Arguing that while it is “possible to produce them here” he says that “onerous federal rules make it extremely difficult,”adding that “[w]e cannot sit idly by and hope our U.S. mining industry can cut through the red tape currently strangling it.”

Sen. Risch points to the long-standing and, against the backdrop of surging demand, increasingly dangerous practice of over-relying on foreign – and especially Chinese supplies of critical minerals, which has given our adversaries significant leverage over us. The senator points to China’s penchant for weaponizing the mineral supply chain, with recent examples being the restriction of gallium and germanium exports — key components of semiconductor production and defense technology, arguing that “[i]t is only a matter of time before China decides to punish the U.S. and ur allies again by holding minerals hostage. That will even apply to minerals that are mined in the U.S. but processed in China, like copper.”

Meanwhile, one of the key obstacles to increased domestic mining and processing according to Sen. Risch, is the Biden administration, under whose guise a “working group on mining regulations released recommendations that, if implemented would transition mineral rights to a leasing program and add a dirt tax to every shovelful of ore, regardless of the value of the mineral,” which, according to the senator “would add years to the already lengthy permitting process and stifle investment in mining projects.”

Followers of ARPN are familiar with the average permitting timeframe for mining projects of roughly seven to ten years.  Litigation from NIMBY environmental groups — Sen. Risch points to the Rosemont decision in the Ninth Circuit Court which “changed the interpretation of long-established mining law” and “hampers the industry while making mining significantly less efficient and cost-effective”– can further add years to the already onerous process.

With even U.S. car companies requesting that the Biden administration speed up the mine permitting process, a consensus is growing that reform should be a national priority.

Sen. Risch points to the U.S. Department of Defense being an outlier in the administration and having recognized the “danger we face, which is why it is awarding grants to critical mining projects.”  The senator highlights the stibnite gold project in the central region of his home state of Idaho, where Perpetua Resources is working to be the sole domestic source of antimony, a key component of military technology.

But of course, as followers of ARPN know, there are more projects receiving DoD support with even more expected to be announced on a rolling basis.

In ARPN’s latest post on the blog, we pointed a series of Presidential Determinations involving specific critical minerals which laid the foundation for this type of funding under Defense Production Act Title III authority.

Current projects, recently highlighted by Oregon Group’s Anthony Milewski, include:

• Graphite: a $37.5 million agreement between the DoD and Graphite One (Alaska) to fast-track a domestic graphite mine;
• Antimony (as highlighted by Sen. Risch): 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 last month];
• 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.

Closes Sen. Risch:

“Every aspect of our society and security relies on processed minerals and would therefore benefit from expedited permitting and easier access. We cannot afford to wait until China reduces or even cuts off our access to critical minerals.

It is time for America to see the power of the U.S. mining industry, invest in it, and secure our supply chains. The technology we depend on every day is only possible because of mining. To ensure not just our economic success but our national security, Congress must revamp our mining laws and substantially reduce irrelevant regulations.”

The stakes are getting higher by the day, and, as ARPN’s Daniel McGroarty pointed out years ago, “we can’t admire the problem any longer” because “we don’t have the luxury of time.” However, we are dealing with Washington, D.C., and the question is whether Congressional stakeholders will finally be able to put policy over politics in an election year.

The post U.S. Senator: Embrace Domestic Mining and Processing of Critical Minerals “Before It’s Too Late” appeared first on American Resources Policy Network.

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.” 

Mr. Xi’s confirmation to another term was hardly a surprise, but in his landmark speech addressing the CCP Congress, he emphasized the the need to increase China’s self-sufficiency in technology and supply chains, and reaffirmed 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.”

Aware 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 United States and its partners have stepped up efforts to decouple from China.

These may become all the more pressing in light of current fears, as Damon Kitney reports for The Australian, that China may seek to retaliate after the U.S. Department of Commerce announced sweeping limitations to semiconductor and chip-making equipment sales to Chinese customers this fall.

Speaking to a private forum in Melbourne, earlier this month, Australia’s former Ambassador to the U.S. and federal Treasurer Joe Hockey told attendees:

“In terms of critical minerals, my concern is – and there has started to be a few reports in the US suggesting this – is that after the midterm elections, and with a re-empowered (Chinese President) Xi Jinping, as of next year China will start to turn down the tap on the supply of critical minerals to the US and other places.”

Followers of ARPN have long known that China is no stranger to playing politics with its near-total rare earths supply monopoly, and just last year, we saw the country threatening to limit rare earth shipments to U.S. defense contractors over U.S. arms sales to Taiwan.

Thankfully, U.S. domestic efforts to bolster supply chains can be complemented with leveraging close cooperation with allied nations including Canada and Australia.

