A number of immediate and medium-term steps have been taken to strengthen our domestic supply of critical minerals. Topping the list are revisions to federal policies focused on securing these minerals as the energy industry transitions away from a generation infrastructure based on fossil fuels.
Focus on Midstream Sector
Though the U.S. still has a robust hard rock mining industry, many virgin minerals are now imported in various processed forms. Improving U.S. energy security requires another pathway to bolster the midstream and downstream supply chain industries — mainly minerals processing. As we bolster midstream minerals processing, support will be built for downstream and upstream segments of the supply chain, including manufacturing and mining.
Currently, the U.S. processes only 4% of the minerals required for battery production. This includes processing capacity for small amounts of synthetic graphite (5%), lithium (2%) and nickel (1%), leaving the U.S. reliant on imports from other countries for the balance of minerals needed for battery manufacturing. For example, rare earth elements neodymium and praseodymium are essential components that enable conversion of electrical energy into motion within EVs. The Mountain Pass Rare Earth Mine in California is one of the largest rare earth mines in the world, producing enough neodymium and praseodymium to supply production of 11 million EV motors per year. However, nearly all of the beneficiated ore produced by that mine must be shipped from California to China and a few other countries for processing.
It is widely believed that locating a larger share of the midstream sector within the U.S. would attract other segments of the critical minerals supply chain to locate within U.S. borders.
Most of the barriers today stopping progress on midstream minerals processing are financial. It takes significant capital, sometimes hundreds of millions of dollars, to build a hydrometallurgical facility. Secondarily, sources of feedstock have to be well-defined.
Building up domestic battery manufacturing and minerals processing, including cathode and anode active materials production, will bolster national security and help attract other players in the supply chain that now represent choke points.
Derisking Is Necessary
The U.S. currently doesn’t produce battery cathode precursor materials. A couple companies are at pilot stages and almost commercially viable, but more investment is needed in these vital industries. Attracting that private capital will require derisking for massive investment, and that will require appropriate signals from government. Fortunately, many of those signals have recently occurred via the government in the form of Department of Energy grant/loan guarantees and funding, as well as tax incentives to bolster the U.S. minerals supply chain.
Locating Reliable Partners
In the short term, the U.S. cannot do any of this alone. It will take a shared act of policy, not nature, as the rocks are where they are.
One important step will be to level the playing field with other countries that have known deposits of critical mineral resources but generally have more anticompetitive practices than the United States. The U.S. and its partner nations should commit to sourcing minerals from regions that maintain good standards for environmental protection and human rights. This can be done by leveraging existing multinational frameworks and bolstering trade. Developing countries will continue to mine substantial volumes of materials for the foreseeable future, so capacity building and strong working relationships should also be a priority.
Repurposing Oil and Gas Wells
There are also other options available to bolster the U.S. critical minerals supply chain. One of these is through techniques to evolve production of lithium via injection wells into oil and gas production zones. We’ve already seen some major oil and gas producers announce plans to do this. On average, it only takes about five years to permit an injection well, a far shorter time frame than what is usually required to open a new lithium mine (~20 years).
Common sense solutions will be required to bolster energy security and help the U.S. reach its decarbonization goals. One such step will be to engage with local communities over the long term to help stakeholders understand that modern mining practices are much different than 150 years ago. Adhering to high environmental standards and sustainable practices are key steps in building a robust minerals supply chain.
Our transition to a minerals-based energy infrastructure will foster development of a circular economy in which many materials are recycled and repurposed.
