Milewski points to Russia having fired an estimated 11 million artillery shells in 2022, the majority of which can contain – depending on shell and manufacturing process – at least an estimate 0.5kg of copper. This, he says would amount to 5,500 tons of copper, or the equivalent of copper used in 1,170 wind turbines.

Copper demand is already forecast to increase by more than 100% by 2035 with many analysts warning there may not be enough copper to meet decarbonization goals in the next few decades after years of underinvestment in the mining industry and falling ore grades.  And those projections, according to Milewski, do not account for surging military demand against the backdrop of increasing geopolitical volatility around the globe.

Of course, copper is just the proverbial tip of the iceberg. According to the National Mining Association, the U.S. Department of Defense uses nearly 750,000 tons of minerals on an annual basis – a number that was calculated around 2016/2017 at a time when the U.S. was not facing any major conflicts.

Fast-forward to 2024 and the U.S. is supporting allies in the Ukraine and Israel while the situation in the Taiwan Strait looks increasing vulnerable.  Meanwhile, particularly ammunition stockpiles are running so low that NATO officials have warned that Western militaries are scraping “the bottom of the barrel” forcing NATO to provide Ukraine with supplies not from full warehouses, but rather “half-full or lower warehouses in Europe.”

The issue is compounded by the fact that production time to rebuild weaponry stocks can take anywhere between three and 18 years, depending on equipment according to the Centre for Strategic and International Studies – however that analysis focuses only on manufacturing and production times.

As followers of ARPN well know, supply chains for the metals and minerals underpinning U.S. military technology and munitions are “extremely vulnerable” due to a perennial over-reliance on supplies from adversary nations, i.e. China.

For all the talk about decoupling supply chains in recent years, the needle has not moved much, and the latest USGS Mineral Commodity Summaries still has the U.S. 100% import reliant for 12 metals and minerals, while an additional 29 critical mineral commodities had a net import reliance greater than 50% of apparent consumption — a small drop by two over last year’s report.

However, some important steps have been taken in recent years, and are beginning to bear fruit. Milewski lists several military budget ramp-ups to “try and resolve the massive shortfall.”

As ARPN previously outlined, a notable example of such efforts is the series of (Defense Production Act) DPA Presidential Determinations involving specific Critical Minerals, beginning with President Trump’s July 2019 designation of the Rare Earth permanent magnet supply chain as being “essential for the national defense,” followed by President Biden’s designation of what ARPN calls the “Battery Criticals” as DPA Title III eligible in March 2022, followed by Platinum and Palladium in a DPA Presidential Determination in June 2022.  Earlier this spring, two further Presidential Determinations (February 27, 2023 Presidential Determination, and DPA Presidential Determination (2023-5)), effectively created an entirely new category of critical minerals – “Defense Criticals” as ARPN calls them – by way of designating airbreathing engines, advanced avionics navigation and guidance systems, and hypersonic systems and their “constituent materials” as priority DPA materials.

Those DPA actions, funded by Congressional appropriations, are now producing Department of Defense funded projects to encourage domestic development of these “defense criticals” and their supply chains.

Milewski highlights the following:

• Graphite: a $37.5 million agreement between the DoD and Graphite One (Alaska) to fast-track a domestic graphite mine;
• Antimony: two awards — $24.8 million and $15.5 million — by the DoD to Perpetua Resources to secure a domestic source of antimony [an additional conditional award of up to $34.6 million under the existing Technology Investment Agreement was announced earlier this week];
•  Lithium: a $90million agreement to secure lithium production between the DoD and Abermarle;
• Nickel: a US $20.6 million agreement between the DoD and Talon Nickel to increase domestic nickel production.

He closes:

“We see the U.S. military shifting its position and capacity to secure its critical mineral supply gaining more momentum than it has for arguably the past 30 years. However, the U.S. military is America’s largest government agency, and it will take time.”

However, with conflict brewing in many parts of the world, time is a luxury we do not have, and strengthening critical mineral supply chains should be a key priority for policy stakeholders in 2024.

The post U.S. Military Faces Compounding Problems – Surging Tensions, Depleted Stockpiles, Critical Mineral Supply Chain Challenges appeared first on American Resources Policy Network.

In a piece posted at Oilprice.com Mark P. Mills (via Zerohedge) takes a deep dive into this question.  As Mills points out, with America’s longstanding bond with cars showing no signs of weakening in spite of soaring cost, the push towards widespread adoption of EVs is running into significant challenges in practical application and underlying physics, and, as followers of ARPN well know, a complex mix of chemistry, geology and geopolitics.

Mills laments that the underlying premises of the “ostensible inevitability, the enthusiasm, the subsidies, and the mandates for EVs are anchored in (…) claims (…) that are simply wrong ” –  EVs are not simpler than conventional cars, they just have a complexity of their own, they do not entail less labor to build but rather shift where the labor takes place, and the upstream supply chains, i.e. the sourcing of material inputs, happens “elsewhere since the mines and refineries are not in America.”

Meanwhile, the mineral challenges are significant, says Mills:

“While copper is the long pole in the tent, it is only one of the mineral challenges. The realities of costs and emissions for EVs is dominated by a simple fact: a typical EV battery weighs about 1,000 pounds to replace the fuel, and the tank weighing together under 100 pounds.  That half-ton battery is made from a wide range of minerals including copper, nickel, aluminum, graphite, cobalt, manganese, and of course, lithium. And to get the materials to fabricate that half-ton battery requires digging up and processing some 250 tons of the earth somewhere on the planet. Those numbers, it’s important understand, are roughly the same no matter what the specific battery chemical formulation is, whether it’s lithium nickel manganese, or the popularly cited lithium iron phosphate.”

As the piece points out, the sheer quantity of materials needed “has led proponents to claim that there are, after all enough minerals on the planet and there’s nothing to worry about” – an argument that becomes irrelevant when you consider that “the data show that, overall, the mines operating and planned can’t supply even a small fraction of the 400% to 7,000% increase in demand for minerals that will be needed within a decade to meet the ban-the-engine goals.” 

Ultimately, Mills concludes, that “the realities of physics and engineering mean that politicians pushing for an all-EV future run a high risk. Quite aside from the eventual discovery that EVs will disappoint with only a tiny impact on global CO2 emissions, the bigger impacts will come as consumers find vehicle ownership costs and inconveniences both escalating.”