Australia is ready to step up its rare earths game and challenge China in this segment.  As Phil Mercer writes for BBC News, Sydney, “Australia, a superpower exporter of iron ore and coal with rich mining traditions believes it is well-placed to join the race to exploit minerals that provide critical parts for electric vehicles and wind turbines.” He cites John Coyne of the Australian Strategic Policy Institute, who — while warning that China will not easily surrender its dominance of the sector — says:

“Australia has the world’s sixth-largest reserves of rare earth minerals. However, they remain largely untapped with only two mines producing them.  There is significant potential in the establishment of multi-ore mineral-processing hubs in Australia. After all, there is no point in creating supply chain resilience for [rare earth] ores if miners must still send them to China for processing.”

Mercer points to the U.S. Defense Department’s deal with Australian miner Lynas Rare Earths, which has been contracted to construct a REE processing facility in the U.S..

In the same vein,  the Canadian government has inked an agreement with Rio Tinto to jointly invest $737 million to modernize the company’s Sorel-Tracy, Quebec metals processing plant, with  Rio Tinto’ chief executive Jakob Stausholm warning of the “excesses of globalization” in critical mineral supply chains. The move is said to strengthen “North America’s first production capacity for titanium metal, a lightweight but strong material important to aerospace and defense groups such as Boeing and Lockheed Martin.” 

Stateside, the U.S. Department of Energy has just announced the first round of funding under the 2021 bipartisan infrastructure act for projects aimed at “supercharging” U.S. manufacturing of batteries for electric vehicles and electric grid — another important step in the decoupling from adversaries like China.

With a newly-emboldened 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,” as the Wall Street Journal writes, these efforts could not be more urgent.

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While for “battery criticals” the most recent notable step was the passage of the Inflation Reduction Act (IRA) with its sourcing requirements for lithium, cobalt, graphite, nickel and manganese, measures addressing rare earth element supply chains included the invocation of Title III of the Defense Production Act for Rare Earth Elements and a DoD allocation of $35 million for a heavy rare earth separation and processing project in California.

While these are important steps, real-life examples show just how deep our nation’s over-reliance really is:

Earlier this fall, the Pentagon, as part of its “efforts to decouple U.S. defense companies’ sprawling global supply chains from China,” as the Wall Street Journal phrases it, said it had begun using artificial intelligence to analyze whether U.S. military contractors source aircraft parts, electronics and raw materials used in U.S. military equipment from China and/or other potential adversaries.

Learning that engine parts for new F-35 combat jets made by Lockheed Martin Corp. contained magnets sourced from Honeywell International, Inc. with a cobalt samarium metal alloy produced in China — which constituted a violation of U.S. procurement laws — the Defense Department last month halted accepting new jets from the company.

The company has since  been granted a waiver, and with it, the Pentagon will accept all aircraft under the contract.

The waiver was granted because the “magnet does not transmit information or harm aircraft, and […] there are no security risks involved,” but Honeywell will have to work to find an alternative source for the metal alloy used in the F-35 engine parts.

Meanwhile, analysts say that with the waiver allowing an alloy of Chinese origins to continue to be used in the manufacture of F-35 combat jets, “the US military has exposed its dependence on Chinese rare-earth products, and China can opt to limit the export of such strategic resources to safeguard its national security.”

China, not surprisingly, is an interested observer in the U.S. supply chain travails.  As the Global Times reports, citing a manager of a Chinese state-owned rare earth enterprise in Ganzhou, East China’s Jiangxi province, with China having a leading edge in the middle-to downstream rare earth magnet production, the “U.S. attempt to remove China-origin alloy imports from military equipment is almost ‘a mission impossible.’ from both a short-term and long-term perspective.” According to unnamed manager, “China is the only country in the world that has developed the ability to extract samarium and cobalt rare-earth metals, which means the middle product samarium oxide is almost 100 percent made in Chinese factories. We also account for over 70 percent of the final product samarium-cobalt rare-earth magnet. How can Washington take out Chinese rare-earth products from its jets in such a scenario?“

A similar dependency applies to China-made neodymium magnets.

A Beijing-based military expert, Wei Dongxu, contacted by the Global Times argued that with the U.S. using the materials for military purposes, which could “harm China’s sovereignty, territorial integrity and development interests,” “China should consider applying more strict export controls on rare earth products.”

The waiver referenced above is only the latest in a series of waivers granted by Pentagon officials under similar circumstances — all of which goes to show how difficult it is to untangle critical mineral supply chains.

However, with geopolitical and trade tensions rising — both between the United States and China and generally on the global stage — and with China’s known penchant for using its advantage as leverage, there is no alternative to turbo-charging the effort to secure U.S. domestic supply chains for critical minerals across the board.

