The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Critical Minerals Alliances 2024 - September 16, 2024
Through a combination of grants, tax credits, loans, and tariffs, the White House is mobilizing an all-of-government approach to establishing secure and reliable domestic critical mineral supply chains.
The U.S. is heavily dependent on imports for many of the minerals critical to the clean energy transition.
MP Materials' Mountain Pass Mine in California produces about 12% of the global rare earth supply. Until recently, however, the rare earth concentrates produced at this mine had to be shipped to China for processing.
Export-Import Bank of the United States has emerged as a heavy lifter when it comes to providing loans to fund the development of domestic critical mineral mines.
China is the leading supplier of 24 of the minerals for which the U.S. relies on imports for more than half of its supply.
Over the first two years following the passage of the Bipartisan Infrastructure Law and Inflation Reduction Act, the U.S. Department of Energy has invested billions of dollars into establishing a clean energy supply chain in the United States. These heavy investments, however, have neglected one vital link – the domestic mines needed to supply the processing facilities, battery plants, and other energy transition infrastructure that DOE has worked so hard to build.
Senators Lisa Murkowski, R-Alaska, and Joe Manchin, D-W.Va., both of which helped to author the domestic mining provisions in the BIL and IRA, are concerned that the White House's strategy is putting the U.S. in a situation where it becomes even more beholden to China and other countries for minerals and metals critical to the clean energy future.
"You've got an administration that is approaching how we deal with this with one hand deliberately tied behind our back – and we are talking about the critical minerals that go into this," Murkowski said while questioning DOE Deputy Secretary David Turk during a January Senate Energy and Natural Resources Committee hearing on EV supply chains.
Turk indicated that DOE's hands are also tied when it comes to supporting domestic battery materials mining projects.
"We are trying to be as creative as possible with the tools and the authorities that we have got," the DOE deputy secretary told the committee.
The tools available to DOE were expanded with an updated guidance released in April that allows the department's Loan Programs Office (LPO) to finance domestic critical mineral mining projects under the Title 17 Clean Energy Financing Program.
"The United States has substantial critical minerals resources, but we must do more if we want to lead in the mining or processing of most critical minerals. Many of the supply chains for these minerals are concentrated in just a few countries, most notably China," DOE wrote in a post announcing the updated Title 17 guidance. "This raises risks for investors and businesses, eroding U.S. economic power, weakening our energy security, and increasing our reliance on unreliable foreign sources, which are often produced with lower environmental or labor standards.
Murkowski says the new guidance is a good start.
"What we need now is for the department to go beyond words, beyond funding projects that lock in long-term mineral imports from abroad, and to instead support domestic projects – in states like Alaska – that will strengthen our economy and security," Murkowski said.
Thus far, DOE has been reluctant to tap into the roughly $72 billion of loan guarantees available under Title 17 to support domestic mining projects. The U.S. Department of Defense and the Export-Import Bank of the United States (EXIM), however, are leveraging their own authorities to bolster the first link of America's clean energy supply chain.
The DOD grants and EXIM loans are beginning to reveal an all-of-government strategy to establish complete mines-to-clean energy supply chains in the U.S.
When compared to the billions of dollars DOE has poured into battery materials processing, manufacturing, and recycling, DOD's investments in domestic critical minerals projects have been relatively small but strategic.
In 2019, then-President Donald Trump authorized the Pentagon to utilize funding available under Title III of the Defense Production Act (DPA) – a tool established during the Cold War to ensure the U.S. could secure goods needed for national security – to support the re-establishment of a rare earths supply chain in the U.S.
Over the ensuing five years, DOD has awarded more than $439 million to establish domestic rare earth element supply chains.
MP Materials' Mountain Pass Mine in California produces about 12% of the global rare earth supply. Until recently, however, the rare earth concentrates produced at this mine had to be shipped to China for processing.
Among the companies involved in the Pentagon's "mine-to-magnets" initiative is MP Materials, which operates the Mountain Pass rare earths mine in California.
So far, MP has been awarded more than $103 million to establish a fully integrated rare earths supply chain. These investments include nearly $45 million in grants from DOD to develop separation facilities at Mountain Pass and $58.5 million in tax credits from DOE for a rare earth magnets and metals plant being developed in Texas.
