resource dependence

It’s back to the grind.

The parades, barbecues, pool parties and fireworks to mark this year’s Independence Day are over.  There’s much to be thankful for, especially at a time when the impact of Russia’s war on Ukraine, now in its second year, reverberates around the globe and geopolitical tensions continue to mount.

ARPN has always used the occasion of Independence Day to remind ourselves that “while we cherish the freedom we are blessed with in so many ways, we must not become complacent, as there are areas where we’re increasingly becoming less independent” — with our reliance on foreign mineral resources being a case in point.

Thankfully, stakeholders are increasingly aware of the urgency to strengthen critical mineral supply chains, and, on the heels of a global pandemic, ongoing war between Russia and Ukraine, and growing resource nationalism, a flurry of activity has dominated the critical minerals space, ranging from domestic efforts over bilateral trade agreements to multilateral alliances.

For the U.S., a notable example of domestic efforts is the series of DPA Presidential Determinations involving specific Critical Minerals, beginning with President Trump’s July 2019 designation of the Rare Earth permanent magnet supply chain being designated as “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 – the “defense criticals” and designated airbreathing engines, advanced avionics navigation and guidance systems, and hypersonic systems and their “constituent materials” as priority DPA materials.

(for more on the Defense Criticals, read our post here.)

Followers of ARPN are further aware of policy initiatives like the United States’ Inflation Reduction Act (IRA) or the European Union’s Critical Raw Materials Act (CRMA), which are currently being followed by bilateral trade agreements, as well as U.S.-EU discussions to launch a “critical mineral club.”

While the United States and our partners have taken several important steps to decouple critical mineral supply chains from China, Beijing, having systematically built out its dominance across the entire value chain from mining over processing to manufacturing, still has a chokehold on many key critical minerals, and particularly the EV battery supply chain.

And for all of the recent U.S. policy efforts, the latest USGS Mineral Commodity Summaries report confirmed that our critical mineral dependencies still persist.

There is momentum to change this, however, as we have previously argued:

“Those familiar with the inner-workings of Washington, D.C. know all too well that particularly in an election year policy efforts can quickly lose steam or fizzle over attempts to placate certain constituencies. Against all affirmations to strengthen domestic supply chains, the not-in-my-backyard (NIMBY) sentiment is still strong.”

As followers of ARPN well know, the stakes are too high to let the momentum for comprehensive reform fizzle.

With a new “Great Game” afoot in the global mineral resource realm (see our most recent post on the issue here), the U.S. must double down on its push to secure critical mineral supply chains from “soup to nuts” to borrow a term used by U.S. Energy Secretary Jennifer Granholm.

With the West’s resource dependence running deep, and Beijing’s determination to continue its global quest for resource dominance unbroken, the critical mineral arms race will continue to heat up.   Stakeholders here and elsewhere must gear up for the long haul.

As ARPN stated in a previous post, Rome wasn’t built in a day.

Neither was the United States of America.

But built it was, challenges were overcome — and we are celebrating the men and women who have fought for and continue to safeguard our freedoms this week.

Here’s hoping that one day we will be able to say the same for the critical mineral supply chains that anchor the technology economies of the 21st Century.

Even before the Biden Administration announced the “most aggressive” plan to curb tailpipe emissions to date with new vehicle pollution standards proposed by the Environmental Protection Agency (EPA) last month, automotive OEMs and Tier 1 suppliers were facing difficulties getting both the parts and raw materials needed for their electric vehicle (EV) components.

The newly proposed rules requiring automakers to reduce carbon emissions by 56% in their 2032 models compared to 2026 models will only add fuel to the fire at a time when geopolitical and trade tensions between the United States and our allies on one hand, and China on the other are soaring.

Recent policy developments, such as the Biden Administration’s invoking of the Defense Production Act (DPA) for the five “battery criticals” — graphite, lithium, cobalt, nickel and manganese –  as well as the rare earths, declared DPA priority materials during the Trump Administration, plus the passage of the Inflation Reduction Act (IRA), the energy provisions of which contained EV tax credits observers said would send important signals to investors and industry that the U.S. was serious about domestic supply chains, have provided hope for a positive change, but, as ARPN pointed out recently, “after decades of dwindling domestic resource production and rising import reliance, no one ever said turning an aircraft carrier this size would be easy.”  

Lithium has, to an extent, become the poster child of the push to strengthen EV battery supply chains – after all, it’s mostly “Lithium-ion” batteries we’re talking about. Concerns are certainly well-founded with material shortages for lithium predicted to hit in just a few short years, but a recent Autoweek story and interview with Graphex Technologies CEO John DeMaio outlines “another serious material issue on the horizon: graphite sourcing.”  