The post Pentagon Waiver for REE Magnets Used in F-35 Combat Jet Engines Underscores Critical Mineral Dependency Conundrum appeared first on American Resources Policy Network.

Lithium Americas, a Vancouver, Canada-based company is, according to its website, “focused on advancing lithium projects in Argentina and the United States to production,” and the company is looking to advance its Thacker Pass projection in Humboldt County, Nevada.   In order to finance it, the company has applied for a loan under the DOE’s Advanced Technology Vehicles Manufacturing Loan Program, which is part of the recently enacted Inflation Reduction Act (IRA).

Writes Sen. Cotton:

“Worryingly, media reports indicate that Lithium Americas’ largest shareholder is Ganfeng, a Chinese company with direct ties to the CCP. Ganfeng is currently acquiring lithium mines around the world, which, according to former Secretary Mike Pompeo, is part of a ‘clear intention by the Chinese Communist Party to control the entire supply chain for green energy.’ The United States should be reducing its dependence on China for these critical inputs, not opening the door for China to ‘gain a foothold in America on lithium mining,’ as reported.”

He adds:

“The U.S. government should apply strict oversight regarding potential federal funding of CCP-owned or -controlled entities. DOE’s loan for the Thacker Pass mine would be substantial and reportedly cover the majority of the project’s capital costs. As the government continues to invest in battery supply chain programs, it is critical that DOE ensure taxpayer funding does not go to corporations with CCP ties and does not increase U.S. mineral dependence on China.”

Specifically, the Senator demands that the department use its leverage to “incentivize Lithium Americas to part ways with Ganfeng. Ganfeng and any other Chinese entities with CCP ties should divest their stakes in Lithium Americas before the company is offered this loan.” He further urges the department to reject Lithium Americas’ application for the ATVM if the company refuses to end its Ganfeng relationship.

Senator Cotton seeks clarification from Secretary Granholm on the following questions:

1. Is DOE aware of Lithium Americas’ application for the Advanced Technologies Vehicles Manufacturing (ATVM) Loan Program and the company’s partial ownership by entities closely tied the CCP?
2. What safeguards or requirements are in place to ensure the ATVM program is not funding other companies owned or controlled by the CCP or other adversaries?
3. Does DOE agree that the United States must reduce its dependence on China for critical minerals like lithium and should invest in domestic production of such minerals? If so, does DOE believe that funding deeper CCP control of the U.S. critical mineral supply chain is counterproductive to this goal? If not, why not?
4. Has DOE raised with Lithium Americas the possibility that its loan application for the Thacker Pass project may be harmed by the company’s partial ownership by Ganfeng or that its application may be improved if Ganfeng divested in the company?

Senator Cotton closes:

“The United States urgently needs domestic critical mineral production to supply its technology sector and reduce its dependence on China; the United States does not need and should not fund possible attempts by the CCP to deepen its control over the U.S. critical mineral supply chain.”

It will be interesting to see how the Department of Energy responds, as it was precisely the realization that our nation (and the Western world) is overly-reliant on adversary nations for its critical mineral needs across the entire value chain that led the United States to finally focus on securing its supply chains.

Whether Chinese influence over this project proves to be definitive or not depends on the facts of the matter, but Senator Cotton’s point that questions of foreign control deserve to be fully investigated before the U.S. Government confers funding seems unarguable. Government programs intended to alleviate worrisome foreign resource dependencies should not unwittingly strengthen those dependencies at the expense of the American taxpayer – and American national security.

The post U.S. Senator Demands Information From Department of Energy over Potential Chinese Ties Relating to Nevada Mining Project appeared first on American Resources Policy Network.

Entitled “Alaska’s Minerals: A Strategic National Imperative,” the summit addressed ways in which Alaska’s vast critical mineral potential, which ARPN has frequently pointed to, could be harnessed to diversify America’s critical mineral supply chains.

U.S. Senators Lisa Murkowski and Dan Sullivan kicked off the proceedings, arguing that Alaska has many of the metals and minerals deemed critical by the U.S. government, while stressing the need for federal permitting changes for Alaska to be able to supply the materials underpinning the sought-after green energy transition.   Said Sen. Murkowski:

“We have the resources. We have resources other states clearly don’t have….  What we need is the ability to be able to access those resources in a way that allows us to be competitive.”

Senator Sullivan looked back to an earlier Critical Minerals summit in Alaska in 2012 – Sullivan was at that time Alaska’s Commissioner of the Department of Natural Resources – and cited our ARPN Risk Assessment, a sober reminder that while momentum is building in 2022, it has been a long journey bringing critical minerals into the public consciousness and public policy debate.

