supply chain security

At ARPN, we have long been spotlighting federal policy initiatives to bolster our critical mineral supply chains. Meanwhile, often considered policy laboratories, the individual states are also not sitting idly by, and it’s time to feature some of their efforts.

With the EV revolution fueling much of the skyrocketing demand for the “battery criticals” lithium, cobalt, graphite, nickel and manganese, it is only fitting that our first example takes us Michigan, home to Detroit, the cradle of the U.S. automobile industry.

As Tim Higgins reports for the Wall Street Journal, the State of Michigan earlier this month approved a more than $200 million grant for Our Next Energy Inc.’s (ONE) planned EV battery factory in Van Buren Township, Michigan.  The company, an EV battery startup spearheaded by a former leader of Apple Inc.’s secretive car project, plans to invest $1.6 billion into the project, which is slated to be fully operational by the end of 2027 and have the capacity make battery cells for about 200,000 EVs annually.

The push to build out a comprehensive domestic EV battery supply chain, as followers of ARPN well know, received a jolt of energy with the passage of the federal Inflation Reduction Act (IRA) and its domestic sourcing requirements for EV credits.

While the U.S. automotive industry has largely focused on lithium-ion battery cells, ONE, according to Higgins, aims to ultimately produce 20 gigawatt hours, amounting to the equivalent of battery packs for about 200,000 vehicles each year by focusing on lithium iron phosphate (or lithium ferro-phosphate, LFP) cells, which, while said to have a shorter range than its lithium-ion peer, is also considered to be less volatile and less expensive.

ONE’s goal is to also build a battery pack with a more than 600-mile range at a significantly lower price point for the cells making up the pack.

The State of Michigan’s $236.6 million in state funding for the project include

• A $200 million Critical Industry Program performance-based grant through the Strategic Outreach and Attraction Reserve (“SOAR”) Fund
• A $15 million Jobs for Michigan Investment Fund Loan
• State Essential Services Assessment Exemption valued at $21.6 million

In a statement released on October 5, 2022, Michigan Gov. Gretchen Whitmer said of the project:

“Our Next Energy’s $1.6 billion investment creating 2,112 jobs in Van Buren Township will build on our economic momentum and secure the future of mobility and electrification right here in Michigan. This innovative, Michigan-made company is on the cutting-edge of battery technology, and the work they’re doing will increase the range of electric vehicles to over 600 miles on a single charge. 

With this new gigafactory, we will continue bringing the supply chain of electric vehicles, chips, and batteries home to Michigan and the USA while creating a sustainable, clean energy economy. I am proud that Democrats and Republicans in Michigan came together to build up our economic development toolkit and empowered our state to compete for every project and every job.”

States like Texas, Georgia,Kansas and Oklahoma have also attracted battery makers as automakers scramble to lock down supplies and policy stakeholders work to create frameworks conducive to attracting investment into these critical industries.

In the coming weeks and months, ARPN will continue to feature more examples of state level public-private cooperation or formalized public private partnerships (PPPs) to sustainably strengthen domestic critical mineral supply chains.

As geopolitical tensions between China and the West are on the rise, and critical mineral supply chain pressures continue to mount against the backdrop of the accelerating green energy transition, U.S. Senator Tom Cotton (R-AR) sent a letter to U.S. Secretary of Energy Jennifer Granholm demanding information from her department regarding recent reports that the Department of Energy (DOE) may provide taxpayer-funded support for a proposed lithium mine with ties to the Chinese Communist Party (CCP).

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.

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