American Resources Policy Network
Promoting the development of American mineral resources.
  • Rise of “Geopolitical Swing States” Underscores Need for All-Of-The-Above Approach to Mineral Resource Security

    In the wake of the coronavirus pandemic, emerging supply chain challenges across all sectors, Russia’s unprovoked war on Ukraine, as well as trade and geopolitical rifts between key global players deepening, many have asked whether the age of globalization, which followed the end of the Cold War, is over.

    With the world having become increasingly interconnected and interdependent in the years that followed the collapse of the Soviet Union, fears that globalization is dead are likely overblown, but, as the Wall Street Journal pointed out earlier this year, it is certainly changing.

    The world is becoming more fragmented, and, as Jared Cohen, president of Global Affairs and co-head of the Office of Applied Innovation at Goldman Sachs wrote earlier this month, “in the 2020s, everything is geopolitical.”

    As he outlines: “Each great power has a privileged position in the global economy, and they all face new risks and uncertain futures.” 

    He elaborates:

    “The United States is leaning more into its status as the holder of the world’s reserve currency, using the dollar and related payment systems to sanction adversaries and competitors. China is leveraging dependency on its position in supply chains. And Russia—with nowhere near the power of China or the U.S., but with more appetite for risk—has wielded energy to intimidate and coerce its neighbors and limit global support for Ukraine. There is no country or multilateral organization that has the capacity to arbitrate these tensions.”

    With the above-referenced events at the top of this decade and the accelerating global push towards net zero carbon emissions a new class of states have entered the spotlight in the global geopolitical realignment – the “geopolitical swing states,” and their role could grow exponentially in the coming years.

    Goldman Sachs’s Cohen defines a geopolitical swing state as “critical to the world economy and balance of power” but without “the capacity by themselves to drive the global agenda, at least for now.” He adds that “as long as the tensions between the U.S. and China continue to get worse, they will have outsized abilities to navigate geopolitical competition and take advantage of and influence it.” 

    According to Cohen, there are four – often overlapping — categories of geopolitical swing states:

    • Countries with a competitive advantage in a critical aspect of global supply chains;
    • Countries with a unique ability to make themselves attractive for nearshoring, offshoring, or friendshoring;
    • Countries with a disproportionate amount of capital and willingness to deploy it around the world in pursuit of strategic objectives; and
    • Countries with developed economies and leaders who have global visions that they pursue within certain constraints.

    As Cohen concludes, “[t]he rise of geopolitical swing states may balance the great powers and help stabilize the global order. Their interest-based decision-making could be a source of consistency in uncertain times. Or their newfound prominence may increase global instability by putting more actors and variables in play. But even if today’s world is not yet multipolar, a rising group of countries recognize that they can determine the course of world events. Those geopolitical swing states are aware that their power may be unsustainable, or event fleeting and they are determined to take advantage of the current window of opportunity.”

    While the rise of the geopolitical swing states has business implications for multinational businesses and investors, these trendlines are have real-world implications for U.S. stakeholders from a policy perspective, and, in the critical mineral resource realm, underscore the importance of a comprehensive all-of-the-above approach to securing critical mineral resource supply chains.

    As Cohen closes:

    “For years, geopolitics mattered more to certain industries than others. Now they matter to everyone.”

    The sooner U.S. policy stakeholders realize this and pursue a comprehensive “soup-to-nuts” approach that embraces nearshoring, offshoring, and friendshoring, while also focusing on bolstering the domestic critical minerals framework, the better.

  • A Nickel for Your Thoughts: New Potential for U.S. Nickel Supply

    As Memorial Day heralds the unofficial beginning of the summer travel season, ARPN has a suggestion to make to pass the time whether you’re gridlocked on the interstate or airport security:  Check out a podcast called “Battery Metals – A Nickel for Your Thoughts.”

    Too wonky?  Who cares?  That’s what earbuds are for – no one has to know that you’re not binging True Crime or learning a new language.

    Better to bone up on a metal that’s emerging as a mainstay of the net zero transition.

    As ARPN previously outlined, a “relatively benign supply profile” kept nickel off the U.S. Government’s first List of Critical Minerals in 2018. However, the metal’s increased usage in EV batteries, and the USGS’s expanded criticality criteria to include materials with only a single domestic producer along their raw materials supply chains – identified as having a single point of failure – led to nickel’s incorporation into the 2021 update to the U.S. Government Critical Minerals List.

    As followers of ARPN may recall, Indonesia, the world’s biggest nickel producer, has hinted at the possibility of Jakarta pursuing the creation of an OPEC-like cartel for nickel (and other key battery minerals).  Reportedly, the Indonesian government has reached out to the Biden Administration to explore a deal similar to those the U.S. has made with Japan and the European Union; however, Indonesia’s “lagging environmental and labor standards”, raise some hard questions on how broad the net of “friends and allies” can and should be cast.