Gov. Mike Dunleavy, keynoting the event on Tuesday, echoed this sentiment his remarks while highlighting specific projects in the state that could play a vital role in “securing our national security and economic growth by providing the critical minerals needed for the energy transition that we see is well underway.”

While welcoming President Joe Biden’s invocation of the Defense Production Act to spur domestic development of the “battery criticals” – lithium, cobalt, graphite, nickel and manganese — the governor lamented the Administration’s lack of acknowledgement of Alaska as a potential source of critical minerals for securing U.S. supply chains, along with an earlier Administration decision to suspend a previously granted federal right-of-way for a prominent Alaskan mining project.

Governor Dunleavy added:

“This administration must speak with one voice. It wants critical minerals, or it doesn’t. It wants the lower energy prices, or it doesn’t.  It wants to create jobs in the U.S. or it doesn’t.  It wants to protect the environment or it doesn’t. It cares about human rights, or it doesn’t. (…) The disjointed federal permitting process doesn’t just hurt Alaskans (…), it hurts every industry, and every state. (…) 

If we set ambitious goals for EVs or renewables without permitting the production of critical minerals here, those minerals will still be produced, they just won’t be produced in here in America or Alaska, they’ll be produced by child labor, potentially, they’ll be produced without environmental standards, potentially, they’ll be produced at the expense of the American worker, to the benefit, potentially, of our adversaries.”  

Sen. Murkowski suggested that the federal government take steps to foster “predictability” in the mining sector to unleash the state’s mineral potential, arguing that “other countries” would “in place longer-term policies that allow them to focus on what it means to be sticking with a policy, and a view, and a vision towards dominance.”

ARPN’s Daniel McGroarty, speaking on Monday, also offered his thoughts on the current critical minerals policy discourse.

As a coda to the conference, on the same day the sessions wrapped up, the U.S. Geological Service announced that Alaska will receive more than $6.75 million in funding for geologic mapping, airborne geophysical surveying, and geochemical sampling in support of critical mineral resource studies in the state.

Here’s hoping this is another signal that more positive change is on the way — because, as Senator Sullivan’s reference to our 2012 ARPN Risk Report made clear, while progress has been made, much more remains to be done, and the rest of the world will not wait for us.

For a webcast of Day Two of the event, click here.  (We will update this post once Day One video coverage, which will include McGroarty’s remarks, becomes available as well.)

The post Alaska Critical Minerals Conference: Stakeholders Welcome Progress Thus Far, Call for Federal Permitting Reform and More Predictability in the Mining Space appeared first on American Resources Policy Network.

General Adams points to the fact that the energy components of the package, in his words, “do far more than just tackle emissions.” In his view, the provisions aim to “use the energy transition to rebuild the nation’s industrial base and ensure that the energy and transportation jobs of tomorrow are American jobs.”

The package would require that by 2024, 40% of the minerals used in EV batteries would have to be extracted, processed or recycled in the U.S. or by a free trade partner — a requirement that increases to 80% by 2027.

General Adams believes that the sourcing requirements for the battery “criticals” contained in the package — lithium, nickel, cobalt, manganese and graphite — are key to addressing “emerging energy security vulnerabilities before they are intractable crises.”

He credits Sen. Joe Manchin, who believes that “trading the ugly geopolitics of petro-dictators only to sleepwalk into complete dependence on a battery supply chain dominated by China is a mistake the country cannot make,” for zeroing in on the threat Chinese dominance of critical mineral supply chains poses to the nation’s energy security.

Followers of ARPN well know that our clean energy future hinges on massive critical mineral inputs, and demand projections for the battery criticals, but also key clean energy metals like copper, are on an ever-high trajectory.  Meanwhile, our import reliance for critical minerals is significantly up from decades ago and has shown no signs of decreasing in the past few years, with China having cornered not just the extraction, but also the processing segment of the supply chain.

As General Adams closes:

“China has worked diligently to turn mineral supply chains into an economic leg up but also an enormous source of geopolitical leverage — not unlike how Russia has leveraged its energy trade with Europe. What Senator Manchin recognizes is that our energy future is on a collision course with our mineral insecurity and China’s mineral dominance. 

The mineral sourcing requirements in the reconciliation bill – coupled with other incentives to encourage domestic mining, mineral processing and recycling– are precisely the bold measures needed to address this alarming vulnerability. This legislation is a critically important leap forward to build the secure, responsible industrial base our economy and national security needs.”

The post U.S. Army Brigadier General (ret.): Congress Has Opportunity to Make “Critically Important Leap Forward to Build the Secure, Responsible Industrial Base our Economy and National Security Needs” appeared first on American Resources Policy Network.

