The U.S. Needs Minerals for Electric Cars. Everyone Else Wants Them Too.
May 21, 2023,
5:00 a.m. ET
For decades, a group of the worlds biggest oil producers has held huge sway over the American economy and the popularity of U.S. presidents through its control of the global oil supply, with decisions by the Organization of the Petroleum Exporting Countries determining what U.S. consumers pay at the pump.
As the world shifts to cleaner sources of energy, control over the materials needed to power that transition is still up for grabs.
China currently dominates global processing of the critical minerals that are now in high demand to make batteries for electric vehicles and renewable energy storage. In an attempt to gain more power over that supply chain, U.S. officials have begun negotiating a series of agreements with other countries to expand Americas access to important minerals like lithium, cobalt, nickel and graphite.
But it remains unclear which of these partnerships will succeed, or if they will be able to generate anything close to the supply of minerals the United States is projected to need for a wide array of products, including electric cars and batteries for storing solar power.
Leaders of Japan, Europe and other advanced nations, who are meeting in Hiroshima, agree that the worlds reliance on China for more than 80 percent of processing of minerals leaves their nations vulnerable to political pressure from Beijing, which has a history of weaponizing supply chains in times of conflict.
On Saturday, the leaders of the Group of 7 countries reaffirmed the need to manage the risks caused by vulnerable mineral supply chains and build more resilient sources. The United States and Australia announced a partnership to share information and coordinate standards and investment to create more responsible and sustainable supply chains.
This is a huge step, from our perspective a huge step forward in our fight against the climate crisis, President Biden said Saturday as he signed the agreement with Australia.
But figuring out how to access all of the minerals the United States will need will still be a challenge. Many mineral-rich nations have poor environmental and labor standards. And although speeches at the G7 emphasized alliances and partnerships, rich countries are still essentially competing for scarce resources.
Japan has signed a critical minerals deal with the United States, and Europe is in the midst of negotiating one. But like the United States, those regions have substantially greater demand for critical minerals to feed their own factories than supply to spare.
Kirsten Hillman, Canadas ambassador to the United States, said in an interview that the allied countries had an important partnership in the industry, but that they were also, to some extent, commercial competitors. It is a partnership, but its a partnership with certain levels of tension, she said.
Its a complicated economic geopolitical moment, Ms. Hillman added. And we are all committed to getting to the same place and were going to work together to do it, but were going to work together to do it in a way thats also good for our businesses.
We have to create a market for the products that are produced and created in a way that is consistent with our values, she said.
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Leaders of the G7 nations, who are gathering in Japan this week, agree that the worlds reliance on China for more than 80 percent of processing of minerals leaves their nations vulnerable to political pressure from Beijing.
Credit...
Kenny Holston/The New York Times
The State Department has been pushing forward with a
minerals security partnership
, with 13 governments trying to promote public and private investment in their critical mineral supply chains. And European officials have been advocating a buyers club for critical minerals with the G7 countries, which could establish certain common labor and environmental standards for suppliers.
Indonesia, which is the worlds biggest nickel producer, has floated the idea of joining with other resource-rich countries to make an OPEC-style producers cartel, an arrangement that would try to shift the power to mineral suppliers.
Indonesia has also approached the United States in recent months seeking a deal similar to that of Japan and the European Union. Biden administration officials are weighing whether to give Indonesia some kind of preferential access, either through an independent deal or as part of a trade framework the United States is negotiating in the Indo-Pacific.
But some U.S. officials have warned that Indonesias lagging environmental and labor standards could allow materials into the United States that undercut the countrys nascent mines, as well as its values. Such a deal is also likely to trigger stiff opposition in Congress, where some lawmakers criticized the Biden administrations deal with Japan.
Jake Sullivan, the national security adviser, hinted at these trade-offs in a speech last month, saying that carrying out negotiations with critical mineral-producing states would be necessary, but would raise hard questions about labor practices in those countries and Americas broader environmental goals.
Whether Americas new agreements would take the shape of a critical minerals club, a fuller negotiation or something else was unclear, Mr. Sullivan said: We are now in the thick of trying to figure that out.
Cullen Hendrix, a senior fellow at the Peterson Institute for International Economics, said the Biden administrations strategy to build more secure international supply chains for minerals outside of China had so far been a bit incoherent and not necessarily sufficient to achieve that goal.
The demand for minerals in the United States has been spurred in large part by President Bidens climate law, which provided tax incentives for investments in the electric vehicle supply chain, particularly in the final assembly of batteries. But Mr. Hendrix said the law appeared to be having more limited success in rapidly increasing the number of domestic mines that would supply those new factories.
The United States is not going to be able to go this alone, he said.
Biden officials agree that obtaining a secure supply of the minerals needed to power electric vehicle batteries is one of their most pressing challenges. U.S. officials say that the global supply of lithium alone needs to increase by 42 times by 2050 to meet the rising demand for electric vehicles.
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Fords electric pickup truck on the production line of the companys plant in Dearborn, Mich.
Credit...
Brittany Greeson for The New York Times
While innovations in batteries could reduce the need for certain minerals, for now, the world is facing dramatic long-term shortages by any estimate. And many officials say Europes reliance on Russian energy following the invasion of Ukraine has helped to illustrate the danger of foreign dependencies.
The global demand for these materials is triggering a wave of resource nationalism that could intensify. Outside of the United States, the European Un
Sunday, May 21, 2023 at 9:00 am