mining

Supply chain challenges in the wake of the coronavirus pandemic, Russia’s war on Ukraine, rising resource nationalism in the southern hemisphere, and now China’s Xi Jinping doubling-down on its zero-Covid policy this week which may lead to more lockdowns with serious economic and trade consequences – critical mineral supply chains can’t seem to catch a break.

As the stakes continue to get higher and stakeholder pressure to take action mounts, it is encouraging to see that mainstream awareness of the issue is increasing.

Case in point: CNN’s Fareed Zakaria dedicating a “Last Look” segment of his Global Public Square program to the new race for natural resources triggered by the green transition.

Followers of ARPN will appreciate that unlike much of the coverage of the critical minerals challenge we’re seeing lately, which often might have you believe that concerns only revolve around the “battery criticals”lithium, graphite, cobalt, nickel, and manganese, Zakaria’s segment makes clear that the challenge is much bigger – and includes many other metals and minerals, including what we at ARPN have dubbed the “unsung hero of the green energy transition” and one of the “most critical non-criticals” (alluding to the fact that the U.S. official government critical minerals list has thus far not included it):

Copper.

As we previously argued, while less flashy and headline-grabbing that some of its tech metal peers, Copper deserves far more credit and attention than it has been getting — not least due to its versatility stemming from traditional uses and an increasing range of new applications.  Then there’s Copper’s Gateway Metal status, with the metal yielding access to Critical List co-products essential to “manufacturing the advanced technologies that will power or generations to come, such as Cobalt, Nickel, Tellurium, Molybdenum, Rhenium, Arsenic and REEs.

In the context of advanced energy technology, Copper is an indispensable component for the manufacture of EVs, wind turbines, solar panels, and the electric grid.   The manufacturing process for EVs requires four times more Copper than gas powered vehicles, and the expansion of electricity networks will lead to more than doubled Copper demand for grid lines, according to the IEA – so it’s good to see mainstream media is including the material in its coverage.

Zakaria rightly outlines the challenges stemming from the United States’ over-reliance on foreign supplies, and China’s having cornered the market not only in the supply, but also the processing segment – a challenge Laura Skaer, member of the board of directors of the Women’s Mining Coalition and former director of the American Exploration & Mining Association, outlined succinctly in a piece for Morning Consult a year ago, arguing that “China already refines 50 percent of the world’s copper and the United States only refines about 3 percent. National security experts have warned that relying on China for critical supply-chain materials like refined copper poses a serious threat to America’s national security interests.”

While the U.S. has taken important steps to reduce our over-reliance on foreign metals and minerals and the processing thereof, much more remains to be done.  Zakaria puts his finger on the crux of the issue stakeholders are currently grappling with.

He says:

“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.”

He continues:

“So far the process very slow, according to the IEA. Even after mineral deposits are discovered somewhere, the average time to production is over fifteen years. Some of that is planning and construction, but governments can streamline the permitting process to get these projects moving.”

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 segment – Zakaria closes:

“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.” 

Watch the full segment:

CNN, Fareed Zakaria, Global Public Square, Last Look: The green transition will trigger a new race for natural resources, 4/30/2022

 “The historic shift to electric vehicles will give the U.S. a fresh chance to achieve energy independence, but it will require complex strategic moves that won’t pay off for years,” writes Joann Muller in a new piece for Axios.

A look at the numbers reveals that despite a noticeable push towards strengthening U.S. supply chains (we’ve featured some recent developments here) “there is still a gaping hole in America’s efforts” according to JB Straubel, a co-founder of Tesla who has moved on to head up Redwood Materials, a battery component company planning to invest more than $2 billion to start building battery components as early as this year.

Muller cites Jigar Shah, head of the Department of Energy’s Loan Program’s office, who says that the U.S. currently only possesses about 5% of the manufacturing capacity required to hit President Joe Biden’s ambitious declared goal of 50% of all vehicles sold in the U.S. being electric by 2030.

Simon Moores, CEO of Benchmark Mineral Intelligence and Morgan Bazilian, Director of the Payne Institute and Professor of Public Policy at Colorado School of Mines, dig deeper into the numbers in a recent piece on the Benchmark Mineral Intelligence Blog, pointing out that while in 2015, 40% of the cost of a lithium ion battery was raw materials, that percentage has shot up to 80% in 2022.  Their conclusion: “[I]f EVs mean lithium ion batteries, EVs must now mean critical minerals and mining.”  Industry leaders like Tesla’s Elon Musk are openly mulling throwing their hats into the mining ring – but, as Moores and Bazilian write: 

“OEMs [original equipment manufacturers] are right to be fearful and hesitant to want to ‘become miners’.

Echoes of an ill-fated venture by Henry Ford to build rubber plantations in Brazil in the 1920s after the industry ran out of rubber tyres loom large. One hundred years on the industry faces an eerily similar problem.

The reality is that this global EV blueprint is yet to be built out to a scale needed to reach surging consumer demand and increasing aggressive OEM and government targets… We are nowhere close.”

Moores and Bazilian see the recent invocation of the Defense Production Act Title III by the Biden Administration to strengthen battery supply chains as a “major step forward” and “a move that it hopes will drag the finance community in to 21^st century mining.” But as they conclude, the proof is in the pudding, and it goes back to a truly comprehensive “all-of-the-above” approach across the entire value chain that ARPN and others have been calling for.  The Administration has been embracing partnership with allies, and expanding recycling and closed-loop solutions, but has been guarded at best when it comes to domestic mining. According to Moores and Bazilian, that must change:

“Big talk on EVs must now mean equally as big statements on mining. After all, a Gigafactory without secure raw materials is as useful to an OEM as a grain silo.” 

As ARPN has said many times, the first word in supply chain…. is supply.

Last week, against the backdrop of mounting pressures on U.S. critical mineral supply chains, 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. The move is a sign that “America is finally taking the battery metal shortage seriously,” as the [...]

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