    In the case of nickel, once again ARPN’s touchstone is our all-of-the-above approach to mineral resource policy, rooted in the realization that as much as we want to rely on our friends and allies, 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.  And domestic nickel production looks to be given a boost by projects currently underway in Minnesota (see our post here), as well as  what appears to be vast untapped mineral potential in neighboring Michigan.

    Currently, Michigan is the home of the only U.S. primary nickel mine in operation, the Eagle Mine.  Yet as the Detroit News reports this week, even with the Eagle nearing the end of its life cycle, according to the USGS, the Lake Superior region “could be home to as much nickel as Russia or Canada, some of the largest nickel producers in the world.” 

    The Detroit News points to Talon Metals Corp.’s plan to explore 400,000 acres of the Upper Peninsula and seek exclusive exploration rights to an additional 23,288 acres from the state, as well as the Michigan Geological Survey’s search of portions of the region in the context of the United States Geological Survey’s current nationwide mapping project.

    John Yellich, director of the Michigan Geological Survey based at Western Michigan University, believes that the area’s potential may go beyond nickel, and that new technology will help scientists gather “as much scientifically accurate information as possible” in an area where the federal government hasn’t done significant mapping for 70 years.

    If the estimates hold up, Michigan (along with Minnesota) could be an important piece of the all-of-the-above puzzle for nickel for which a current oversupply is expected to dissipate and tip into a deficit by 2026, with EV battery technology as a key driver.

    However, as is the case with neighboring Minnesota, and as U.S. House Natural Resources Committee Chairman Pete Stauber (R-MN) recently outlined,

    “[I]f we’re going to unlock the full potential of our resources and secure our domestic mineral supply chains, we need the political will to implement permitting reform.”   

    As Michigan and Minnesota make clear, the U.S. has vast resource potential for precisely the metals and minerals needed to power our 21st Century economy.  What the U.S. needs now is policy reform that unlocks the investment and innovation to realize that potential.

  • Is the U.S. Ready for the Coming “Coop-etition” for Critical Minerals?

    As geopolitical tensions continue to mount all over the globe, leaders of the Group of Seven (G7) countries gathering in Hiroshima, Japan last week reaffirmed the need to “manage the risks caused by vulnerable minerals supply chains and build more resilient sources.”   Buried in the boilerplate consensus common to G-7 sessions is real interest in cooperation among the [...]
  • New Battery Investment Numbers for Europe Point to the Real-World Challenges of Decoupling from China

    Against the backdrop the accelerating global push toward net zero carbon emissions and escalating tensions, worries about strategic vulnerabilities and the specter of supply chain disruptions have prompted the United States and its allies to forge new alliances designed to bolster supply chain security – and, to the extent possible, decouple their critical mineral supply [...]
  • Securing the Supply Chain for Graphite — the “Unsung Player” in Battery Supply Chain –“Herculean Task,” But One That Must Be Prioritized In Push Toward Net Zero Carbon

    Even before the Biden Administration announced the “most aggressive” plan to curb tailpipe emissions to date with new vehicle pollution standards proposed by the Environmental Protection Agency (EPA) last month, automotive OEMs and Tier 1 suppliers were facing difficulties getting both the parts and raw materials needed for their electric vehicle (EV) components. The newly proposed rules [...]
  • Has the Green Energy Transition Ushered in a New Commodity Supercycle?

    If history holds one important lesson for us, it’s that most things in life are cyclical. Low tide and high tide, ups and downs, times of war, times of peace.  What holds true on a personal level, also applies to bigger fields like economics. As value investor and author Howard Marks phrased it: “Mechanical things can go [...]
  • Tackling the “Single Point of Failure” – Inside the Push to Bolster the U.S. Domestic Nickel Supply Chain

    Against the backdrop of the accelerating global push to net zero carbon emissions, a volatile overall geopolitical climate and a new EPA proposal to tighten tailpipe emission standards U.S. stakeholders are looking for ways to secure critical mineral supply chains. The expectation is that with the proposed EPA rules requiring automakers to reduce carbon emissions [...]
  • Growing Importance of Critical Minerals Fuels Resource Nationalism Not Just in Latin America, as Countries from the Rest of World to the Western World Warm Up to More State Involvement

    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 [...]
  • Chile’s Plans to Take Control over Country’s Lithium Industry Part of Larger Resource Nationalism Trend

    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 44th largest economy, with a GDP roughly the size of Indiana. But small size belies the multiplier effect of Critical Minerals, which [...]
  • The Pitfalls of Decoupling – A Look at Europe’s REE Supply Chain Push

    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 [...]