While this may be true, it appears that, to stay with transportation analogies, the train has left the station.  Politicians are all in for the EV revolution — but to lessen the blow to consumers, they will need to embrace frameworks that will bolster the domestic supply chains for the critical minerals underpinning this shift, across all segments of the value chain.

As the horse and carriage gave way to the “motor carriage” with its superior horsepower, EVs are inexorably redefining the driving experience, even as internal combustion engines co-exist in some manner.  The pace of change will certainly rest on the understanding of the role a host of Critical Minerals play in this transformation – and the willingness to extract them in ways old and new.

The post The EV Transition is Here – But Its Enthusiasts Ignore Its Political and Economic Implications appeared first on American Resources Policy Network.

ARPN outlined several of these DoD-funded projects to strengthen critical mineral supply chains in an earlier post. This past week, DoD added two more projects to the list.

On September 12, 2023, DoD announced that the Office of the Assistant Secretary for Industrial Base Policy, through its Manufacturing Capability Expansion and Investment Prioritization (MCEIP) office, has entered an agreement with Albemarle Corporation to support the expansion of domestic mining and production of lithium.

Per DoD’s announcement, “[t]he $90 million agreement, entered into under Defense Production Act (DPA) Title III authorities and utilizing funds appropriated by the Inflation Reduction Act, will help support Albemarle’s planned re-opening of their Kings Mountain, N.C. lithium mine to increase domestic production of lithium for the nation’s battery supply chain. Albemarle estimates that Kings Mountain will be operational between 2025 and 2030.”

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 a key component of the battery cathode, and the EV market and demand for renewable energy storage are key drivers for soaring lithium demand.

Meanwhile, as global lithium production has quadrupled since 2010, the U.S. share of production has dropped significantly. Once the largest producer of lithium in the 1990s, the United States’ share of production has dropped to 1 percent of the global total, as Australia, Chile and China dominate the field.

A second award announcement made on the same day aims at strengthening the nickel supply chain, and was also made through the Manufacturing Capability Expansion and Investment Prioritization (MCEIP) office of the Office of the Deputy Assistant Secretary of Defense for Industrial Base Resilience:

The $20.6 million agreement with Talon Nickel (USA), LLC – also entered into under DPA Title III authorities — uses funds appropriated by the Additional Ukraine Supplemental Appropriations Act to advance nickel exploration and mineral resource definition of the Tamarack Intrusive Complex in northeast Minnesota.

The Office of the Deputy Assistant Secretary of Defense for Industrial Base Resilience, through its Manufacturing Capability Expansion and Investment Prioritization (MCEIP) office, entered an agreement with Talon Nickel (USA), LLC (Talon) to increase the domestic production of nickel.

The $20.6 million agreement, entered into under Defense Production Act (DPA) Title III authorities and using funds appropriated by the Additional Ukraine Supplemental Appropriations Act, to advance nickel exploration and mineral resource definition of the Tamarack Intrusive Complex (TIC). Here, the company seeks to leverage its Advanced Exploration System (AES) — a proprietary suite of geophysical mapping tools that has already completed a successful pilot program and allows the company to rapidly identify and demonstrate economically recoverable nickel materials.

A key battery critical, nickel is also an essential building block for the production of high-temperature aerospace alloys and stainless steel.  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.    The United States’ only primary nickel mine in operation, the Eagle Mine in Michigan, is nearing the end of its life cycle.

While, as ARPN previously outlined,  increased domestic production for critical minerals alone may not suffice to fully solve our nation’s critical mineral woes – hence ARPN’s support for an all-of-the-above approach to mineral resource security — there are promising domestic resource development projects that can go a long way to significantly reducing vulnerabilities in the short to medium term, and ARPN will continue tracking these DoD-funded projects as they begin to bear fruit.

The post DoD Once More Invokes Defense Production Act Title III Authority for Projects to Strengthen Domestic Critical Mineral Supply Chains for Lithium, Nickel appeared first on American Resources Policy Network.

After Zimbabwe banned lithium ore exports last December in a move that only permits concentrates to be shipped out, Namibia has banned the export of unprocessed lithium and other critical minerals, according to Reuters.

The country is largely known as a source for uranium, but also has significant deposits of lithium and rare earth minerals.

With demand surging for the battery criticals — lithium, graphite, cobalt, nickel and manganese — as well as other minerals underpinning the green energy transition like the rare earths, the Namibian government hopes to cash in on this development.

Under the plan approved by the Namibian government’s cabinet, only small quantities of the specified minerals —unprocessed crushed lithium ore, cobalt, manganese, graphite and rare earth minerals — would be allowed to leave the country, and their export would be subject to prior approval by the mines minister.

The Namibian announcement ties into a larger trend, which has been noticeable particularly in Latin America, a region with a historic penchant for nationalism, but has also reared its head in other parts of the globe.

ARPN has featured recent nationalist moves in Chile, Mexico and Bolivia, as well as in Myanmar, Indonesia, and China.

However, even in the Western world, government involvement in the critical minerals sector is on the rise. As ARPN previously outlined, “while modern Western democracies are typically hesitant to embrace more state intervention in the critical minerals sector, many believe that in order to succeed, the United States and its allies need to learn ‘how to stomach more state intervention [themselves].‘ “

As such Namibia’s announcement is hardly surprising, but it also serves as another reminder that as the U.S. and the rest of the West continue the quest to decouple from China, we will have to carefully balance domestic and global policy approaches — as well as public and private sector roles with economic and security concerns to reflect the geopolitical realities of our times.  This can be best achieved within the context of a comprehensive all-of-the-above approach that focuses on domestic resource development where possible and leverages partnerships where needed.

The post Namibia Joins Resource Nationalism Trend as Demand for Battery Criticals Surges appeared first on American Resources Policy Network.

But small size belies the multiplier effect of Critical Minerals, which can have an outsized impact on the global economy.

