Rhetoric will not fill US mineral needs
Domestic mining also needed to achieve clean energy goals Metal Tech News - March 6, 2023
Last updated 3/7/2023 at 2:57pm
With the world-class deposits already found within its borders, the United States has the potential to be a major global producer of copper, lithium, and the other minerals and metals critical to the clean energy transition. Realizing this potential, however, will require reserves of political will in Washington, DC, that match the nation's domestic energy metals endowment, according to R Street Institute.
"Despite political rhetoric and policies promoting the use of domestic critical minerals in clean energy through the Inflation Reduction Act and executive actions, the United States is well short of being able to supply enough minerals to fuel its own clean energy transition, much less to be a major global supplier of minerals needed for clean energy technology as politicians are keen to depict," Philip Rossetti, senior fellow for energy and environment at R Street, penned in the executive summary of a U.S. energy mineral policy study.
The R Street researcher calculates that at current U.S. production levels the U.S. would be 74% import-reliant for copper, 99% for cobalt, 98% for nickel, and 100% for the lithium needed for the clean energy transition by 2040.
Bringing online large and advanced-stage domestic mine projects, such as the Pebble copper mine project in Alaska or the Thacker Pass lithium mine project in Nevada, would significantly lower this import reliance.
"If all proposed projects for copper, cobalt, nickel, and lithium entered the market, the potential import-reliance for these minerals for a net-zero emission energy transition would fall to 41%, 99%, 95%, and 51%, respectively," Rossetti penned in the study.
These import percentages could be further reduced, especially for cobalt and nickel, if earlier staged mining projects show their feasibility and are advanced to producing mines over the next 17 years.
"The likelihood or timing of major mines entering the market in the United States is uncertain, though, and our own analysis of proposed mines found that practically every major project relevant for clean energy has been delayed over issues of permitting, leasing and litigation," Rossetti penned in the report. "This is problematic because, absent increased domestic production, the United States will remain reliant on foreign suppliers – a fact that is creating its own potential challenges."
Over the past half a century, the U.S. has become increasingly dependent on foreign suppliers for its mineral needs.
According to the U.S. Geological Survey, the U.S. was dependent on imports for more than half its supply of 50 out of the 64 nonfuel mineral commodities and was 100% import-reliant for 15 of those during 2022.
The U.S. net import reliance list is littered with mined commodities critical to the clean energy transition. This includes importing 100% of the mined graphite and manganese needed for electric vehicle batteries, more than 95% of the rare earths needed for EV motors and wind turbines; 83% of the antimony used for renewable energy storage; 76% of the cobalt needed for EV batteries; more than 75% of the tellurium needed for solar panels; and 56% of the nickel for EV batteries.
The International Energy Agency forecasts EVs and renewable energy infrastructure required to meet the net-zero emission climate goals of the Paris Agreement are going to demand forty times more minerals in 2040 than they do today.
"Today, the data shows a looming mismatch between the world's strengthened climate ambitions and the availability of critical minerals that are essential to realizing those ambitions," said IEA Executive Director Fatih Birol.
Based on the IEA analysis, coupled with consumption estimates by the USGS, R Street forecasts that U.S. demand for copper to expand by 121%, cobalt by 2,007%, lithium by 13,267%, and nickel by 504%.
This comes at a time when all major global economies are competing for supplies of these minerals and metals to achieve their own climate goals.
"Overall, conventional political rhetoric that typically focuses on global emission targets of net-zero, or even net-negative, may not fully appreciate the challenges that mineral scarcity may present to technological cost and availability," Rossetti penned in the R Street clean energy minerals report.
The challenging energy transition mineral landscape goes beyond just not being able to secure enough raw materials to build America's envisioned low-carbon future due to many of these building blocks of the clean energy future coming from political adversaries and nations with low environmental and human rights standards.
While China has long been known for its near total monopoly of the global rare earths sector, the Middle Kingdom is also America's largest supplier of a wide range of critical minerals and has nabbed strategic positions in global mining projects and regions. This includes investing heavily in the Democratic Republic of Congo (DRC), a nation rich in copper and cobalt but has been condemned for human rights violations, including child labor.
R Street says China's global reach into the energy minerals space also extends to allied nations that the U.S. hopes to turn to for the mined materials considered by many to be the new oil.
"For example, a number of lithium projects in Australia are owned by Chinese companies, and some national security scholars believe that China is employing a concerted strategy to increase its influence over minerals that are increasing in demand," according to the R Street energy minerals report.
Similar geopolitical concerns also extend to Russia, a major global supplier of nickel, platinum group metals, and other critical minerals.
