nickel

Against the backdrop of surging demand for critical minerals and increasing geopolitical tensions, the U.S. Department of Defense (DoD) is forging ahead with its efforts to strengthen the U.S. defense industrial base. The Department is stepping up its efforts to award funding for projects to encourage domestic development of the Battery Criticals (lithium, graphite, cobalt, nickel and manganese), and what ARPN has dubbed the “Defense Criticals” – a new category of critical minerals effectively created by designating airbreathing engines, advanced avionics navigation and guidance systems, and hypersonic systems and their “constitutent materials” as priority Defense Production Act (DPA) materials via Presidential Determination. (see ARPN’s latest post on the issue for more background)

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.

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

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

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

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

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

In the case of nickel, once again ARPN’s touchstone is our all-of-the-above approach to mineral resource policy, rooted in the realization that as much as we want to rely on our friends and allies, to succeed and remain competitive in the 21st Century we will also have to harness our arguably vast domestic resource potential across the entire value chain, from mine to manufacturing.  And domestic nickel production looks to be given a boost by projects currently underway in Minnesota (see our post here), as well as  what appears to be vast untapped mineral potential in neighboring Michigan.

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

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

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

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

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

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

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

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