On April 20, 2023 Chile’s President Gabriel Boric announced his plan to nationalize the country’s lithium industry to boost the Latin American nation’s industrial base and protect the environment.  Falling short of full nationalization, the proposals envision majority state-owned partnerships with private companies for lithium exploration and production, and would require that the two lithium miners currently operating in the country, Chile’s SQM and U.S. company Albemarle, “negotiate an unspecified state participation in their existing concessions, which run to 2030 and 2043 respectively.”

Considering that Chile is the world’s second largest lithium producer, observers called Boric’s announcement a “shock move,” but in all reality, Chile is only the latest in a series of countries resorting to resource nationalism at a time when critical mineral demand is soaring.  As for the shock effect, Boric’s plans to nationalize mineral operations were well-known.  The shock seems to result from global observers who are still learning to appreciate the importance of parts of the Periodic Table more critical to economic growth than ever before.

But there is something new under the Latin American sun.  As Peter Schechter and Juan Cortiñas outlined in a February 2022 piece for Marsh McLennan’s Brink News ARPN featured at the time, the shunning of laissez-faire economics, particularly in Latin America, is not new. “What’s different this time,” they say, “is that these new interventionist policies are not only focused on the traditional energy sector. Instead, the region’s attention is turning to increasingly valuable minerals that are key to the new green economy quickly gaining momentum across the world.” 

Chile’s move comes on the heels of a comprehensive lithium nationalization plan enacted by Mexico which culminated in President Andres Manuel Lopez Obrador signing a decree handing over responsibility for lithium reserves to the country’s energy ministry in February of this year.

Bolivia’s ruling socialists have also favored state control over the nation’s vast untapped mineral resources but are relying on Chinese partners to harness them.

Meanwhile, some speculate that had it not been for his ouster, Peru’s President Pedro Castillo, who won a narrow victory in 2021 and had initially pledged to nationalize much of the country’s mining sector, might have pursued an approach similar to Boric’s in Chile.

While Peru may have bucked the resource nationalism trend, and is now “watching from the sidelines” as it gains steam, for all its resource riches, lithium watchers have their eyes on the last remaining holdout against the region’s statist trend:  Argentina.  There, a number of lithium projects currently in development are open to foreign investment and capital.  But across the region, and with Chile joining Mexico and Bolivia, the Argentinian exception proves the rule.

With resource nationalism rising across the Latin America region, stakeholders in the U.S. must heed the lesson that the best approach to shoring up our own critical mineral supply chains is a comprehensive “All of the Above” approach.

The increasingly popular strategy of “friend shoring” is an important pillar of this approach, and of course, remains highly appealing to policy makers with “not in my backyard (NIMBY)” constituencies.  However, as we previously outlined:

“[Friend shoring] will not be sufficient to meet our vast material needs, particularly as NIMBY-ism is going global.

It’s time we come to terms with the fact that as much as we want to rely on our friends and allies, this can only be part of our critical mineral resource strategy.  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.”

The post Chile’s Plans to Take Control over Country’s Lithium Industry Part of Larger Resource Nationalism Trend appeared first on American Resources Policy Network.

Meanwhile, as global lithium production has quadrupled since 2010, the U.S. share of production has dropped significantly. Once the largest producer of lithium in the 1990s, the United States’ share of production has dropped to 1 percent of the global total, as Australia, Chile and China dominate the field.

As we previously pointed out, China may only account for 13% of total production, but It has not only consistently developed domestic mining capabilities — it has also acquired lithium assets in countries like Chile, Canada and Australia, and, one link down the lithium supply chain, it is now home to 60% of global refining capacity. In light of skyrocketing demand projections, the country has stepped up its involvement in the electric game, and has recently beat out automaker Tesla in a bid to mine for lithium in Nigeria.

As for the United States, according to the latest USGS Mineral Commodity Summaries, “[c]ommercial-scale lithium production […] was from one continental brine operation in Nevada. Lithium was also commercially produced from the brine-sourced waste tailings of a Utah-based magnesium producer. Two companies produced a wide range of downstream lithium compounds in the United States from domestic or imported lithium carbonate, lithium chloride, and lithium hydroxide.”

Big picture, the U.S. simply cannot realize its aspirations to be a global player in the renewable revolution while producing 1% of worldwide lithium supply.

Efforts to strengthen the lithium supply chain are underway. Followers of ARPN are aware of the green energy-related provisions of 2021 congressional infrastructure package, as well as the 2022 invocation of the Defense Production Act for lithium and the battery criticals and the passage of the Inflation Reduction Act (IRA).

[Lithium is the latest in ARPN’s feature series reviewing the battery criticals against the backdrop of the latest USGS Mineral Commodity Summaries. View our posts on graphite, manganese, cobalt, and nickel.]   

In January of this year, the Department of Energy’s Loan Programs Office (LPO) announced a conditional commitment to Ioneer to advance the domestic production of lithium and boron at its Rhyolite Ridge project.

Rhyolite Ridge would become the second lithium mine in the United States, but – while DOE is providing a 9-digit loan guarantee – the project is still pending approval from DOI, the Department of the Interior, where it is mired in the inherent irony of the green energy transition, with environmentalists opposing the project on grounds that Thiem’s buckwheat, a rare wildflower found on the proposed mine site, was added to the endangered species list by the U.S. Fish and Wildlife Service only a few weeks ago.   We have seen this paradox elsewhere. As Reuters columnist Andy Home phrased it: “public opinion is firmly in favour of decarbonisation but not the mines and smelters needed to get there.”

Also in January, General Motors announced that it would jointly invest with Lithium Americas Corp. to develop the Thacker Pass mine in Nevada, which is the largest known source of lithium in the United States, and is considered the third largest in the world.  With a $650 million equity investment, this would represent the “largest investment by an automakers to produce battery raw materials” in GM’s own words. Under the agreement, GM will have exclusive access to the lithium once the investment is complete. The company expects that once the mine is operational in the second half of 2026, the batteries bearing Rhyolite Ridge lithium could power up to 1 million EVs.

Not surprisingly, the Thacker Mine, too, is embroiled in a high stakes legal battle, with environmentalists and tribal leaders attempting to block the project near the Oregon line.  Just last week, however, a federal judge – for the third time in two years – sided with the Biden Administration and Lithium Americas, denying the opposition’s request for an emergency injunction until the 9th U.S. Circuit Court of Appeals can hear their latest appeal.  Based on the judge’s decision, construction could begin as early as this week.

