mining

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 jockeyed for pole position in the EV race a long time ago and has since attained a startling level of “control of the EV supply chain, particularly the production and processing of minerals that make lithium-ion batteries possible.”

The Biden Administration’s ambitious goals to electrify the U.S. vehicle fleet are well known – and consistent with recent global pledges to reduce vehicle CO2 emissions.   However, as Nolan points out, there is an “alarming disconnect between the mineral demand that U.S. energy policy is driving and the policies needed to meet it,” adding that “fully electrifying the U.S. car fleet would require increases of 127 percent, 245 percent, and 114 percent of total respective global nickel, lithium, and cobalt production from 2019.”

Failing to establish a comprehensive and robust domestic supply chain for the materials underpinning the sought-after shift to net carbon zero, writes Nolan, risks three troubling developments:

1. The U.S. might trade “the geopolitics of the oil barrel — and reliance on OPEC — for the geopolitics of the battery and a supply chain controlled by China.” With import dependence for metals and minerals already at “alarming levels(…) [a]llowing China to potentially weaponize our mineral insecurity is a mistake we must avoid.”
2.  U.S. and global climate efforts could be derailed: “Battery material shortfalls by 2030 could mean sharply rising battery prices and curtailed EV deployment that makes the impact of today’s semiconductor shortage and its effect on the auto market seem tame. By 2030, as many as 35 million EVs that otherwise would be on the world’s roads won’t exist due to a lack of the materials needed to produce them.”
3. Not all nations would be equally hit by this production shortfall “[b]ecause China holds such a dominant position in the supply chain.” As such, “Chinese automakers will gain access to materials that U.S. manufacturers won’t. The competitiveness of the U.S. auto industry and the millions of jobs it supports hang in the balance.”

The challenge is clear, and awareness of the issue has been growing.  However, charting a path to success is complicated by a persisting “Not-in-my-Backyard (NIMBY)” sentiment and the notion that we can recycle, substitute, and “friend-shore” our way out of the problem, as we pointed out in a recent post.

Ultimately, the only viable solution is a comprehensive “all-of-the-above” approach that acknowledges that the above-referenced approaches are all parts of the solution — but they must be complemented by support for a strong and sustainable domestic mining and processing infrastructure.  The sooner stakeholders come to terms with this reality, the more likely we are to succeed.

As Nolan concludes:

“The U.S. can win the EV revolution, produce the emissions-free vehicles essential to climate action, and ensure the auto jobs of tomorrow are American jobs, but we must make mining policy the foundation of this effort. There’s not a moment to lose.”

 

At the 2021 United Nations Climate Change conference (COP26) held in Glasgow, Scotland earlier this month, two major U.S. automakers, General Motors and Ford, signed a commitment calling on automakers to sell only zero-emissions vehicles by 2040.  Joined by Volvo, Jaguar Land Rover and Mercedes-Benz, as well as several countries, territories and fleet operators, the manufacturers pledged to work towards “reaching 100% zero emission new car and van sales in leading markets by 2035 or earlier,” with the full transition to zero-emissions to be made by 2040.

On the heels of the agreement, Ford Motor Company CEO Jim Farley — who earlier this fall called for bringing the battery production supply chain to the United States  – announced on Twitter that his company intended “to become the second bigger EV producer within the next couple [of] years,” adding: “Then as the huge investments we’re making in EV and battery manufacturing come onstream and we rapidly expand our EV line-up, our ambition is for Ford to become the biggest EV maker in the world.” 

Reaching these ambitious goals, however, may prove challenging, as Benchmark Mineral Intelligence’s Simon Moores, who is also a member of the ARPN panel of experts, pointed out on Twitter:

“Lithium-ion batteries will be the first bottleneck, then raw materials the ultimate pinch point,” adding that “[t]he issue now is U.S. leaders need to get a grip with reality and solve EV supply chain issues they face, from raw materials all the way [through] to the battery cell.” 

And that’s the major challenge for the United States, because for all of the verbal affirmations of an “all of the above” approach to mineral resource policy on the part of the Biden Administration, the overall plan thus far appears more geared towards “rely[ing] on ally countries to supply the bulk of the metals needed to build electric vehicles and focus[ing] on processing them domestically into battery parts, [as] part of a strategy designed to placate environmentalists.”

The latest manifestation of this challenge became apparent during a congressional hearing last week, during which U.S. Representative Scott Peters (D-Calif.) suggested that rather than onshoring minerals production, the U.S. should try “friend-shoring,” adding that “it seems like we should be working with our allies to develop new mines and factories for clean energy technologies in more favorable locations.”

While the “friend-shoring” concept is certainly appealing, especially to those policy makers with “not in my backyard (NIMBY)” constituencies, it is insufficient to alleviate our overall problem, as Benchmark Mineral Intelligence’s latest blog post on the issue makes clear:

 “To meet the goals set out in the COP26 Glasgow declaration by 2040 would require over 7 million tonnes of lithium (LCE) annually, which is 17 times more than lithium chemical production in 2021, according to Benchmark’s Lithium Forecast. It would also require over 5 million tonnes of nickel sulphate, which Benchmark’s Nickel Forecast shows is 19 times more than nickel sulphate production in 2021.

At the moment there is insufficient investment into raw material supply to meet battery demand in 2030 let alone 2040, Simon Moores, CEO of Benchmark Mineral Intelligence, said. ‘Right now, lithium demand is growing at three times the speed of lithium supply,” he said. “That’s a big problem that needs to be solved.’” 

As Thom Carter, energy adviser to Utah Gov. Spencer Cox and executive director of the Governor’s Office of Energy Development, recently argued in a piece for the Deseret News, the “keep it all in the ground” push by “Washington, D.C. and the East and West Coasts” provides little more than a “talking point. (…) Anyone who says that you can get power through a ‘keep it in the ground’ policy isn’t telling you the truth. (…) All power, whether traditional or renewable, is impacted by what comes out of the ground. Advocating for renewable energy sources also means maintaining, if not expanding, our mining infrastructure.”

The good news is that courtesy of the materials science revolution, industry can harness new technologies to do expand our mining infrastructure responsibly and sustainably – as even Energy Secretary Jennifer Granholm acknowledged this summer during a U.S. Senate hearing:

“This is the United States. We can mine in a responsible way. And many places are doing it. And there are some places where there are more challenges, but we can do this.”

 

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