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) earlier today to encourage domestic production of the metals and minerals deemed critical for electric vehicle and large capacity batteries.

In Presidential Determination No. 2022-1, President Biden determines, pursuant to section 303(a)(5) of the Act, that:

-       “sustainable and responsible domestic mining, beneficiation, and value-added processing of strategic and critical materials for the production of large-capacity batteries for the automotive, e-mobility, and stationary storage sectors are essential to the national defense;

-       without Presidential action under section 303 of the Act, United States industry cannot reasonably be expected to provide the capability for these needed industrial resources, materials, or critical technology items in a timely manner; and

-       purchases, purchase commitments, or other action pursuant to section 303 of the Act are the most cost-effective, expedient, and practical alternative method for meeting the need.”

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.”

Acknowledging that “action to expand the domestic production capabilities for such strategic and critical materials is necessary to avert an industrial resource or critical technology item shortfall that would severely impair the national defense capability” the Presidential Determination further waives “the requirements of section 303(a)(1)–(a)(6) of the Act for the purpose of expanding the sustainable and responsible domestic mining, beneficiation, and value-added processing of strategic and critical materials necessary for the production of large-capacity batteries for the automotive, e-mobility, and stationary storage sectors.”

According to a White House fact sheet released only hours before the Presidential Determination was made public, the President “is also reviewing potential further uses of DPA – in addition to minerals and materials – to secure safer, cleaner, and more resilient energy for America.”

Earlier this month, U.S. Senators Lisa Murkowski (R-AK), Joe Manchin (D-WV), James Risch (R-ID), and Bill Cassidy (R-LA) had sent a letter to President Biden urging  him to take congressional and Administration efforts to bolster mineral supply chains one step further and to “invoke the Defense Production Act (DPA) to accelerate domestic production of lithium-ion battery materials, in particular graphite, manganese, cobalt, nickel, and lithium.”

“Allowing our foreign mineral dependence to persist is a growing threat to U.S. national security, and we need to take every step to address it. The 100-day report acknowledges the ‘powerful tool’ the DPA has been to expand production of supplies needed to combat COVID-19, as well as the potential the DPA could have to ‘support investment in other critical sectors and enable industry and government to collaborate more effectively,’” the Senators said in their letter, adding that  “[t]he time is now to grow, support, and encourage investment in the domestic production of graphite, manganese, cobalt, lithium, nickel, and other critical minerals to ensure we support our national security, and to fulfill our need for lithium-ion batteries – both for consumers and for the Department of Defense.”

It seems President Biden was ready to take that step.

According to Bloomberg News, the addition of metals and minerals like lithium, nickel, graphite, cobalt and manganese to the list of items covered by the 1950 Defense Production Act affords mining companies access to $750 million under the Act’s Title III fund.

The National Mining Association’s President and Chief Executive Rich Nolan welcomed the move, stating that “[t]he minerals supply chain that will drive the electrification of our transportation sector and the energy transition is not only at risk from a perilous and growing import dependence, but the approaching minerals demand wave is set to strain every sector of the economy and requires an urgency in action from government and industry never before seen.”

Nolan told the Washington Post in anticipation of the Presidential Determination that the United States needs new mines and mineral processing plants: “What we need is policy to ensure we can produce them and build the secure, reliable supply chains we know we must have.” 

Watch the press conference announcing the Presidential Determination here.
And for the full text of Presidential Determination No. 2022-1 click here.

ARPN will be back with additional analysis as we work through the DPA action.

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An October 2021 announcement by Chinese state-owned enterprise Zijin Mining Group Co. Ltd that it would purchase Canadian lithium miner Neo Lithium had opened up a 45-day window during which the Canadian federal government could have conducted a review of the takeover.

The Canadian Conservative Party is now lamenting that no such review took place. Citing national security concerns, Conservative members of parliament Michelle Rempel Garner and Ed Fast said in a publicly released statement:

“Canada is falling behind in developing its critical mineral industries, and allowing the foreign takeover of companies like Neo Lithium without due diligence could further weaken our strategic interest in developing a domestic supply of lithium and other critical minerals.(…)

Canada’s Conservatives are calling on the Liberals to immediately conduct a national security review of the takeover under the Investment Canada Act and to explain why a national security review was not completed in the first place.”

Foreign takeovers of Canadian companies are subject to an initial security screening by the government.  If the initial screening concludes that the takeover constituted a threat to Canada’s national security, it would trigger a more formal review under Section 25.3 of the Investment Canada Act, and the deal could be blocked.

While Neo Lithium’s project — the 3Q mine — is located in Argentina, it could play an important role in supplying Canada’s lithium needs at a time when the country is not extracting the material within its own borders.

