The Geopolitics of Critical Minerals Supply Chains

March 17, 2021

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by Jane Nakano (Center for Strategic & International Studies) As clean energy technology becomes the latest frontier for geoeconomic rivalry, the security of supply chains for rare earths and critical minerals—essential materials for clean energy—has become a global strategic issue.

The fragility of global supply chains revealed by Covid-19 and rising competition from China have only heightened the importance of supply chain security for critical minerals.

This report compares strategies and actions taken by the United States, European Union, and Japan, illuminating key economic, security, and geopolitical factors behind these evolving approaches to enhance the security of critical minerals supply chains. READ MORE

The Geopolitics of Critical Minerals Supply Chains

BREAK THE CHAIN: (Politico's Morning Energy)

DOE Announces $30 Million for Research to Secure Domestic Supply Chain of Critical Elements and Minerals (US Department of Energy)

Exclusive: U.S. looks to Canada for minerals to build electric vehicles - documents (Reuters)

Schlumberger New Energy developing Nevada lithium plant to meet battery storage demand (Power Engineering)

Schlumberger New Energy Is Launching A Lithium Extraction Pilot Plant In Nevada (Clean Technica)

Energy security fears rise anew in shift to clean energy (Houston Chronicle)

Electric Vehicles Drive up Metals Demand (Transportation Energy Strategies)

Electric Vehicles Can Drive More Responsible Mining (China Dialogue/Transportation Energy Strategies)

CME Seeks to Tap Electric-Car Demand With Lithium Futures -- Contracts tied to the battery metal could make pricing more transparent (Wall Street Journal; includes VIDEO)

Lithium shortage threatens EV growth — report (E&E News)

The U.S. is facing a lithium-ion battery shortage as electric vehicle production ramps up (CNBC)

Lithium Prices Could Triple As EV Production Soars (OilPrice.com)

A transition to renewables and electric vehicles will prompt a spike in demand of critical minerals (Politico's Morning Energy)

The Lithium Gold Rush: Inside the Race to Power Electric Vehicles -- A race is on to produce lithium in the United States, but competing projects are taking very different approaches to extracting the vital raw material. Some might not be very green (New York Times)

IEA Says Governments Should Consider Stockpiling Battery Metals (Bloomberg)

Biden's conundrum: Expand EVs without harming the Earth (E&E News)

The Dark Side of Congo’s Cobalt Rush: Cell phones and electric cars rely on the mineral, causing a boom in demand. Locals are hunting for this buried treasure—but are getting almost none of the profit. (The New Yorker)

INVESTIGATION -- ‘This Is the Wild West Out Here’ How Washington is bending over backward for mining companies in Nevada at the expense of environmental rules. (Politico Magazine)

The US has to mine more minerals to meet EV, clean energy demands (electrek)

World Energy Outlook Special Report: The Role of Critical Minerals in Clean Energy Transitions (International Energy Agency)

Tesla signs deal with world’s largest nickel miner to secure resource for battery production (electrek)

Webinar: Critical Supply - Addressing US Reliance on Foreign Sources of Critical Minerals (ConservAmerica)

What is bioleaching, and how can it make cars greener? The raw materials needed to power electric vehicles are in short supply. Why not recycle what’s already out there? (Fast Company)

Biden’s Electric-Car Ambitions Face Real-World Roadblocks: Auto makers want congressional moves on charging stations and tax incentives; consumer support also is needed (Wall Street Journal)

Senators spent the night in a vote-a-rama on Democrats' budget resolution (Politico's Morning Energy)

Taliban grabs mineral riches coveted by energy developers (E&E News)

The Role of Critical Minerals in Clean Energy Transitions: Part of World Energy Outlook (International Energy Agency)

No to Seabed Mining From World Conservation Congress (Our Daily Planet)

In Argentina's north, a 'white gold' rush for EV metal lithium gathers pace (Reuters)

Biden's fork in the Alaskan road -- WHERE DOES THIS ROAD GO: (Politico's Morning Energy)