Geopolitical tensions with China and Russia's war with Ukraine also pose national security implications that are worrisome to Pentagon top brass and some Washington lawmakers.
"From a policy perspective, there is a concern that China and Russia are using their natural resources as an extension of their foreign policy efforts, and national security scholars have suggested that Chinese SOE (state-owned entities) domination of mineral supply chains is part of a long-term strategy to influence the foreign policy of Western nations," Rossetti wrote.
Without bolstering production in the U.S. and allied nations, R Street believes policies aimed at limiting the amount of minerals from China, Russia, or DRC being used to build America's clean energy transition will have little impact on bad actors.
"For example, although the United States no longer subsidizes cobalt produced from child labor, the increased demand for non-DRC cobalt causes those cobalt prices to rise, which then increases demand for DRC cobalt from consumers willing to buy it at a lower price than on the open market," Rossetti wrote.
"Policymakers should therefore avoid falling into central planning biases where they may – mistakenly –believe that regulations or subsidy regimes would undo the effects of increased product demand in nations from which the United States may not want to source minerals," he added.
The U.S. is home to large deposits of copper, lithium, and other energy transition metals that could help mitigate the geopolitical pitfalls of import reliance and help to limit price spikes that would benefit adversaries and bad actors, according to the R Street study.
A prime example of this is Northern Dynasty Minerals Ltd.'s Pebble Mine project in Alaska, which is considered to be the world's largest undeveloped deposit of copper.
According to R Street analysis, Pebble alone could meet 12% of the copper needed to meet America's climate goals by 2040. When combined with Resolution, a proposed copper mine in Arizona being advanced by Rio Tinto and BHP, would double copper production in the U.S.
These projects, however, have faced litigation and federal permitting challenges that make it highly uncertain whether they will go into production.
This includes a recent move by the U.S. Environmental Protection Agency to preemptively veto the federal permits needed to develop a mine at Pebble and place restrictions on the Bristol Bay area where the world-class copper mine is located that would essentially prevent any future mining there.
Similarly, Lithium Americas Corp.'s Thacker Pass in Nevada, the largest proposed lithium project in the U.S. and one of the largest in the world, was approved early in 2021 but was delayed two years by litigation asserting that the associated environmental reviews were rushed.
Following a February federal court decision in favor of developing the project that could singlehandedly meet 25% of U.S. lithium demand, Lithium America announced that it broke ground on construction at Thacker Pass on March 2.
The permitting of another Nevada lithium project, Rhyolite Ridge, has been delayed over potential impacts to the habitat of an endangered species of buckwheat. ioneer Ltd., the company advancing Rhyolite Ridge, hopes to get federal permit approval in 2024.
As another example of difficulties that delay or stop mining of energy metals in the U.S., the Biden administration recently announced a 20-year mining moratorium for 225,000 acres of federal land that encompasses the Twin Metals nickel-copper mine project in northeastern Minnesota.
"While it is ultimately up to policymakers to prioritize and balance various issues related to mining, challenges such as these mean that a singular policy proposal or reform would be unlikely to fully unlock potential mineral resources in the United States," Rossetti wrote.
Wide gulf between rhetoric and realities
R Street said mine permitting reform is one of the biggest ways U.S. policymakers can ensure that America's domestic energy minerals potential is unlocked for the benefit of the economy and clean energy transition.
The mine permitting process in the U.S. typically takes at least 4.5 years and often longer. Tacking on the litigation and federal regulatory challenges often adds years or even decades to getting a domestic mine approved.
"The key issue is not whether the United States can supply its own minerals, but that undue barriers to market entry of mines will raise costs by exacerbating scarcity and the potential for foreign suppliers to leverage their position in supply chains to pressure other nations into foreign policy concessions, as China has attempted in the past with its rare earth element exports," according to the R Street report.
The Washington-based think tank says America's clean energy ambitions are at risk without matching domestic mining and recycling policies.
"Overall, policymakers should understand that there is a wide gulf between the popular rhetoric of a clean energy transition and the realities of mineral scarcity that are likely to exacerbate clean energy costs and increase reliance on foreign suppliers," Rossetti penned in the report's conclusion.
EDITOR'S NOTE: Li-Bridge, an alliance convened by the U.S. Department of Energy that includes America's national laboratories and more than 40 companies, has published a blueprint that addresses many of the policy issues highlighted in the R Street Institute study. More information on the Li-Bridge lithium battery supply chain blueprint can be read at Bridge to the US lithium battery future in the February 20, 2023 edition of Metal Tech News.