The largest DPA Title III investment made so far into America's rare earths supply chain is a $288 million grant to a U.S. subsidiary of Australia-based Lynas Rare Earths Ltd. to establish a commercial-scale rare earth oxide production plant in Texas.
The DOD has also made small investments in several other domestic rare earth initiatives. This includes $4 million for Ucore Rare Metals Inc. to demonstrate the capabilities of RapidSX, an innovative rare earths separation technology that the company plans to install at the Louisiana Strategic Metals Complex it is building at a former U.S. Air Force base in the Pelican State.
"DOD's strategic investments are building capability at multiple stages of the rare earth supply chain and will provide a clear signal to private capital that the time is right to build additional resiliency," said Danielle Miller, who worked in the DOD acquisitions office before moving into the private sector as a strategic analyst. "We are on track to meet our goal of a sustainable, mine-to-magnet supply chain capable of supporting all U.S. defense requirements by 2027."
In 2022, a group of senators urged President Joe Biden to authorize the Pentagon to tap into DPA funds to bolster domestic supplies of other critical minerals.
"The authorities provided to you as President under the Defense Production Act will help to ensure that America's critical mineral supply chains are strong, responsibly produced, and ethically sourced. Given the stakes, America cannot afford to wait any longer for that day to arrive," Sen. Lisa Murkowski, R-Alaska, Joe Manchin, I-W.Va., Jim Risch, R-Idaho, and Bill Cassidy, R-La. penned in a letter to Biden.
Biden agreed, and over the two years since receiving a directive from the White House, the Pentagon has invested more than $260 million of DPA Title III funds into the mining side of the critical minerals equation.
Domestic mining projects that have received DPA funding over the past couple of years include:
• Albemarle Corp. – $90 million to support the reopening of the Kings Mountain lithium mine in North Carolina.
• Perpetua Resources Corp. – $59.4 million to re-establish a domestic supply of antimony at the Stibnite Gold mine project in Idaho.
• Graphite One Inc. – $37.5 million to support a domestic graphite supply chain that includes a mine in Alaska.
• Talon Nickel Corp. – $20.6 million to advance exploration and resource definition at the Tamarack nickel-cobalt mine project in Minnesota.
• South32 Ltd. – $20 million to jump-start the production of battery-grade manganese at the Hermosa project in Arizona.
• Jervois Mining Ltd. – $15 million to support the expansion of the Idaho Cobalt Operations.
• Lithium Nevada Corp. – $11.8 million to accelerate the extraction and processing of lithium carbonate at the Thacker Pass mine project in Nevada.
• Doe Run Resources Corp. – $7 million to complete a demonstration-scale cobalt and nickel processing plant at their mining operations in Missouri.
These investments have been strategically placed to get the domestic critical minerals projects across make-or-break technical thresholds that will make them more attractive to investors.
The Export-Import Bank of the United States has emerged as the federal government's heavy lifter when it comes to funding domestic critical mineral mining projects.
Export-Import Bank of the United States has emerged as a heavy lifter when it comes to providing loans to fund the development of domestic critical mineral mines.
In April, the export credit agency for the U.S. government extended an offer to loan Perpetua $1.8 billion to fund the development of a mine at its Stibnite Gold project in Idaho that would provide the only domestic source of antimony critical to America's economic and national security.
The antimony to be produced as a byproduct of gold at Stibnite is of strategic interest to the Pentagon, which is why it invested nearly $60 million to advance this mine project from the start.
In a letter inviting Perpetua to submit a loan application, EXIM said the Idaho antimony project may be eligible for funding under the U.S. export bank's "Make More in America initiative."
The proposed EXIM loan would provide the funding to build the antimony-gold mine that the Pentagon has backed through the engineering and permitting phases.
"We are seeing a whole of government approach to bring antimony production home," said Perpetua Resources President and CEO Jon Cherry. "From EXIM's potential financing of up to $1.8 billion to the multiple Department of Defense's multi-million-dollar awards to Perpetua, there is a profound recognition that we need domestic antimony production now."
A month after the invitation to Perpetua, EXIM offered a similar but smaller $800 million loan to NioCorp Developments Ltd. to fund the development of a mine at the Elk Creek project in Nebraska that would provide a domestic source of 17 minerals deemed critical to the U.S.