AND WE’LL NEVER HAVE ROYALTIES: (Politico's Morning Energy)

The race for lithium – a new method makes water-derived lithium possible (Bio Market Insights)

There’s a Fortune to Be Made in the Obscure Metals Behind Clean Power (Bloomberg)

The Not-So-Rare Earth Elements: A Question of Supply and Demand (Kleinman Center for Energy Policy)

Congo's $6 billion China mining deal 'unconscionable', says draft report (Yahoo!/Reuters)

The Real Winner In The War Between Fossil Fuels And Renewables (Oilprice.com/Yahoo!)

Is Lithium The Best Bet On A Overheated EV Market? (Oilprice.com)

A Power Struggle Over Cobalt Rattles the Clean Energy Revolution (New York Times)

The Role of Minerals in US Transportation Electrification Goals (Atlantic Council)

Hunt for the ‘Blood Diamond of Batteries’ Impedes Green Energy Push (New York Times) Seattle Times

Battery Pack Prices Fall to an Average of $132/kWh, But Rising Commodity Prices Start to Bite (Bloomberg NEF)

LOOKING AT AFGHANISTAN: (Politico's Morning Energy)

Congo Ousts Mining Leader in a Cloud of Corruption Claims: The country’s president removed Albert Yuma Mulimbi as chairman of the state mining firm. Cobalt in Congo is a crucial resource in the global clean energy revolution. (New York Times)

Excerpt from Politico's Morning Energy: BREAK THE CHAIN: The Energy Department is putting up to $30 million into research for securing the domestic supply of critical minerals — a vital component of electric vehicles and other clean energy technology. "America is in a race against economic competitors like China to own the EV market — and the supply chains for critical materials like lithium and cobalt will determine whether we win or lose," Energy Secretary Jennifer Granholm said in a statement.

Currently, the U.S. gets all its supply of 14 of the 35 rare-earth elements from overseas, and it imports half of its supply for 17 others, according to DOE. The investment will "fund research into the fundamental properties of rare-earth and platinum-group elements and the basic chemistry, materials sciences, and geosciences needed to discover substitutes," according to a DOE release. READ MORE

Excerpt from Reuters: On Thursday (March 18, 2021), the U.S. Department of Commerce held a closed-door virtual meeting with miners and battery manufacturers to discuss ways to boost Canadian production of EV materials, according to documents seen by Reuters.

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Conservationists have strongly opposed several large U.S. mining projects, leading officials to look north of the border to Canada and its supply of 13 of the 35 minerals deemed critical for national defense by Washington.

Tesla Inc, Talon Metals Corp and Livent Corp were among the more-than 30 attendees at Thursday’s meeting who discussed ways Washington can help U.S. companies expand in Canada and overcome logistical challenges, according to the documents.

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Canada’s Fortune Minerals Ltd, which is developing a cobalt mine in the Northwest Territories, has also held funding talks with the U.S. Export/Import Bank, its chief executive told Reuters.

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Canadian firms are also able to apply for U.S. government grants under the U.S. Defense Production Act and other U.S. funding programs. There are no U.S. tariffs on Canadian EV battery metals or EV parts.

Excerpt from Politico's Morning Energy: A transition to renewables and electric vehicles will prompt a spike in demand of critical minerals, which remain vulnerable to market volatility, according to new research by the International Energy Agency — and such volatility could hinder the adoption of clean technology overall.

Though the situation is different for each mineral, overall demand for the minerals required for batteries and other tech could go up sixfold by 2040, depending on how quickly renewables replace fossil fuels, according to the study. Production of key minerals is concentrated in a handful of countries, and a convoluted supply chain could further risk disrupting mineral markets.

IEA recommends policymakers take steps to secure the supply chain, including outlining long-term commitments for emissions reductions, promoting technological advances and scaling up recycling to relieve pressure on primary supplies. Read the rest of the report and recommendations here. READ MORE

Excerpt from New York Times: Atop a long-dormant volcano in northern Nevada, workers are preparing to start blasting and digging out a giant pit that will serve as the first new large-scale lithium mine in the United States in more than a decade — a new domestic supply of an essential ingredient in electric car batteries and renewable energy.

