Washington Gives US EV Battery Market a Much Needed Rev-Up

By Glenn Dyer | More Articles by Glenn Dyer

President Joe Biden has invoked America’s Cold War powers to encourage US domestic production of critical minerals for electric-vehicle and other types of batteries.

The story has been mentioned in media reports several times in recent months and has been given more currency by the Russian invasion of Ukraine and strong Chinese support for that act of war.

China is a major source of key metals for batteries, as is Russia. But so are Australia, Canada, Argentina and Chile and South Africa.

Bloomberg reported this week that the Biden White House was discussing adding battery materials to the list of items covered by the 1950 Defence Production Act.

On Thursday the President did just that – but it’s a very belated decision and in fact confirms the reality of American business – unless it’s technology, finance or property – or politics – they are not really interested in the long-term thinking needed to drive a renewables revolution.

While America has stumbled, countries like Australia, NZ, much of Europe, the UK and Japan have headed off down the renewables route – Australia more by chance than any active lead from a denialist Federal Government

America already knows the need for key metals and minerals. It already has a list of 55 critical minerals which is updated yearly. All battery making materials and rare earths are on that list prepared by the US Geological Survey.

Adding minerals like lithium, nickel, graphite, cobalt and manganese to the list could help mining companies access $US750 million under the Defense Production Act. The move also could boost recycling of battery materials.

Whether that will turn into actual projects is very much uncertain.

Instead of loans or direct purchases of minerals for America’s strategic reserves, the Administration would fund production at current operations, productivity and safety upgrades, and feasibility studies.  In addition to EV batteries, the directive also would apply to large-capacity batteries.

The Biden administration already has allocated money — including $US6 billion as part of the 2021 infrastructure bill — aimed at developing a US battery supply chain and weaning the auto industry off its reliance on China, the leading producer of lithium-ion cells.

But all this will take time and by the end of 2024, when the next presidential poll is held, hardly any new mines or processing plants will have started production – the lead times are in years, not months.

The reason America is in this position because business, banks and governments have ignored the rise in imports of key metals and minerals (from China, but also from allies of the US like Australia and Canada).

As well tightening environmental laws across much of the US – especially on Federal lands in the southwest which many mineral deposits still lie, unexploited – have held back development.

And US investors are more to blame because for decades they have believed mining and manufacturing are old hat compared to the new technologies of computer chips, mobile phones and the internet, not to mention finance and investment in property.

Fracking to produce oil and gas was a ‘hot’ investment for many Americans up to 2014 when world prices started sliding and the fracking industry was hit harder and harder, triggering collapses, forced mergers made worse by the huge impact of the pandemic on demand and US production.

Now investors and banks object if these frackers try to expand production by lifting investment, even at a time when oil prices are at decade plus highs.

American investors have been reluctant to invest in mining and commodity companies – producing or processing – in the US, instead favouring ‘hotter’ investments. oil and gas for a while was as far as they went and now, after the current boomlet, they will slowly die as renewables takeover.

The US has plentiful lithium prospects but only one producing mine and although there’s said to be a lot of market interest, there’s very little sign of any new action over the past five years when lithium and batteries have emerged as key for the growth of renewables, especially for EVs.

All the major car companies operating in the US – Ford, GM, Stellantis, Mercedes, BMW, VW, Toyota, Nissan-Renault and EV makers like Telsa, Rivian have built plant or are going to build battery plants and EV plants. Many have been signing deals with western suppliers – BHP, Vale for example have deals with Tesla or Toyota for nickel.

These companies and other, smaller suppliers in batteries and recycling have already revealed plants to spend upwards of $US250 billion out to 2030.

Dozens of companies in the lithium business in Australia, Argentina, Chile and even Europe are signing early-stage deals with battery companies or prospective makers.

The failure of successive US governments and business (and banks) to foster a domestic critical metals/minerals sector has been to the benefit of Australia, Canada, Chile, Argentina, Peru, South Africa and of course China.

Why does Albemarle, the American owned chemicals and lithium giant, have more money invested in Australia and Argentina than in the US industry?

And why is Twiggy Forrest and his Fortescue Metals/Future Industries companies showing more energy and drive on renewables (green hydrogen is his trip) than any business leader of similar stature in the US?

Lynas, the Australian rare earths company and the largest operator in this key sector outside China has gotten funding from the US government to build a rare earths light separation plant in Texas – without the need for the President to invoke an antiquated law. Lynas will receive up to $US30 million from the government under this very act that has now been invoked.

The Texas plant will produce 1,250 tonnes a year of NdPr (a rare earth) from raw material shipped from a plant Lynas is developing in Western Australia. Last year, Lynas received a US defence contract for a heavy rare-earth separation facility at the same site. The minerals are used in electric vehicles, electronics, and defence applications.

The fact that Lynas sought and received US government aid via the same process that will see a flood of companies with their hands out for prospects, not projects, helps explain the essential laziness of much of American business.

Australian lithium and renewable metals companies large and small are powering ahead despite the lack of national leadership from the federal government. There’s a message there for US companies to do something rather than sit and salivate over a pot of gold in the US now Biden has invoked this long dead power.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

View more articles by Glenn Dyer →