A new report from the liberal Brookings Institute out Monday warned that the United States and European supply chains are too dependent on China for modern technologies such as electric vehicles, transmission, and energy storage.
The report, titled “China’s Role in Supplying Critical Minerals for the Global Energy Transition,” is urging Western policymakers to expedite an overhaul of their mining regulatory regime to meet 21st-century demand for clean technology.
“China is the dominant global player in refining strategic minerals,” the authors wrote, with Chinese operations refining 68 percent of the world’s nickel, 40 percent of the world’s copper, 59 percent of lithium, and 73 percent of cobalt. “Most notably, China holds 78 percent of the world’s cell manufacturing capacity for [electric vehicle] batteries, which are then assembled into modules that are used to form a battery pack.”
Beyond Chinese monopolization of electric battery production, demand for which is set to spike as the Biden administration reaches to achieve its goal of half U.S. auto sales being electric by 2030 with generous subsidies, Beijing also maintains a grip on rare earth mining.
The 17 rare earth elements (REE) are not just critical for electric cars and wind turbines, but also for aerospace and defense technologies. President Joe Biden’s aggressive expansion of wind power at the expense of a reliable power grid run by conventional sources, has only deepened American reliance on Chinese exports.
According to the Department of Energy, “demand for rare earth elements for wind power alone could exceed the supply for all uses by 1.6 to 3.5 times over.”
Although China dominates in the refinement of critical minerals and rare earth production, the authors emphasize Beijing lacks the upper hand in mining critical minerals such as lithium and cobalt. Together, Australia and Chile are home to more than 70 percent of the global lithium supply, and the Democratic Republic of the Congo alone extracts nearly 70 percent of the world’s cobalt.
“While China has a clear downstream competitive advantage, it does not dominate the upstream for critical minerals,” the authors wrote. However, the Chinese are working to change that. “With demand for critical minerals rapidly increasing, Chinese companies are striking new deals for minerals globally to secure raw mineral inputs for refining and battery manufacturing.”
American lawmakers have certainly taken notice of vulnerabilities in supply chains as global turmoil, from Russia’s invasion of Ukraine to rising tensions with China, has ramped up the pressure to produce more critical minerals within the United States.
In June, the U.S. along with nine allied nations and the European Commission formed the Minerals Security Partnership, which is seen as a form of “metallic NATO,” to insulate stability and security in supply chains among members. The Senate Committee on Energy and Natural Resources also held a series of hearings on the nation’s supply of critical minerals this spring, where members of both sides of the aisle expressed a need to develop new American mines.
“From the technologies needed to support military readiness and combat climate change to the cell phones in our pockets or the cars in our driveways, critical minerals are essential to life we lead and the technologies we have come to depend on,” said Sen. Joe Manchin, D-W.Va., who chairs the committee. “Accelerating their production and establishing secure and dependable supply chains is vital to our energy and national security.”
Lawmakers have proposed reforms to the Mining Act of 1872, though uncertainty over the final outcome has continued to chill investment in the capital-intensive industry. A proposed lithium mine in Nevada, described by Reuters as “the first new U.S. source of the battery metal in decades,” is the sole exception after Panasonic and Toyota came to a deal to purchase from the project.
“The U.S., in particular, will likely have to update and amend its mining regulatory regime,” the authors of the Brookings report wrote, describing it as “outdated.”
Debra Struhsacker, a hardrock mining and environmental policy expert who has testified before Congress five times, agrees. The nation’s current regulatory mining regime, Struhsacker told The Federalist, “is fraught with delays and uncertainly,” with permitting processes, not environmental rules, in desperate need of reform.
“The U.S. has tremendous potential,” Struhsacker said, with rich deposits of lithium, copper, cobalt, nickel, and antimony, to name a few, waiting for harvest across the American continent. The nation’s complex permitting system, which has created a lucrative litigation industry to shut down major projects, however, has stifled the ability to develop new mines. “Part of the reason we have so much reliance on foreign minerals is because we’ve made our own lands off-limits to mining,” she said.
While Congress has struggled to put together a bipartisan package to stimulate American mining operations, Struhsacker said, she gives Biden a “D” on his performance addressing the issue.
In April, Biden invoked the Defense Production Act to support mining operations behind lithium, nickel, cobalt, graphite, and manganese, but the administration has continued to shut down major projects from Alaska to Minnesota.
Biden’s Department of the Interior welcomed the new year with the cancellation of mineral leases for a copper and nickel mine in Minnesota. The proposed “Twin Metals” mine in the Superior National Forest, which Struhsacker described as a “world class resource,” would be one of the largest in the nation. In May, Biden’s Environmental Protection Agency moved to shut down plans for a trillion-dollar copper project known as “Pebble Mine” in southwest Alaska.
“The Biden administration is currently taking some steps to address these challenges related to political and stakeholder factors, but its efforts are not commensurate with the scale of the challenge,” reads the Brookings report. “Moreover, the administration has been unwilling to advance controversial projects like Pebble and Twin Metals, which are likely needed to significantly increase domestic supply in the short term.”
Struhsacker summed up her assessment of Biden’s approach as “schizophrenic.”
“On the one hand he’s giving policy lip service to the need for these minerals but he hasn’t really given his land management agencies the imperative to get critical mineral projects permitted,” Struhsacker said.
The mixed signals to the industry from the White House’s inconsistency, combined with a slow-moving Congress, is maintaining the status quo of reliance on foreign sources. In the end, that means an era of supply-chain vulnerability and higher emissions from overseas transportation as opposed to domestic mining operations here at home.
Tristan Justice is the western correspondent for The Federalist. He has also written for The Washington Examiner and The Daily Signal. His work has also been featured in Real Clear Politics and Fox News. Tristan graduated from George Washington University where he majored in political science and minored in journalism. Follow him on Twitter at @JusticeTristan or contact him at [email protected]
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