In addition to projects pursuing lithium as a primary material, Rio Tinto’s U.S. Borax Mine in California has recovered lithium from 90-year old waste piles.  The effort has leveraged a public-private partnership linking Rio Tinto with DOE’s Critical Materials Institute, to work through processing challenges.  It’s the kind of unconventional thinking that finds a 21^st Century tech material in the mine tailings of the 1920s, turning a “waste stream” into a “work stream” in a world hungry for lithium.

Achieving global (and domestic) decarbonization goals while at the same time strengthening our supply chains and reducing our over-reliance on critical minerals from China will require a comprehensive “all of the above” approach across the entire value chain, and,  ARPN’s Daniel McGroarty has consistently  pointed out, “we don’t have the luxury of time” anymore.

The post Strengthening the Supply Chains for the “Fuel of the Green Revolution” – A Look at Lithium appeared first on American Resources Policy Network.

It’s fitting that ARPN reviews the report on Groundhog Day, February 2^nd, because just like in the Bill Murray classic movie, in which the clock jumps back to the same day all over again every morning, the Critical Mineral movie appears to bring us back to a situation of ongoing deep dependency on foreign sourced metals and minerals every year – at least in recent memory.

While there are some changes from last year’s report, the number of metals and minerals for which we are 100% import dependent dropped by two from 17 to 15, the only significant change here is a drop for Vanadium, with recalculations made for overall import reliance suggesting that its inclusion in the 100% segment has been overstated for several years. (The drop for nepheline syenite from 100% to greater than 95% is less significant, with the numerical drop small and material not featuring on the critical minerals list.)

And for all the talk about reducing the United States’ resource dependence in recent years,  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 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 has even gone up over last year — with the new report pegging it at 51 versus 47 in 2022.

When cross-referencing the U.S. Net Import Reliance chart with the 2022 Final list of Critical Minerals, the United States was 100% net import reliant for 12, and an additional 31 critical mineral commodities (including 14 lanthanides, which are listed under rare earths) had a net import reliance greater than 50% of apparent consumption.

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 few changes for individual metals and minerals included in the report 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 21st Century technology and the accelerating green energy transition, our import reliance had dropped from 100% in the 2021 report to “greater than 90%” in the 2022 report. It is now back up to “greater than 95%”, and the rare earth concentrate being extracted in the U.S. currently sent to China for separation.  Once again, a single link lacking in a supply chain continues U.S. dependency.

For Lithium, perhaps the most frequently cited battery tech mineral, and Cobalt, another one of Lithium’s “battery critical” peers, U.S. import reliance stayed the same at “greater than 25%” for lithium, and Cobalt at 76% respectively.

For Graphite and Manganese, both battery criticals – the USGS report shows both still pegged at an unchanged 100% import reliance.

For Nickel, the final battery critical and a new element on the 2022 Critical Mineral List, import-reliance jumped from 48% last year to 56% in this year’s report.

In upcoming posts, ARPN will focus on each of these battery criticals, and the U.S.-based projects working to urgently needed new supply into production.

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 still China an unchanged 25 times as one of the major import sources of metals and minerals for which our net import reliance is 50% or greater – and recent developments in China show that the country has no intention of loosening its grip on the critical minerals supply chain [see our recent posts on Chinese resource policy here].

Owing to the growing focus on critical minerals on the part of U.S. policy stakeholders, this year’s Mineral Commodity Summaries report features an expanded chapter on developments in the critical minerals realm, identifying trend lines, and supply chain security and U.S. government critical minerals initiatives as well as critical mineral investments.

While the urgency of the need to secure critical mineral supply chains has registered with stakeholders over the past few years, USGS’s findings underscore once more that supply chains in the 21st Century are extremely complex and meaningful change takes time – and the developments of 2022 ranging from increased resource nationalism in the Southern hemisphere over war in Ukraine to rising geopolitical tensions have not made untangling supply chains any easier.

In Bill Murray’s movie, it took the protagonist several years to realize how to change behavior to break the cycle.  We know by now that to break our cycle of resource dependence, it will take a comprehensive “all of the above” approach to critical mineral resource policy – and stakeholders have come to realize this and have increasingly embraced the concept.  We continue to stand by what ARPN’s Dan McGroarty stated during a congressional hearing in 2019 – “we can’t admire the problem anymore. We don’t have the luxury of time.”

If we act swiftly and comprehensively, there may just be a chance that we will wake up twelve months from now not to another Groundhog Day, but to a 2024 Mineral Commodity Summaries that paints a picture of reduced resource dependence.

The post Groundhog Day 2023 – Another Year of Critical Mineral Resource Dependence? USGS Releases Annual Mineral Commodity Summaries Report appeared first on American Resources Policy Network.

Under the conditional commitment, the LPO would lend up to $700 million to the company to develop lithium carbonate for EV batteries from the Rhyolite Ridge Lithium-Boron Project in Esmeralda County, NV.  According to DOE, if implemented, the project could produce enough lithium production to power 370,000 EVs each year, and offtake agreements with Ford, Prime Planet Energy & Solutions and EcoPro Innovation have been executed.

The announcement could not be more timely. With lithium a key component of the lithium-ion battery cathode, demand for the material is surging rapidly, and is projected to exceed current global production by 2030.

Meanwhile, as global lithium production has quadrupled since 2010, the U.S. share of production has dropped significantly.

A new graphic by Visual Capitalist paints the picture, and it’s not pretty:

As Visual Capitalist outlines, the U.S. was the largest producer of lithium in the 1990s, accounting for over one-third of global production in 1995.  Today, three countries, Australia, Chile and China dominate the field, with Australia producing more than 50% of the world’s lithium.

As for the U.S., it now accounts for 1% of the world total.

China may only account for 13% of total production, but has not only consistently developed domestic mining capabilities, but has also acquired lithium assets in countries like Chile, Canada and Australia, and – one link down the lithium supply chain — has ensured it is home to 60% of global refining capacity.