The mine, constructed on leased federal lands, could help address the near total reliance by the United States on foreign sources of lithium.

But the project, known as Lithium Americas, has drawn protests from members of a Native American tribe, ranchers and environmental groups because it is expected to use billions of gallons of precious ground water, potentially contaminating some of it for 300 years, while leaving behind a giant mound of waste.

“Blowing up a mountain isn’t green, no matter how much marketing spin people put on it,” said Max Wilbert, who has been living in a tent on the proposed mine site while two lawsuits seeking to block the project wend their way through federal courts.

The fight over the Nevada mine is emblematic of a fundamental tension surfacing around the world: Electric cars and renewable energy may not be as green as they appear. Production of raw materials like lithium, cobalt and nickel that are essential to these technologies are often ruinous to land, water, wildlife and people.

That environmental toll has often been overlooked in part because there is a race underway among the United States, China, Europe and other major powers. READ MORE

Excerpt from E&E News: The United States co-founded the Energy Resource Governance Initiative with Australia, Botswana, Canada and Peru. It works with countries to create the "regulatory and governance conditions that will attract investment to their critical energy minerals sector," and reduce emissions and other environmental impacts from mining, a State Department official wrote in an email.

But can it clean up the supply chain in the short time needed?

Observers say it won't be easy.

"These things do not turn on a dime," said Morgan Bazilian, director of the Payne Institute for Public Policy at the Colorado School of Mines. "Companies have to line up; governments have to regulate ... which is not dissimilar to other parts of the economy."

He and his colleagues recently authored a study on how the rapid transition to a low-carbon economy carries the potential for severe environmental and social degradation. They're also evaluating ways to secure critical mineral supply chains that limit environmental damage and promote good governance.

One way is expanding recycling and reuse of the critical minerals used in batteries, part of the Energy Resource Governance Initiative's latest focus. Another is expanding exploration — although doing so in a way that doesn't harm the environment takes more money and attention, Bazilian said.

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Right now, most of the critical minerals or materials used to produce those products come from China or Congo or other places with checkered human and environmental safety records.

Recent allegations that solar panels from China were made with forced labor underscored concerns about the future of U.S. solar projects (Energywire, April 15).

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Recent analysis by the Oslo, Norway-based research firm Rystad Energy found that the mining capacity of lithium — a key ingredient in EVs and grid storage — will not keep pace with expected demand, and the shortfall could see prices for the mineral triple toward the decade's end (Energywire, April 19).

Of the 35 rare earth elements used in clean energy technologies, the United States depends entirely on imports for 14, and 17 others are at least 50% imported, according to the U.S. Geological Survey.

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Ramping up U.S. mining isn't an easy or fast proposition, however. It can take five to seven years on average to develop and permit a mine, said Miller (Andrew Miller at Benchmark Mineral Intelligence).

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As for recycling, it's hard to say when that approach will be broadly available. Technological hurdles stand in the way of making it economically feasible to recycle the materials used in batteries and put them back into the market at a price that is competitive with what can be mined out of the ground, Miller said. READ MORE

From Energy Matters vol 7.10

Excerpt from The New Yorker: Southern Congo sits atop an estimated 3.4 million metric tons of cobalt, almost half the world’s known supply. In recent decades, hundreds of thousands of Congolese have moved to the formerly remote area. Kolwezi now has more than half a million residents. Many Congolese have taken jobs at industrial mines in the region; others have become “artisanal diggers,” or creuseurs. Some creuseurs secure permits to work freelance at officially licensed pits, but many more sneak onto the sites at night or dig their own holes and tunnels, risking cave-ins and other dangers in pursuit of buried treasure. READ MORE

Excerpt from International Energy Agency: This World Energy Outlook special report on The Role of Critical
Minerals in Clean Energy Transitions identifies risks to key minerals and metals that – left unaddressed – could make global progress towards a clean energy future slower or more costly, and therefore hamper international efforts to tackle climate change. The IEA is determined to play a leading role in enabling governments around the world to anticipate and navigate possible disruptions and avoid damaging outcomes for our economies and our planet.

