supply chains

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 back into the swing of things.

Today, it’s time to meet 2023 head-on.

If you could use a refresher to get you up to speed on where we are in the critical minerals space, take a look at our “Year in Review” post, especially if you missed it amidst the pre-holiday craziness in December.

In it, we argued that in some ways, 2022 was the year in which strengthening supply chains moved from “rhetoric to reality” as much progress was made, including important groundwork to build out a secure North American critical minerals supply chain.  However, we also cautioned that much more remains to be done, and to overcome the many challenges, new alliances will need to be forged.

As Shane Lasley argues in Critical Minerals Alliances 2022, a magazine covering 29 metals and minerals (when counting rare earths as 14)  deemed critical to North American supply chains as well as related policy issues:

 “The optimum solution to laying the foundation for the next epoch of human progress will only be discovered through the forging of unlikely alliances between the woke and old school, environmental conservationists and natural resource developers, liberals and conservatives, national laboratories and private sector entrepreneurs, local stakeholders and global mining companies, venture capitalists and innovators, and everyone else with visions of a cleaner, greener, and high-tech future.”

Now the question is, what lies ahead?

As we look at overall trend lines in the critical minerals space, we see the following themes emerge:

• A focus on the Super Criticals (see our Year in Review post for more info);
• the growing importance of geopolitics, with China taking center stage and alliances and partnerships continuing to be forged to reduce reliance on Beijing;
• the acceleration of the green energy transition which will require vast amounts of critical minerals;
• as well as industry’s efforts to sustainably green our future by harnessing the materials science revolution.

All of these themes are intertwined, and more may emerge in the coming months, but rest assured that ARPN will be covering these issues extensively as we go forward.

Of course, we are not the only ones to have paused and reflected on what’s to come in 2023.  In a new piece for InvestorIntel.com, editor in chief, critical minerals, Jack Lifton stipulates that “2023 is a breaking point if there is to be an EV revolution/transformation.”

Arguing that “[i]t is not at all certain that high-tech, critical minerals producers and processors, will be ready or even existent by the time the minerals can be delivered to their end-user manufacturers,” Lifton says that “[i]t’s time that car makers performed a due diligence on the critical minerals’ supply space.”

In his view, car makers must — specifically for minerals, metals and manufactured components dependent upon lithium, cobalt, nickel, graphite, manganese and the rare earths —

• “[a]scertain whether or not the supply of finished components necessary for the assembly of motor vehicles (…) can meet current and all future demand;
• and predict and mandate price maximums for critical minerals that they can afford if their products are to be sellable.”

Benchmark Mineral Intelligence’s Simon Moores says that “2023 will be the end of the start up phase for electric vehicles and battery supply chains” as we are “entering scale up.” He adds: “This may seem like demand (which industry could not fulfill) is falling when it’s high and volatile. A sky high but bumpy ride ahead.”

In the waning days of December the stage was set for 2023 with decisions to come standing to determine national fortunes and human progress in decades ahead.

As 2023 rolls down the runway, it’s time to buckle up.

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 security and intelligence community, and other government partners,” Canada’s Minister of Innovation, Science and Industry declared in a statement:

“While Canada continues to welcome foreign direct investment, we will act decisively when investments threaten our national security and our critical minerals supply chains, both at home and abroad. In accordance with the [Investment Canada Act], foreign investments are subject to review for national security concerns, and certain types of investment—such as those in the critical minerals sectors—receive enhanced scrutiny.

Therefore, we reviewed a number of investments in Canadian companies engaged in the critical minerals sector, including lithium. These companies were reviewed via the multi-step national security review process, which involves rigorous scrutiny by Canada’s national security and intelligence community. As a result of that process, the Government of Canada has ordered the divestiture of the following investments by foreign investors in Canadian critical mineral companies: 

• Sinomine (Hong Kong) Rare Metals Resources Co., Limited is required to divest itself of its investment in Power Metals Corp.
• Chengze Lithium International Limited is required to divest itself of its investment in Lithium Chile Inc.
• Zangge Mining Investment (Chengdu) Co., Ltd. is required to divest itself of its investment in Ultra Lithium Inc.”

As Reuters columnist Andy Home observes, the new policy on critical mineral investment is both “wide ranging and far-reaching:”

“It’s not just China’s state-owned players that will come in for extra scrutiny, but also any private investors ‘assessed as being closely tied to, subject to influence from, or who could be compelled to comply with extrajudicial direction from foreign governments.’”

What’s more, he argues, “the policy covers not just mining but all stages of the minerals processing chain.”

The ramifications of Canada’s move will stretch beyond our neighbors’ borders. For one, it hardens the already drawn “geopolitical battle-lines in the metals sector” between the West and adversary nations, i.e. China.

It also places additional pressure on all segments of the already strained  U.S. critical minerals supply chain.

The recently passed congressional Inflation Reduction Act contained sourcing requirements for EV credits.  Observers have outlined that, while sending an appropriate message, the requirements also represent an “almost insurmountable challenge” as “considering it takes seven years to build a mine and refining plant but only 24 months to build a battery plant, the best part of this decade is needed to establish an entirely new industry in the United States.”  

The global push towards net zero carbon emissions, which has received fresh impetus with the COP 27 climate summit commencing today in Sharm El Sheik, will further up the ante.

While we are still days and maybe weeks away from leaving the Congressional midterm election with all its theatrics in the rear view mirror, policymakers and other stakeholders would be well-advised to shift focus from politics to policy, and act swiftly and decisively to bolster North American supply chains.

We’re “on a highway to climate hell.” The picture UN Secretary General Antonio Gutierrez is painting of current efforts in the climate fight is – expectedly – bleak. As such, it is no surprise that nations have been doubling down on their efforts to reduce greenhouse gas emissions, and the Biden Administration is no exception. Followers of ARPN have [...]

“Solar power, electric cars, grid-scale batteries, heat pumps—the world is crossing into a mass-adoption moment for green technologies,” writes Tom Randall for Bloomberg.  Citing Bloomberg research, he argues that “clean energy has a tipping point, and 87 countries have reached it.”  The mass-adoption of green technologies, as followers of ARPN well know, requires drastically increased amounts of critical [...]

Pressures on already strained battery material supply chains are mounting, and not just due to geopolitical tensions and rising demand in the context of the green energy transition. The U.S. Department of Labor has included lithium-ion batteries into its “List of Goods Produced by Child Labor or Forced Labor” – a list of 158 goods from 77 [...]

As one of the longest running and biggest automobile shows in North America, the North American International Auto Show (NAIAS) — or the Detroit auto show, as it is known more colloquially — has traditionally been one of the key events for car makers every year.   This year, however, another concurrently held event taking place roughly 30 miles [...]

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 [...]

As Europe’s already high energy prices continue to soar due to fallout of Russia’s invasion of Ukraine, and EU energy ministers are gearing up to meet this Friday for an emergency summit, the corporate leaders of Europe’s non-ferrous metals sector have sounded the alarm in an open letter warning that the industry that underpins the energy sector [...]

In a new piece for Canada’s Globe and Mail, columnist Robert Muggah zeroes in on the geopolitics of mineral resource supply, which have, in his view, triggered a new “Great Game” – a term coined by British writer Rudyard Kipling to describe the “fierce competition between Victorian Britain and Tsarist Russia, both of which sought to control South Asia [...]

As pressures continue to mount, U.S. stakeholders are beginning to realize the urgency of building supply chains “that are safer, more secure and not beholden to a country that has multiple human rights violations, predatory lending practices, and vast national security complications.”  For now, however, too often, automakers still have to turn to Chinese suppliers to meet [...]