Biden’s request seeks to stoke domestic market for crucial metals

Whether President Joe Biden defense production law works as intended and kick-starts mining of battery metals crucial to the country’s clean energy transition won’t be known for years, according to industry experts.

But it is already fueling unrest among environmental groups that have raised concerns about mining on US soil.

The Biden Administration announced in an executive order Thursday that the president had invoked the law, which could boost mining by directing the Defense Department to support feasibility studies for mining projects.

“The basic idea is that it is funded to stimulate exploration and further investment to understand what the options are for producing these materials here at home,” said Jessika Trancik, a professor at the Institute for Data, Systems, and Society at the Massachusetts Institute of Technology. “That’s going to boost energy security.”

Finding the raw metals needed to make batteries is fast becoming a key bottleneck in the supply chain for electric vehicles and other battery-intensive technologies key to the energy transition, experts said. The search for drum metals has already sparked a recent investment in companies that are trying to find new ways to find and extract the precious materials.

Simon Moores, chief executive of Benchmark Mineral Intelligence, a company that tracks data on the electric vehicle supply chain, said it takes about seven years to develop a lithium mine, but only 21 months to build a battery plant. As the industry grows, that dynamic has curtailed demand for raw metals like graphite, lithium, cobalt, nickel and manganese.

“It’s going from a niche industry to a mass market,” Moores said. “Commodities are not growing fast enough.”

After a prolonged decline, the prices of these minerals are rising rapidly and this could threaten, to some extent, the pace of the energy transition.

The materials needed for modern batteries are relatively rare and China outperforms the US in terms of mining, leading to some concerns of trade dependence on fossil fuels by a dependence on foreign metals.

“Electric vehicle battery prices have fallen by about 90 percent over the past decade and are projected to fall further over the next decade,” said Dan Lashof, US director of the World Resources Institute. “But this jump in mineral prices definitely has the potential to interrupt that drop in prices for a period of several years, delaying the transition to electric vehicles at a time when we can’t afford to do that.”

Transportation emissions account for about one-third of all US greenhouse gas contributions and cutting them is essential to combat climate change.

The United States has few operating mines extracting the most important metals for batteries, Moores said, and the administration hopes the invocation of the Defense Production Act will prompt capital markets to invest in domestic mining projects.

The Defense Production Law is a federal law passed in 1950 that, in its current form, gives the president a variety of powers to direct private companies and resources for national defense. those powers are split into different areasone of which allows the creation of incentives to stimulate industries.

Although often associated with wartime efforts, some recent presidents have used the act to address non-military challenges facing the US. Donald Trump used the act to stimulate private production of medical supplies at the start of the pandemic. barack obama used it to force telecommunications companies to disclose foreign-made hardware and software due to concerns about China’s espionage efforts.

Image: Lithium mining
Rod Colwell, CEO of Controlled Thermal Resources, right, and Tracy Sizemore, the company’s global director of battery materials, walk past geothermal mud pots off the coast of the Salton Sea, where the company mines lithium, in Niland, California, on July 15, 2021.Marcio José Sánchez / AP File

Moores said Biden’s order could jump-start the market in two ways. In the short term, perhaps a year from now, it could spur the construction of facilities to extract critical metals for clean energy at existing mines for other materials.

Small amounts of lithium, for example, could be traded as a byproduct of existing boron mining, Moores said.

In the long term, the effort could provide enough funding to shorten the time it takes to build a new mine by helping companies get past the bankable feasibility stage, which is when projects are evaluated to see if they’re financially worth developing.

Financing that viability process could reduce risk for investors and attract those with deep pockets.

“If institutional money reacts positively and gets it, this will remove the bottleneck, it will de-risk all this money from New York, this money from Chicago, this money from Silicon Valley to go into mining,” Moores said. “There is a supply chain to build.”

Some remain skeptical that the new policy will stimulate rapid growth.

Nadia Schadlow, a senior fellow at the Hudson Institute, a think tank, who served as deputy national security adviser in the Trump administration, called it a “paper response” and said quick results could hinge on easing environmental regulations, which is not something the Biden administration has signaled its willingness to do.

“There is not going to be a change in community views of mines or environmental views of mines,” Schadlow said. “While the expression of will can be a good thing, meaningful change will require addressing the issues that have blocked mine production over the years.”

in a order information sheetthe Biden administration said the Defense Department would “implement this authority using robust environmental, labor, community, and tribal consultation standards.”

Some environmental groups have expressed opposition or misgivings about the measure.

“The transition to clean energy cannot be built on dirty mining. Earthworks strongly opposes the use of the Defense Production Act to fuel mining because it adds to the generational trauma experienced by mining-affected communities, particularly indigenous communities,” wrote Lauren Pagel, director of policy for Earthworks, in a Press releaseadding that the administration should focus instead on sourcing minerals through recycling and building a circular economy of materials.

Frequent environmental litigator Earthjustice struck a similar tone, with Legislative Rep. Blaine Miller-McFeeley saying:Press release that it was “vital” that the order not become “business as usual” for the mining industry and that mining reforms be implemented.

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