This special report is the most comprehensive global study of this subject to date, underscoring the IEA’s commitment to ensuring energy systems remain as resilient, secure and sustainable as possible. Building on the IEA’s detailed, technology-rich energy modelling tools, we have established a unique and extensive database that underpins our projections of the world’s future mineral requirements under different climate and technology scenarios.

This is what energy security looks like in the 21st century. We must pay close attention to all potential vulnerabilities, as the IEA did in our recent series on electricity security for power systems, which covered challenges such as growing shares of variable renewables, climate resilience and cyber security.

Today’s supply and investment plans for many critical minerals fall well short of what is needed to support an accelerated deployment of solar panels, wind turbines and electric vehicles. Many minerals come from a small number of producers. For example, in the cases of lithium, cobalt and rare earth elements, the world’s top three
producers control well over three-quarters of global output. This high geographical concentration, the long lead times to bring new mineral production on stream, the declining resource quality in some areas, and various environmental and social impacts all raise concerns around reliable and sustainable supplies of minerals to support the energy transition.

These hazards are real, but they are surmountable. The response from policy makers and companies will determine whether critical minerals remain a vital enabler for clean energy transitions or become a bottleneck in the process.
Based on this special report, we identify the IEA’s six key recommendations to ensure mineral security. An essential step is for policy makers to provide clear signals about their climate ambitions and how their targets will be turned into action. Long-term visibility is essential to provide the confidence investors need to commit to new projects. Efforts to scale up investment should go hand-in-hand with a broad strategy that encompasses technology innovation, recycling,
supply chain resilience and sustainability standards.

There is no shortage of resources worldwide, and there are sizeable opportunities for those who can produce minerals in a sustainable and responsible manner. Because no single country will be able to solve these issues alone, strengthened international cooperation is essential. Leveraging the IEA’s long-standing leadership in safeguarding energy security, we remain committed to helping governments, producers and consumers tackle these critical
challenges. READ MORE

Excerpt from Politico's Morning Energy: Senators spent the night in a vote-a-rama on Democrats' budget resolution ... Among the other non-binding amendments ... adopted by voice vote an amendment from Sen. Ron Wyden to prohibit federal funds from going to the purchase of materials, technology and critical minerals produced, manufactured or mined with forced labor. READ MORE

Excerpt from Politico's Morning Energy: AND WE’LL NEVER HAVE ROYALTIES: Miners are pushing back against proposals on the Hill to impose royalties on mining on federal lands, Reuters reports . The House Natural Resources Committee advanced a measure to set royalties on new and existing mines, subjecting the industry to similar schemes as federal-land oil and gas extraction. The proposal went forward as part of the committee’s reconciliation legislation.

But miners say the royalties would impede domestic critical mineral extraction when the country needs it most. "The race for electric vehicles and electrification of the economy requires metals and mining, and that needs to be incentivized, not stalled," Rich Nolan, head of the National Mining Association, told Reuters. READ MORE

Excerpt from Politico's Morning Energy: LOOKING AT AFGHANISTAN: Afghanistan’s rich lithium and copper deposits are attracting renewed attention from China, The Financial Times reports. Chinese officials have been in contact with the Taliban since the summer, and a cohort from China’s mining industry visited Afghanistan recently to discuss access to copper deposits in Mes Aynak, southeast of Kabul, according to FT. Afghanistan is believed to have some of the richest deposits of lithium and other crucial resources on Earth, and demand for the resources is only expected to grow with higher reliance on batteries for electricity storage and electric vehicles.

Republicans have used foreign-sourced resources as a cudgel against Democrats’ clean energy plans, particularly following the Taliban takeover of Afghanistan. Read more from FT. READ MORE