The Rhyolite Ridge project would be the second lithium mine in the United States, but – while DOE is providing a 9-digit loan guarantee – the project is still pending approval from DOI, the Department of the Interior, where it is mired in the inherent irony of the green energy transition, with environmentalists opposing the project on grounds that Thiem’s buckwheat, a rare wildflower found on the proposed mine site, was added to the endangered species list by the U.S. Fish and Wildlife Service only a few weeks ago.   We have seen this paradox elsewhere. As Reuters columnist Andy Home phrased it: “public opinion is firmly in favour of decarbonisation but not the mines and smelters needed to get there.”

But as followers of ARPN well know, we clearly can’t have our cake and eat it, too.

Achieving global (and domestic) decarbonization goals while at the same time strengthening our supply chains and reducing our over-reliance on critical minerals from China will require a comprehensive “all of the above” approach across the entire value chain, and,  ARPN’s Daniel McGroarty has pointed out on several occasions, “we don’t have the luxury of time” anymore.

The post Visualizing the Lithium Challenge – Time to Strengthen the Domestic Supply Chain appeared first on American Resources Policy Network.

2022 surely was as fast-paced a year as they come.

Didn’t we just throw overboard our New Year’s Resolutions?  We blinked, and it’s time for another review of what has happened in the past twelve months.

So with no further ado, here is ARPN’s annual attempt to take stock of what has happened on the critical mineral resources front in 2022 — to assess where we are, and, filled with hope for a New Year, where we are headed. 

Early 2022 —

As Covid Pressures Fade, Geopolitical and National Security Concerns Mount, While the Global Push Towards Net Zero Carbon Emissions Intensifies

Coming off two years of a global pandemic affecting virtually every aspect of our lives, the world was ready to take a collective deep breath.

The severity of the coronavirus strains had lessened, vaccines, therapeutics and treatment methods for Covid-19 became more readily available, many restrictions had been loosened or dropped, and global supply chains appeared to slowly recover and reorganize from the strain of lockdowns.

In the U.S. domestic critical minerals realm, against the backdrop of the accelerating global green energy transition, it appeared that stakeholders had learned their pandemic-induced lesson as the 2021 Biden Administration’s 100 Day Supply Chain report and subsequent policy statements pointed towards the adoption of an “all of the above” approach to mineral resource policy to strengthen North American supply chains and decouple from adversaries, and especially China.   (see our 2021 Year in Review post for more)

However, any sense of collective relief was short-lived.

Only weeks into 2022, geopolitical tensions were rising fast with China and Russia declaring a “no limits” partnership in the face of what both nations perceived as “interference in the internal affairs” of other states by “some forces representing a minority on the world stage” which “continue to advocate unilateral approaches to resolving international problems and resort to military policy.”  

Resource nationalism began rearing its head in the Southern Hemisphere, which, often overlooked in the policy discourse, is no less crucial in the global race for critical mineral resources and has emerged as a major source of renewable energy metals and minerals.  Argentina, Bolivia, and Chile, which form the so-called Lithium Triangle — home to more than half of the world’s known lithium reserves — were central to this new development, but other countries in the region, like Mexico, are also in the critical minerals business.  Specific developments varied from country to country (for more on the issue click here), but in each case, the trend toward resource nationalism was unmistakable.

Against the backdrop of a global lithium market expected to grow by 500% in the next 35 years, developers in Argentina, Bolivia, Chile and possibly Peru were even reportedly evaluating the possibility of creating an OPEC-like lithium cartel.  While observers contended that it was “important not to confuse this resource nationalism with predictions of a highly ideological leftward turn,” the underlying implications for U.S. critical mineral resource supply chains as U.S. demand for lithium and other green energy critical materials continues to grow are not to be dismissed.

Meanwhile, countries around the globe forged ahead with their pursuit of net zero carbon emissions, with up to 20 countries to date having have announced phase-out bans on internal combustion engine car sales over the next 10 to 30 years.

But the watershed moment for 2022 was undoubtedly Russian President Vladimir Putin’s decision to launch a full-scale invasion of Ukraine on February 24.  While the ongoing war has serious implications for European energy supply, the ramifications of Russia’s actions stretch well beyond oil and natural gas, and well beyond Europe.

Russia’s war on Ukraine set off a potential realignment of critical mineral resource supply chains that warrants attention.  Moscow’s invasion of Ukraine has largely isolated it on the global front both diplomatically and economically, and, with sweeping sanctions taking hold, the Western world has turned elsewhere to meet certain critical mineral needs previously supplied by Russian companies and halted shipments of materials to the Russian Federation. Unsurprisingly for followers of ARPN, Russian buyers began turning to China to plug shortfalls.

As ARPN cautioned earlier this year:

“While to date, Beijing has walked a carefully calculated line on Russia’s war on Ukraine emphasizing its concern with violence while maintaining the need to respect territorial integrity and security interests of all parties, China stands to gain major strategic opportunities from filling the void left by a Western business pullout from the Russian market, both in terms of imports and exports. China will also be able to further its grip on global critical minerals via access to Russia’s vast mineral riches.”

By mid-March of 2022, a confluence of factors — pandemic-induced supply chain shocks, increasing resource nationalism in various parts of the world, and Russia’s invasion of Ukraine — had completely altered the Post-Cold War geopolitical landscape and mineral resource security calculus.

Critical Mineral Security = National Security. President Joe Biden Invokes Defense Production Act 

Responding to the resulting growing pressures on critical mineral supply chains and skyrocketing demand scenarios, U.S. President Joe Biden invoked the Defense Production Act (DPA) to encourage domestic production of the metals and minerals deemed critical for electric vehicle and large capacity batteries via Presidential Determination No. 2022-1.

The Presidential Determination instructs the Secretary of Defense to “create, maintain, protect, expand, or restore sustainable and responsible domestic production capabilities of such strategic and critical materials by supporting feasibility studies for mature mining, beneficiation, and value-added processing projects; by-product and co-product production at existing mining, mine waste reclamation, and other industrial facilities; mining, beneficiation, and value-added processing modernization to increase productivity, environmental sustainability, and workforce safety; and any other such activities authorized under section 303(a)(1) of the Act.”

Observers and stakeholders hoped that the presidential determination would “oil the wheels of domestic mining and refining” by “funding easy wins” and “low hanging fruit,” as Simon Moores, Managing Director of Benchmark Mineral Intelligence phrased it, and set the stage for subsequent additional steps to support domestic mining and processing projects.