As ARPN has previously argued, while much of the focus has been on the cathode of the EV battery, the anode warrants a close look, and may in fact be our “Achilles heel when it comes to building out a battery supply chain independent of China.”

DeMaio explains:

“As far as the percentage of the components in a battery cell, almost the entire anode is graphite. So that makes graphite about 45% of the individual cell.

On a total component basis for an EV battery, graphite is about 25% to 28% of the whole thing. It’s by far the largest component by volume and mass in the battery. And people don’t realize that a lithium-ion battery is sometimes up to 15 times more graphite than lithium. It’s really the unsung player.”

While to date, the supply chain for this “unsung player” is quite firmly dominated by China, the sourcing provisions in the energy passages of the recently passed Inflation Reduction Act (IRA), coupled with the recently announced grants to “supercharge” U.S. EV battery and electric grid supply chains are important steps towards mitigating that potential single point of failure.

Projects currently underway are expected to qualify for the IRA credits, and ultimately help “domesticate” the graphite supply chain, including Graphex’s pitch coating facility coming online in Michigan, and Graphite One, Inc.’s cooperation with two U.S. national laboratories under the Department of Energy umbrella in an effort to establish an all-American mine-to-manufacturing supply chain. Graphite One, Inc.’s Graphite Creek deposit near Nome, Alaska was recently recognized by the U.S. Geological Survey as the largest U.S. graphite deposit and among the largest in the world.

As DeMaio points out, it’s a “herculean task at hand” because “the United States (…) is so intertwined with China that it’s a little impractical to think we’re going to extract ourselves overnight.”

The challenge becomes even bigger if one considers that, as scholars at the Wilson Center’s Environmental Change and Security Center have argued “the Biden administration’s efforts to free up federal funds for domestic mining activities has highlighted the inherent conflict between accessing the minerals needed for climate action and the administration’s commitment to environmental and social justice.” 

However herculean the task may be, it is one we cannot shy away from because as ARPN has previously pointed out, lofty goals of net carbon neutrality – and that includes the just-released proposed EPA emission standards –  will not be achievable if we don’t embrace a push to secure critical mineral supply chains from “soup to nuts” to borrow a term used by Energy Secretary Jennifer Granholm.

All of which brings us back to what we have noted often at ARPN — the first word in supply chain is… supply.

 For all the talk about reducing our over-reliance on foreign critical mineral resources against the backdrop of soaring demand, strained supply chains and increasing geopolitical tensions, last week’s release of the annual USGS Mineral Commodity Summaries report still paints a sobering picture. While the number of metals and minerals for which the U.S. remains 100% import dependent [...]

Two weeks into the new year, it appears that 2023 will continue the fast-paced tempo we got used to in 2022 when it comes to developments on the critical minerals front. With Congressional leadership elections – finally – behind us, policy makers in Washington are gearing up to delve into the issues, and, if the [...]

Happy New Year! For most of us, the first week of January means it’s time to go back to the grind after an extended period of family time, food coma, rest and – hypothetically, at least — reflection.  It also means trying shake the brain fog and mental rust that has settled in order to dive [...]

As geopolitical and economic stakes mount, the urgency to build out secure critical mineral supply chains is increasingly resonating with policymakers around the world.  Acknowledging that “[c]ritical minerals are not just the building blocks of clean technology like solar panels and electric vehicle batteries – they are a key ingredient for creating middle class jobs and growing [...]

As geopolitical tensions continue to mount, and China tightens its reins on its critical mineral supply chains, U.S. policy makers are stepping up their efforts to secure domestic supply chains. The latest case in point: Sen. Dan Sullivan’s (R-Alaska) and Mitt Romney’s (R-Utah) just-introduced “Critical Mineral Independence Act of 2022,” legislation aimed at reducing the United States’ over-reliance on [...]

Within days of Canada outlining new investment stipulations for state-owned entities aimed at protecting the country’s critical minerals sector, the Canadian government last week told three Chinese resource companies to divest their interests in Canadian critical mineral firms. Basing the decision on “facts and evidence and on the advice of critical minerals subject matter experts, Canada’s [...]

While the coronavirus pandemic may no longer occupy the top of the hour slot in news broadcasts, the supply chain challenges it unearthed for many of the materials we rely upon are here to stay.  And as the global push towards net zero carbon emissions gets kicked into high gear, nations are increasingly realizing their own [...]

The Russian invasion of Ukraine and subsequent additional supply chain challenges have prompted the European Union — already grappling with strained supply chains in the wake of the coronavirus pandemic — to step up its critical minerals game. During her State of the Union address on September 14, European Commission President Ursula Von der Leyen announced [...]