"Our goal is to make North America less dependent on foreign suppliers for the critical minerals we need to transition to a clean energy and less carbon-centric economy," says NioCorp Developments Chairman and CEO Mark Smith.
To achieve this mission, the company plans to produce niobium and titanium, key ingredients in an emerging rapid-charging solid-state battery technology; scandium used in lightweight and durable alloys for automotive, aerospace, and defense applications; and 14 rare earths essential for numerous high-tech, military, and everyday applications.
Global automaker Stellantis has already agreed to offtake future neodymium, praseodymium, dysprosium, and terbium produced at Elk Creek. These rare earths are key ingredients in the powerful magnets that go into the motors driving EVs, including electrified versions of the automaker's Jeep, Dodge, and Ram brands that are popular in North America.
The EXIM loan would cover about two-thirds of the $1.2 billion currently estimated cost to develop Elk Creek. The total costs, however, will likely be higher with the completion of an updated feasibility study for Elk Creek that includes the recovery of rare earths, which is expected later this year.
"As I see it, the stars are increasingly aligning behind our Elk Creek project and 2024 promises to be a momentous year for NioCorp," said Smith.
The stars are also aligning for U.S. Strategic Metals (USSM) and the battery materials mining, processing, and mining project it is developing in neighboring Missouri.
In August, EXIM invited USSM to apply for a $400 million loan to fund the construction of a state-of-the-art plant to recover metals from concentrates and recycled lithium-ion batteries.
This potential loan will add to the nearly $230 million in funding commitments from affiliates of Appian Capital Advisory LLP announced by USSM late last year, as well as around $250 million in previous funding from Glencore and others.
"Appian is excited to partner with USSM to develop its cobalt-nickel mine and battery recycling and mineral processing operation in Missouri," said Appian Capital CEO Michael Sherb. "USSM will shape the battery recycling landscape in the U.S. and play a critical role in establishing a domestic supply of essential minerals for the energy transition."
China is the leading supplier of 24 of the minerals for which the U.S. relies on imports for more than half of its supply.
As DOE, DOD, and EXIM invest in domestic supplies of minerals essential to the energy transition, the Biden administration has rolled out a plan to levy heavy tariffs on a wide range of goods from China, including critical minerals.
"Despite rapid and recent progress in U.S. onshoring, China currently controls over 80% of certain segments of the EV battery supply chain, particularly upstream nodes such as critical minerals mining, processing, and refining," the White House inked in a briefing on the tariffs unveiled in May.
According to the U.S. Geological Survey's Mineral Commodity Summaries 2024 report, the U.S. is more than 50% reliant on imports for 49 minerals and metals and is 100% dependent on foreign suppliers for 15 of them.
This list includes being 100% import-reliant for the graphite and manganese that go into EV batteries; 95% for the rare earths used in EV motors, wind turbine generators, and a lengthy list of other products; 83% for the platinum for hydrogen fuel cells; and 82% for the antimony critical to military hardware.
America's heavy dependence on countries like China, which was the leading supplier of 24 of the minerals for which the U.S. is net-import-reliant, and Russia, a significant global producer of others, is worrisome to many Washington policymakers and industry leaders.
"Our mineral import dependence continues to be a gaping hole in our economic and national security and we're clearly not moving fast enough to course correct," said National Mining Association President and CEO Rich Nolan.
In addition to cutting off supplies of the minerals critical to America's economy and clean energy ambitions, China can use its dominance to oversaturate global supply chains and make it uneconomical for emerging competition.
The tariffs introduced by the Biden administration are meant to insulate American mining, refining, and manufacturing companies "from China's unfair trade practices."
The tariffs related to critical minerals and energy transition supply chains include:
• 25% tariff on graphite and certain other critical minerals.
• 25% tariff on rare earth permanent magnets.
• 25% tariff on lithium-ion batteries.
• 50% tariff on solar cells.
• 100% tariff on electric vehicles.
The White House says these tariffs are to "encourage China to eliminate its unfair trade practices regarding technology transfer, intellectual property, and innovation."
"The President has also established the American Battery Materials Initiative, which will mobilize an all-of-government approach to secure a dependable, robust supply chain for batteries and their inputs," the White House penned in its tariffs briefing.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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