Mid 2022 –

A New Great Game?

Post-Cold War Realignment Spurs Domestic and Global Efforts to Strengthen Critical Mineral Supply Chains

Over the course of the following weeks and months, awareness of the importance of securing critical mineral supply chains and decoupling from adversaries, i.e. China, against the backdrop of an increasingly volatile geopolitical landscape and mounting environmental pressures continued to grow, not just domestically, but also amongst the United States’ key allies.

In the eyes of Globe and Mail (Canada) columnist Robert Muggah, the geopolitics of mineral resource supply had triggered a new “Great Game” -   a term coined by British writer Rudyard Kipling to describe the “fierce competition between Victorian Britain and Tsarist Russia, both of which sought to control South Asia and Africa” which “went on to shape geopolitics for much of the rest of the 19th and 20th centuries.”

Said new Great Game, according to Muggah, foreshadowed by the 2010 rare earths dispute between China and Japan, gained momentum with the adoption of the Paris Agreement in 2015 which committed countries to significantly reduce greenhouse gases and transition to renewables, and prompted Western nations to rethink and reorganize their supply chains.

As director of the Payne Institute and professor of public policy at the Colorado School of Mines Morgan Bazilian, and postdoctoral fellow at the Jackson Institute for Global Affairs at Yale University Gregory Brew suggest:

“Where the 20th century featured battles over access to oil, the 21st century will likely be defined by a struggle over critical minerals, particularly as the United States views China as a global competitor and strives to limit its reliance on Chinese supplies for EV manufacturing and a wide variety of energy and defense technologies.”

In July, the United States and allied countries announced the formation of a new cooperative initiative to bolster critical mineral supplies. The Minerals Security Partnership (MSP) comprises the United States, Canada, Australia, Finland, France, Germany, Japan, the Republic of Korea, Sweden, the United Kingdom and the European Commission, and seeks to “ensure that critical minerals are produced, processed, and recycled in a manner that supports the ability of countries to realize the full economic development benefit of their geological endowments.”

Observers like Reuter’s Andy Home posited that the formation of the MSP might signify a post-Cold War “tectonic realignment with far-reaching implications” as it — against the backdrop of Russia’s war on Ukraine and mounting tension with China — is “defined as much as anything by who is not on the invite list — China and Russia.” Arguing that a “previously highly globalized minerals supply network looks set to split into politically polarized spheres of influence” he suggested that a “metallic NATO [was] starting to take shape, though no-one [was] calling it that just yet.”

U.S. Congress “Net-Zeroes” in on Critical Mineral Supply Chains, Passes Inflation Reduction Act

In August of 2022, the U.S. Congress passed and President Joe Biden signed the Inflation Reduction Act, which includes combined investments of $369 billion aimed at reducing carbon emissions by roughly 40% by the end of this decade.

A swath of significant clean energy tax credits aims at increasing domestic energy production while at the same time accelerating energy innovation abroad.

The package further includes funding for tax credits and rebates for consumers buying electric vehicles, installing solar panels or making other energy-efficiency upgrades to their homes, including, a credit of $4,000 for lower-and middle-income individuals purchasing used EVs, and up to $7,500 tax credits for EVs.  These represent a renewal of the existing $7,500 electric vehicle Federal tax credit starting in January of 2023, and carrying it through until the end of 2032. The former 200,000-vehicle cap is removed and all manufacturers will have access to the credits if they comply with the other requirements in the package.

However – and of considerable interest for followers of ARPN — a new requirement is that qualified cars must be assembled in North America, and adhere to mandated “escalating levels of critical minerals to be sourced from the U.S. or a country with a free-trade agreement with the U.S.”

Experts like John Adams, U.S. Army brigadier general (ret.), believed the sourcing requirements for the battery materials contained in the package would become key to addressing “emerging energy security vulnerabilities before they are intractable crises,” while others have cautioned that because the auto industry was so heavily reliant on battery materials and components from China that the requirement would represent an almost insurmountable challenge in light of lagging timelines for mine permitting.  These concerns notwithstanding, the provisions have sent a strong signal to investors that the United States is serious about “building the secure responsible industrial base our economy and national security needs,” kicking off a flurry of activity in the industry.

Fall/Winter 2022 –

Regulatory Changes Prompt Rethink As China Tightens Reins on Supply Chains 

Energy Provisions in Inflation Reduction Act Spur Efforts to Build Out U.S. Battery Supply Chain, as States Step Up Their Own Efforts

In October of 2022, As part of the implementation of the 2021 infrastructure law, the U.S. Department of Energy announced the first round of funding under the Act for projects aimed at “supercharging” U.S. manufacturing of batteries for electric vehicles and electric grid.

Awardees — a total of 20 companies — will receive a combined $2.8 billion “to build and expand commercial scale facilities in 12 states to extract and process lithium, graphite and other battery materials, manufacture components, and demonstrate new approaches, including manufacturing components from recycled materials.”

Meanwhile, adapting to “recent regulatory changes and intensifying competition over key battery raw materials,” automakers, miners and suppliers have begun to rethink and reorganize their critical mineral supply chains.  ARPN featured several examples (see here and here) of new offtake agreements  and contracts between battery makers and mining companies – and even states and cities are getting in on the action, entering into partnerships with and offering incentive packages to mining companies to cultivate a “vertically integrate supply chain that will help companies increase efficiencies by reducing the reliance on imported materials,” as Georgia Governor Bryan P. Kempdescribed the rationale for a new battery plant construction partnership in Georgia.

Tying into the overall push towards net zero carbon emissions, these agreements increasingly leverage advances in materials science and technology as the mining industry has made strides towards balancing modern mining practices and environmental protections in the quest to sustainably green our future.

For more examples of initiatives by mining companies to significantly reduce carbon emissions or even “close the loop,” take a look here, here and here.