The development ties into the broader North American context of the United States and Canada having formalized a joint action plan on critical minerals in 2020 which included commitments by both governments to strengthen North American battery material supply chains against the backdrop of China’s ever-tightening grip on global supplies.

A stronger focus on critical mineral resource security through the prism of national security is certainly warranted, not just for our Canadian friends, but also from a U.S. perspective.

As Tsvetana Paraskova notes in a piece for Oilprice.com, “while the Administration was reviewing supply chain issues and vulnerabilities to its demand for critical minerals, China is moving in on Africa and South America to strike alliances and lend money to mineral resource-rich African countries, while Russia is thought to be providing shadow ‘security services’ in some African nations with a mercenary organization with links to the Kremlin.” 

Followers of ARPN know all too well that as the green energy transition accelerates, we will be facing significant critical mineral resource shortfalls.  For the United States (and for our close allies), the time to act is now. As Paraskova concludes, “(…) otherwise, America’s clean energy goals and hi-tech and automotive supply chains could depend on China.” 

The post China’s Play for Lithium in Canada — A Stronger Focus on National Security in Critical Mineral Resource Policy Warranted appeared first on American Resources Policy Network.

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 meme.”  

As we noted more than once in 2021, the first word in supply chain is supply – a broad hint that we should wonder, and in many cases worry, about where we get the constituent parts and essential materials that make our EVs, our laptops, computers and CT scanners, smart phones, and smart bombs.

Even cookies – not the website kind, more the chocolate-chip variety.  As Sesame Street’s Cookie Monster put it in a 2021 New Yorker Cartoon: “What me wants to know:  What are the implications of the supply-chain crisis for cookie?”

For ARPN, it all added up to a teachable moment:  A reason to step back from the magic of modern life and ask, where does the stuff that makes our stuff come from?

And what better time to take that step back than mid-December, which is customarily the time for ARPN to take stock and assess what has happened on the critical mineral resources front in the past twelve months — where we are, and, filled with hope for a new year, where we are headed.

COVID-19 and Push Towards Net Carbon Zero as Catalysts

With the U.S. presidential elections behind us, one of the two key issues dominating the news cycle in 2020 has faded into the background, but of course the ongoing coronavirus pandemic has not. Vaccines have brought hope and have helped save lives, but the arrival of new virus variants have made clear that the issue is here to stay.

In 2021, two major themes — the ongoing coronavirus pandemic and the accelerating global push towards net carbon zero dominated headlines.

Both themes served as catalysts for the rise of one key issue in the mineral resource realm and beyond:  Securing the Supply Chain.

After all, the supply chain is what everything hinges on these days — our success in the fight against the coronavirus pandemic, the global push towards net carbon zero, buying a new car, putting presents under the Christmas tree, or (if you’re trying to find cream cheese for that traditional holiday dessert) just minding our day-to-day business in our personal lives.

In 2020, we were given a first glimpse into the challenges associated with an over-reliance on foreign, and especially Chinese, raw materials, the effects of which were being felt across broad segments of manufacturing.

In 2021, the extent of our supply chain vulnerabilities has reached crisis levels.

Where We Began – Amidst Big Policy Shifts, Signs for Continuity in Mineral Resource Realm

Observers of the critical mineral resource realm saw early indications that, unlike some other policy areas, critical mineral resource policy would display a certain level of continuity. In December of 2020, then-Assistant Secretary of State (Energy Resources) Frank Fannon declared that he expected the Energy Resource Governance Initiative (ERGI) — an initiative aimed at securing supply chains for metals critical for the clean energy transition — would continue in 2021, and policy statements made by the transition team suggested that, while emphases were certainly going to shift, efforts to secure critical mineral supply chains was going to continue taking a central role under an incoming Biden Administration.

Remarks made by the incoming Secretary of Energy Jennifer Granholm, before the Senate Committee on Energy and Natural Resources in January signaled that the Biden Administration acknowledged the urgency of our nation’s critical minerals challenge, and the importance of securing supply chains:

“If we are to build the supply chain for batteries, as one example, if we allow for China to corner the market on lithium or for the Democratic Republic of Congo to be the place where everyone gets cobalt when there may be child labor or human rights violations associated with that supply, then we are missing a massive opportunity for our own security but also for a market for own our trading partners that also may want to have access to minerals that are produced in a responsible way.”

She added, “the responsible way is an important thing to mention — we know we can mine in a responsible way.”

The Push towards “Building Back Better” 

One of the key priorities of the Biden Administration would dominate the domestic policy agenda for much of 2021.  President Biden’s “Build Back Better” agenda: an economic recovery package seeking to “make historic investments in infrastructure, along with manufacturing, research and development and clean energy.”

