transition:

For the Rare Earths, a key group of tech metals underpinning 21^st Century technology and the accelerating green energy transition, our import reliance dropped from 100% in the 2021 report to currently “greater than 90%.”  That said, the rare earth concentrate being extracted in the U.S. are currently sent to China for separation.  Once again, a single link lacking in a supply chain continues U.S. dependency.

And for Lithium, perhaps the most frequently cited battery tech mineral (aside from Cobalt, Nickel, Graphite, and Manganese) U.S. import reliance has dropped significantly from “greater than 50%” to “greater than 25%.”

On the other hand, import dependence for Copper, another (and often overlooked) key component of green energy technology, has increased from 37% to 45%.

As in previous iterations of the report, China continues to be the elephant in the data room. And against all pledges in recent years for the United States to reduce import reliance on supplies from China, the 2022 Mineral Commodity Summaries lists China 25 times as one of the major import sources of metals and minerals for which our net import reliance is 50% or greater, which is up by one.

Of course, the sourcing of critical minerals is only one segment of the supply chain, and, as a recent look at the complete clean energy supply chain by Visual Capitalist has revealed, China has not only established itself as a global lead supplier of critical minerals. The country has also established dominance in the processing segment. (Take a look at our latest post on the issue here.)

While the urgency of the need to secure critical mineral supply chains has registered with stakeholders over the past two years, USGS’s findings underscore once more that supply chains in the 21^st Century are extremely complex and meaningful change takes time.

However, as ARPN’s Dan McGroarty phrased it during a congressional hearing in 2019 – “we can’t admire the problem anymore. We don’t have the luxury of time.”

Securing our supply chains is a behemoth task – and it is too complex to address piecemeal, but it is not impossible. To successfully address the issue, our focus must be across the entire value chain from mine to manufacturing and must encompass an “all of the above” approach we have come to know from the energy realm.

If we are able to do that in the coming months, maybe 2022 can be the year that strengthening tech metal supply chains can move from resolution to reality.

They say a picture is worth a thousand words.

This Visual Capitalist graphic may not exactly qualify as a picture – but is certainly reveals a lot about the complexity and urgency of the West’s critical mineral woes, and underscores how China has managed to corner the strategic and clean energy materials supply chain especially when it comes to processing.

According to the graphic, China has the edge when it comes to producing Rare Earths, currently accounting for 60 percent of global production.  China also produces 13 percent of global lithium supplies – another key material underpinning the green energy transition.  However, it is the processing segment of the supply chain where China has systematically established firm grip and has attained a startling level of control, accounting for 35 percent of global nickel refining, 58 percent of lithium refining, 65 percent of cobalt refining, and a whopping 87% of global REE refining. Expressed a little flippantly, it’s the processing, stupid.

The chart must be viewed against the backdrop of the accelerating global push towards carbon neutrality, evidenced most recently by electric vehicle sales outpacing diesel car sales in Europe for the first time in history.

In light of the growing urgency to secure critical mineral supply chains, the United States’ notable absence from the Visual Capitalist chart should give pause to stakeholders.

As National Mining Association president and CEO Rich Nolan argued in a November 2021 op-ed, while the United States still has a shot at winning the EV revolution, it is currently not only not in the lead, but is “being lapped” by China.

Benchmark Mineral Intelligence data shows that while battery megafactories have gone mainstream, with 225 plants in the pipeline as of August 2021.  While the U.S. is no longer a bystander in this race, only very few megafactories are currently located in the United States.

To succeed in this environment, Benchmark Mineral Intelligence’s Simon Moores says stakeholders will need to understand the lithium-ion-to-EV supply chain, its individual sections, and the linkage between them:

“Automakers who quickly understand the importance of these linked steps in the battery supply chain to the quality and cost of their EVs will be the most successful at navigating the next decade. 

For governments, the shifts in the economics of the supply chain […] provide opportunities to create jobs, garner influence over a strategic industry, and establish new trading relationships, particularly relevant as Europe and the United States, under a Biden presidency, will seek to reduce reliance on China as a single point in the supply chain.”

While first steps to strengthen supply chains have been taken (refer to our comprehensive Year in Review post from December 2021) and stakeholders are increasingly realizing the severity of the problem we’re facing, many have yet to fully embrace a comprehensive “all-of-the-above” strategy to secure our supply chains.

What we outlined in December of last year remains true today:

“The challenge is too large to address piecemeal. While recycling, substitution, and partnering with allies should be part of any overall comprehensive strategy, strengthening domestic mineral resource development across the entire value chain must be a key focal point of our efforts if we want to ensure reliable access to the critical minerals we need to meet our current and future needs.”

China will certainly not wait for us to catch up.

As the United States continues to look for ways to shore up and secure its critical mineral supply chains, a business deal involving China is raising eyebrows for some of our neighbors to the North. An October 2021 announcement by Chinese state-owned enterprise Zijin Mining Group Co. Ltd that it would purchase Canadian lithium miner [...]

ARPN’s Year in Review —   a Last Look Back at the United States’ Critical Mineral Resource Challenge in 2021 Well, two words, for the sticklers.  Merriam Webster may have gone with “vaccine,” but for ARPN, there was really no doubt. As one article put it, “2021 is the year ‘supply chain’ went from jargon to [...]

Every December, editors of the English-speaking world’s dictionaries release their choices for Word of the Year, a “word or expression that has attracted a great deal of interest over the last 12 months.” Unsurprisingly, for 2020, the honorees were coronavirus-related terms, with Merriam-Webster and Dictionary.com bestowing the honor on the word “Pandemic,” whereas the Collins Dictionary Word of the [...]

In a recent op-ed, National Mining Association president and CEO Rich Nolan argues that while the United States still has a shot at winning the EV revolution, it is currently not only not in the lead, but is rather “being lapped.” In the lead – not surprisingly to any of ARPN’s followers — is China, which [...]

Canada is currently in the process of positioning itself as “a cornerstone of the North American battery supply chain,” writes James Frith in a recent piece for Bloomberg. Pointing to two battery cell manufacturers choosing Canada as a future site of operation —UK-headquartered Britishvolt and Canadian-headquartered Stromvolt — Frith argues that “Canada is now on course to create [...]

“The U.S. has for too long ceded control of the front end of our manufacturing supply chains to foreign nations, assuming the materials we require will be there when we need them,” writes National Mining Association president and CEO Rich Nolan in a recent Boston Herald piece. In doing so, the U.S. has allowed China [...]

In the wake of several eye-openers regarding our nation’s critical mineral supply chain woes — the coronavirus pandemic, increasing trade tensions with adversary nations like China, and reports underscoring the mineral intensity of our green energy future — the bipartisan infrastructure package passed by the U.S. Senate before the August recess contained a series of [...]

Released at the beginning of June, the White House’s 100 Day Supply Chain report assessed risks and vulnerabilities in the supply chains for four key industrial sectors, making recommendations on how to alleviate them appears to have already inspired several new developments in the critical minerals realm: As the Australian Financial Review’s U.S. correspondent Matthew [...]