Xi’s China – Beijing’s Tightening of Reins Underscores Urgency of Decoupling Critical Mineral Supply Chains from China

Also in October, China’s Communist Party confirmed President Xi Jinping for another term in office.  In what effectively amounted to a “coronation,” as the Wall Street Journal editorial board phrased it, the CCP’s move has effectively “confirm[ed] China’s combination of aggressive nationalism and Communist ideology that is the single biggest threat to world freedom.”  Xi has since reaffirmed the need to increase China’s self-sufficiency in technology and supply chains, and China’s commitment to attaining control over Taiwan — a key point of contention in the country’s relations with the United States, which have already starkly deteriorated in recent years.  According to the Wall Street Journal, the “coronation” “all but guarantees an era of confrontation between China and the U.S.”

Earlier this summer, Beijing had established a new state-owned group to serve as a consolidated hub for the country’s iron ore trade with a registered capital of 20 billion yuan ($3 billion).  China Mineral Resources Group’s mandate covers mining, ore processing and trading.  As mining.com outlines, the company’s creation was “encouraged and closely monitored” by senior government officials in Beijing.   These Chinese officials have repeatedly accused the United States and its allies of “ganging up to try to suppress China’s global rise,” and consider the formation of a consolidated trading platform a “way to strengthen the country’s negotiating position in an unfriendly international environment.”  

Since then, with a newly emboldened Xi at the helm, the Chinese government has been actively tightening the reins on its critical mineral supply chains. Most recently, according to news reports, the Chinese Ministry of Industry and Information Technology announced plans to increase its supervision of China’s lithium battery supply chain, which, according to the ministry, is “severely unbalanced.”

Efforts to decouple supply chains from China may become “all the more pressing in light of current fears that (…) China may retaliate after the U.S. Department of Commerce announced sweeping limitations to semiconductor and chip-making equipment sales to Chinese customers this fall.” 

2022 Reality Check

– The Real World Challenges of “Decoupling” -

Against the backdrop of a growing realization that “China has big footed a lot of the technology and supply chains that could end up making us vulnerable if we don’t develop our own supply chains,” as U.S. Secretary of Energy Jennifer Granholm phrased it earlier this summer, the push to decouple critical mineral supply chains from China has been one of the emerging key trend lines of 2022.

However, in spite of having made it de facto policy, it appears that Biden Administration officials are becoming increasingly wary of the term “decoupling” – as evidenced most recently by U.S. Secretary of Commerce stating explicitly that the United States is “not seeking a decoupling from China” in a policy speech on U.S. Competition with China.  This development may be rooted in the fact that, in light of the complexity of critical mineral supply chains, the process of “decoupling” is fraught with more significant real world challenges than some would have thought.

Earlier this summer, a RealClearInvestigations exposé discussed the alleged China connections of a domestic lithium extraction project in Nevada, where, as RealClear’s Steve Miller writes “a Chinese-dominated mining company has procured millions of dollars in American subsidies to extract lithium in the United States – but, given a dearth of U.S. processing capacity, the mineral is likely to be sent to China with no guarantee that the end product would return as batteries to power President Biden’s envisioned green economy.

The Nevada project is still in the permitting process, but similar scenarios have already unfolded elsewhere, such as in the case of rare earths magnets used in engine parts for F-35 fighter jets, where the U.S. Department of Defense has resorted to granting a waiver for sourcing requirements because at the current time acquisition of parts without Chinese components is not possible.  While the U.S.’s national security imperatives may make a rare earth waiver unavoidable, it should serve to turbo-charge domestic rare earth supply chain development to break the U.S. Armed Services’ Chinese rare earth dependency once and for all.

Of course, experts have long warned that decoupling supply chains for lithium, for example represents a formidable challenge.

As Simon Moores, chief executive of Benchmark Mineral Intelligence argued in the wake of the passage of the Inflation Reduction Act, “[c]onsidering it takes seven years to build a mine and refining plant but only 24 months to build a battery plant, the best part of this decade is needed to establish an entirely new industry in the United States.”

Meanwhile, the not-in-my-backyard (NIMBY) challenge, becoming increasingly prominent in 2021, continues to represent a significant hurdle for shoring up domestic supply chain security, particularly as it now appears that its newest manifestation, “virtual weaponized NIMBYism” in the form of concerted cyber warfare campaigns in which networks of inauthentic accounts across social media platforms, websites and forums pose as local residents opposed to certain mining or processing projects.

(see our post on virtual weaponized NIMBYism here) 

Interestingly, and underscoring that the critical minerals challenge has gone mainstream it was CNN’s Fareed Zakaria, who put his finger on the crux of the issue stakeholders are currently grappling with in a TV segment this summer. He said:

“The minerals industry isn’t as popular as renewable energy – particularly on the Left. There are real environmental hazards. But if people want to protect the planet from climate change and authoritarian powers, they will have to get onboard with new mineral projects.”

While pointing to the importance of other components that ARPN has consistently highlighted as part of a comprehensive “all-of-the-above” approach to mineral resource security – recycling and closed-loop solutions as well as increased R&D in the materials science arena – Zakaria closed his segment as follows:

“This will have to remain a priority for years and years to come. For the sake of the planet and international security, we will need to dig deep, quite literally.” 

2022 – Metals in Focus

Government Critical Minerals List, Rare Earths and the Battery Criticals 

While USGS released its second government critical minerals list in February of 2022 (an update to the 2018 list of 35) featuring 50 metals and minerals deemed critical to United States national security and economic wellbeing, this year’s media coverage might have you believe that all that matters when it comes to securing critical mineral supply chains, is the rare earths and the battery criticals (Lithium, Cobalt, Graphite, Nickel, and Manganese).

And even here, initially, lithium appeared to steal the spotlight – after all, much of the green energy transition is fueled by Lithium-Ion technology.

In recent months, this has shifted.

Cobalt

With the U.S. Department of Labor including lithium-ion batteries into its “list of Goods Produced by Child Labor or Forced Labor” – a list of 158 goods from 77 countries assumed to be produced in violation of international standards regarding child or forced labor, tracking the cobalt supply chain is becoming increasingly important and the added scrutiny of labor practices for cobalt adds increased urgency for U.S. policy and other stakeholders to build out a North American supply chain.

Nickel

With Indonesia’s investment minister hinting at the possibility of Jakarta pursuing the creation of an OPEC-like cartelfor nickel (and other key battery materials), the spotlight is falling on nickel.

the looming specter of battery material cartelization – first introduced earlier this year by South American Lithium producers — should be reason enough for U.S. stakeholders to kick the buildout of domestic battery supply chains into high gear wherever possible.