The increased focus on clean energy brought the critical minerals challenge to the forefront of the political discourse.  As followers of ARPN well know, the road to a lower-carbon future is paved with critical metals and minerals – not least evidenced by the instructive World Bank report entitled “The Mineral Intensity of the Clean Energy Transition,” which estimated that production of metals and minerals underpinning the shift, such as the battery tech metals graphite, lithium and cobalt, would have to increase by nearly 500 percent by 2050 to meet global demand for renewable energy technology. To achieve the transition to a below 2°C pathway as outlined by the Paris Agreement, the deployment of wind, solar and geothermal power, as well as energy storage will require more than three billion tons of minerals and metals.

The growing emphasis on clean energy on the part of the Biden Administration, embedded into a global push towards net zero carbon emissions that began to accelerate in 2020 and has continued into 2021, culminated in the 2021 Climate Change Conference (COP26) commitments by various countries, territories, and automakers to sell only zero-emission vehicles by 2040.  Against the backdrop of these commitments, and the growing awareness of the mineral intensity of sustainably greening the future, supply chains took center stage.

Supply Chains Take Center Stage – the White House’s 100 Day Supply Chain Report

On June 8, 2021, the White House released its 100 Day Supply Chain Report — key findings from reviews directed under Executive Order 14017 “America’s Supply Chains” (E.O.14017). Signed on February 24, 2021, the Executive Order instructed President Biden’s economic and national security teams to conduct a 100-day review of four key U.S. supply chains across federal agencies to assess the nation’s “resiliency and capacity of the American manufacturing supply chains and defense industrial base to support national security [and] emergency preparedness.” 

The report assessed the risks and vulnerabilities for several key industry sectors — semiconductors, high- capacity batteries, medical supplies and critical and strategic metals and minerals, and offered recommendations on how to address the challenges.  Not only did the report endorse an all-of-the-above approach to critical mineral resource policy, by looking to  invest in “sustainable production, refining, and recycling capacity domestically,” while at the same time looking to “diversify supply chains away from adversarial nations and sources with unacceptable environmental and labor standards” by working closely with allies and partners. The Department of Defense-led chapter also specifically acknowledged the importance of the inter-relationship between what we at ARPN have been calling “gateway metals” and their “co-products.”

See ARPN’s report on the 100 Day Supply Chain Review here.
To learn more about the Gateway Metal/Co-product relationship, click here. 

 On July 22, 2021 the House Armed Services Committee’s bipartisan Defense Critical Supply Chain Task Force, chartered in March of 2021 to “review the industrial base supply chain to identify and analyze threats and vulnerabilities,” released its final report, which includes key findings and policy recommendations, many of which mirror the Administration’s 100-Day Supply Chain report in the context of an all-of-the-above approach.

Against mounting pressures, hope was building that both reports would create sufficient momentum to translate recommendations into actual policy, programs, and projects to address the nation’s deep shortfalls in Critical Mineral supply.

Shoring Up Supply Chains in the Wake of the 100 Day Supply Chain Report

Industry Deals
Only weeks after the release of the 100 Day Supply Chain Report, several deals struck in the critical mineral resource realm suggested that the “all of the above” approach was off to a good start.

International Cooperation
Efforts to promote closer collaboration with allied nations to secure stable supply of critical minerals had already been underway in 2020, and continued in 2021, in line with the all-of-the above approach endorsed by the 100 Day Supply Chain Report.  In this context, relations with long-standing trading partners Canada and Australia remained the focal point, but stakeholders also called for increased leveraging of the National Technology and Industrial Base (NTIB), which, originally established to strengthen technology links between the U.S. and Canada in 1993, was expanded in 2016 to include the United Kingdom and Australia. 

Industry Efforts to Sustainably Green Our Future
Acknowledging their role and responsibility in supporting and building out “sustainable production, refining, and recycling capacity domestically,” the mining sector and associated industries have made significant capital investments and – long before 2021 – began harnessing the materials science revolution to meet increased expectations of consumers, society, and governments to support the green energy transition.  ARPN has, over the course of 2021, featured many of the industry initiatives to that effect, and will continue to do so going forward.

 Examples of recent industry initiatives to sustainably green the future can be
found here and here.

Legislation and the New Draft Critical Minerals List
While several pieces of critical minerals legislation never made it out of Congress, the bipartisan infrastructure package passed by Congress and signed by President Biden contains key provisions ranging from mine permitting reforms, to investments in carbon capture and critical mineral mapping initiatives aimed at strengthening critical mineral supply chains.

Meanwhile, the fact that a new draft Whole-of-Government Critical Minerals List released by USGS in November with a request for public comment has grown from 35 to 50 metals and minerals deemed critical for U.S. economic and national security (– essentially half of the naturally-occurring elements on the Periodic Table –), is proof of the critical role these materials play in our Tech Metal Era.

