Critical Mineral and Rare Earth Mineral Supply Chains Too Concentrated, Experts Say
The European Union, Japan, South Korea and U.S. all recognize they will be at the mercy of China during the energy transition unless they change the supply chains for batteries, experts said. The U.S. has nickel mines and a lithium mine (with another in process of opening), but China's dominance in processing minerals and making cathodes and anodes means China still could interfere with America's ability to produce economical electric vehicle batteries.
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Jane Nakano, a senior fellow in the Energy Security and Climate Change Program at the Center for Strategic and International Studies, hosted an April 23 CSIS webinar on the topic. China knows it has geopolitical leverage because of its dominance in rare earth minerals, Nakano said, with President Xi Jinping's visit to a rare earth processing facility in as the trade war heated up in 2019 widely seen as warning to the U.S. She said the U.S. relies on imports for 31 of 35 critical minerals, and for 14, there is no domestic production. But she noted that while a California mine excavates rare earth concentrates, those concentrates are exported for processing.
Panelist Andrew Miller, product director Benchmark Materials Intelligence, said, it’s abundantly clear to him that whoever holds the keys to these supply chains will control the energy transition.
China does not mine for cobalt, but it has invested heavily in the Democratic Republic of Congo, where most of the world's cobalt is mined, and it refines 70% of the world supply, Nakano said.
Miller said while opening more electric vehicle battery plants in the U.S is good, companies that don't consider the intermediate inputs, such as anodes and cathodes, will not be able to displace China's dominance in the battery supply chain. "There’s no point of building a lithium mine in the U.S. if you have no cathode plant to sell into," Miller said. He said China does 90% of the world's anode production and 70% of cathode production.
Miller said most policymakers talk about the risk of China's dominance in this manufacturing segment, but they should look at China as a blueprint instead. If you have the money, you can establish anode and cathode plants, he said.
But Miller said establishing mining or processing takes years. He said it would take five years to get a mine running, and another two to three years to establish a processing facility. "It’s not that you can just turn on the tap, even in one administration," he said.
Japan and the EU have even greater challenges, panelists said, as neither has the geology to mine these minerals locally. Marco Giuli, a researcher at the Institute of European Studies, said the EU is less worried about China imposing export constraints as a means of political coercion, and more that the U.S., China, Chile or others will want to develop indigenous battery-making, reserving more minerals for domestic producers. He also said that the EU is concerned about Congo's fragility as a country and about becoming a casualty of the U.S-China trade conflict.
"The pandemic has heightened the EU’s perception of how supply chain disruption can threaten the EU’s economic power," he said.
Giuli said that while it makes sense to try to diversify from China, it's not easy, as the left of center party in Greenland, which just came to power, opposition to opening a rare earths mine in that country due to environmental concerns. Environmental restrictions have also curtailed growth in Chilean lithium production. "Problems are not just with systemic rivals," Giuli said. "The EU remains with few options," he said, but exploring how to make wind turbines or batteries with smaller amounts of these critical minerals is one path.
Nakano said while the U.S., EU and Japan are competing in industrial policy for a green future, "I think there is still scope for cooperation." She said they can research together how much recycling can reduce the need for these mines. "The idea isn’t to be alarmed for the sake of being alarmed," she said. "Sometimes it could motivate people to start acting."