As recent U.S. developments suggest, efforts are already underway.

The first recipients of federal funding disbursed under the 2021 infrastructure law to “supercharge” U.S. manufacturing of batteries for electric vehicles and the electric grid included the Tamarack Nickel Project in central Minnesota.  As ARPN has noted, the project had previously been awarded  $2.2 million  to fund an effort 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.  Bringing the supply chain home could not only inoculate the U.S. from trade issues on the critical minerals front, but could also help reduce the industry’s — arguably large — carbon footprint.

Graphite

Graphite has also entered the chat.  As the key raw material in the battery anode, graphite is the largest component of lithium-ion batteries by weight. In light of “phenomenal demand growth from the EV battery sector and delays to new capacity as well as rising power costs,” the graphite supply chain represents a significant and growing challenge for automakers looking to reduce the carbon footprint of the materials they use for their EVs.

Currently, according to the USGS, the United States is 100% import dependent for its graphite needs, but as ARPN recently pointed out,

“that’s not for lack of known graphite resources.  As USGS noted in February 2022 in its updated U.S. Mineral Deposit Database, Graphite One’s Graphite Creek deposit near Nome, Alaska is America’s largest graphite deposit.  If U.S. Government efforts to develop an American-based EV and lithium-ion battery supply chain have any hope of succeeding, looking for ways to help projects like Graphite Creek down the path to production will be, in a word…. Critical.”

Until then, China’s battery anode dominance could be the West’s Achilles heel in the green energy transition – in defense planners parlance, a potential “single point of failure”:  irrespective of whether we succeed in developing multiple minerals and metals for the battery cathode, if we are unable to meet anode material needs – and we cannot do so sustainably and ESG-friendly without natural graphite — we will not be able to build a rechargeable battery independent of China.

New Focus: The Super-Criticals 

Altogether, a new set of critical minerals appears emerge as a key priority for stakeholders.

What ARPN has dubbed the “super-criticals” – the five battery materials, plus a sub-set of five rare earths required for permanent magnets (neodymium, praseodymium, dysprosium, terbium and samarium) altogether comprise a group of 10 criticals within the 50 critical minerals on the official U.S. government list, and many of the efforts to build out a secure North American critical minerals supply chain are focused on this group of materials.  By June, courtesy of another DPA Presidential Determination, platinum and palladium pushed the super-critical list to 12.

All-of-the-Above and Supply Chains in 2022

At the end of 2021, ARPN suggested that if the term “supply chain” could “move from jargon to meme in 2021,” maybe 2022 could be the year that strengthening supply chains could “move from rhetoric to reality” – and in some ways it was.

As outlined above, much progress was made, including important groundwork to build out a secure North American critical minerals supply chain.  However, much more remains to be done, and to overcome the many challenges, new alliances will need to be forged.

As Shane Lasley argues in Critical Minerals Alliances 2022, a magazine covering 29 metals and minerals (when counting rare earths as 14)  deemed critical to North American supply chains as well as related policy issues:

 “The optimum solution to laying the foundation for the next epoch of human progress will only be discovered through the forging of unlikely alliances between the woke and old school, environmental conservationists and natural resource developers, liberals and conservatives, national laboratories and private sector entrepreneurs, local stakeholders and global mining companies, venture capitalists and innovators, and everyone else with visions of a cleaner, greener, and high-tech future.”

And so the stage is set for 2023, as decisions to come will determine national fortunes and human progress in decades ahead.

The post 2022 – ARPN’s YEAR IN REVIEW appeared first on American Resources Policy Network.

According to news reports, the Chinese Ministry of Industry and Information Technology announced plans to increase its supervision of China’s lithium battery supply chain, which, according to the ministry, is “severely unbalanced.”

While China accounts for roughly 60% of the world’s lithium chemical supply and has secured a “position of strength within the industry” and “we [i.e. the West] have been very slow to react to that,” as American Lithium CEO Simon Clark has phrased it, Chinese EV producers have been registering financial losses in the face of increasing battery costs.   In an effort to counterbalance the undercutting of their profits, the ministry is looking to “curb hoarding, price gouging and unfair competition” in the supply chain – a move that is welcomed by China’s state-owned automakers, who have been calling for a government crackdown on the hoarding of battery materials.

China’s moves in the lithium sector align with other policy shifts in the resource space.  Earlier this summer, Beijing established a new state-owned group to serve as a consolidated hub for the country’s iron ore trade with a registered capital of 20 billion yuan ($3 billion).  China Mineral Resources Group’s mandate covers mining, ore processing and trading.  As mining.com outlines, the company’s creation was “encouraged and closely monitored” by senior government officials in Beijing.   These Chinese officials have repeatedly accused the United States and its allies of “ganging up to try to suppress China’s global rise,” and consider the formation of a consolidated trading platform a “way to strengthen the country’s negotiating position in an unfriendly international environment.”  

Is China’s iron ore vertical a sign of things to come in the Critical Minerals world?  Watch this space, as ARPN tracks Chinese government developments in 2023.  But it’s already clear that both moves to further tighten government control over segments of the critical minerals sector tie into newly emboldened Chinese President Xi Jinping’s call for China to increase its self-sufficiency in technology and supply chains during his re-confirmation speech in October of this year. The Wall Street Journal had called Mr. Xi’s re-confirmation for another term in office in October a “coronation,” which effectively “confirm[ed] China’s combination of aggressive nationalism and Communist ideology that is the single biggest threat to world freedom.” 

As ARPN has previously pointed out, efforts to decouple supply chains from China may become “all the more pressing in light of current fears that (…) China may retaliate after the U.S. Department of Commerce announced sweeping limitations to semiconductor and chip-making equipment sales to Chinese customers this fall.”  With Mr. Xi reportedly seeing the possibility of a showdown with the West as “increasingly likely” in the context of his goal to “restore China to what he believes is its rightful place as a global player and a peer of the U.S.,” America and its close allies would be well advised to move critical mineral supply chain security to the top of their priority lists.

The post China Tightens Reins On Its Critical Mineral Supply Chains appeared first on American Resources Policy Network.