See our commentary on the new draft list here, here, and here.

Once finalized, the updated list, additions and omissions to which we featured in a series of blog posts, may provide fresh impetus for policy reform in 2022.

The NIMBY Challenge
While much is being done to shore up U.S. supply chain security, efforts continue to face a significant hurdle:

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 at a November 2021 congressional hearing, 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 an important pillar of the “all-of-the-above” concept and highly appealing especially to those policy makers with “not in my backyard (NIMBY)” constituencies, it is insufficient to alleviate our overall problem.

As Thom Carter, energy adviser to Utah Gov. Spencer Cox and executive director of the Governor’s Office of Energy Development, 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 we outlined above, and 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.” 

A Sense of Urgency:  On China, Winning the Battery Arms Race, and the Overall Critical Minerals Challenge

While not making as many headlines this year, the tech war between China and the United States, the extent of which was exposed in 2020 as the coronavirus pandemic placed a magnifying glass on our mineral resource dependencies, continued in 2021. In essence, this tech war is a competition ““to see which country will dominate the 21st Century Technology Age, in which our ‘Achilles heel’ is our over-reliance on foreign metals and minerals underpinning 21st Century technology.”  The tech war has a number of battlefronts, ranging from aviation to space technology, from biotech and quantum sciences to robotics, and from military technology to artificial intelligence.

From an ARPN perspective, critical mineral resources are – in the military sense of the term — the materiel from which modern weapons of war are fashioned, and within that context, aside from the rare earths challenge, perhaps the biggest theater of U.S.-Chinese confrontation is the battery arms race, which in 2021 not only continued, but punched into overdrive.

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, 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.”

As Benchmark Mineral Intelligence data shows, the battery arms race trend was set in motion in 2015 – but today the megafactories are 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.”

And in stern message for us as we look to the new beginnings of a new year:

“Those who do not see the importance of the lithium-ion battery will have no meaningful future.”

All-of-the-Above and Supply Chains in 2022 – Beyond Verbal Commitments 

2020 was a watershed year to expose the extent of our nation’s over-reliance on foreign mineral resources. Meanwhile, considering the aftershocks of pandemic-related policy measures such as lockdowns, and a new global resolve to pursue a low carbon energy future we feel confident to say that 2021 could go down in history as the Year of the Supply Chain.

While several steps were taken to address associated challenges, pressures will only continue to mount – particularly when it comes to the sought-after global green energy transition. Stakeholders increasingly realize the urgency of the situation, as the mineral resource-focused passages the freshly codified infrastructure bill underscore.

However, many have yet to fully embrace a comprehensive “all-of-the-above” strategy to secure our supply chains.

Consequently, current efforts “might pale in comparison to the scale and pace of mineral demand growth,” as Reed Blakemore of the Atlantic Council lamented in a recently released study on the role of minerals in realizing US transportation electrification goals.

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.

New Years are an invitation to take stock – a phrase with multiple meanings now that our just-in-time economy has rudely reminded us that stocks can be rapidly depleted, and dependencies exposed.  Here’s hoping that as we survey our prospects for 2022, it will be the year we take critical minerals and metals as seriously as Cookie Monster takes the things that make his cookies….  cookies.

If “supply chain” could move from jargon to meme in 2021, maybe 2022 can be the year that strengthening supply chains can move from rhetoric to reality.

The post ARPN’s 2021 Word of the Year: Supply Chain appeared first on American Resources Policy Network.

Building upon last year’s bipartisan work in the defense bills, Green believes policy makers should:

- Ensure that DoD purchases from domestic producers. Doing so, “could provide a stable ‘safe harbor’ that is insulated from Chinese manipulation and reduce the risk for nascent U.S. producers,” and thus encourage domestic production.

- Reduce excessive red tape and barriers of entry to “ease the financial burdens on potential domestic producers and provide a more supportive environment in which they could achieve success.”

- “Continue to invoke the Defense Production Act to support domestic REE producers who find innovative solutions for America’s supply chain issue.”

- “View trusted foreign allies as part of the process to achieve true supply chain security.”

Click here to read Green’s full piece.

Against the backdrop of significantly increasing critical mineral resource needs, any efforts to secure REE supply chains should be embedded into a broader all of the above approach to mineral resource policy, as outlined by ARPN’s Daniel McGroarty during a recent virtual congressional policy forum.

For more on the forum, and a link to re-watch, click here.

The post ARPN Expert Panel Member: Create Framework to “Insulate Domestic Producers from Market Manipulation While Fostering Innovation” in Effort to Decouple From China appeared first on American Resources Policy Network.