US companies have embarked on a quest to find and domestically source materials that play a vital role in the transition to renewable energy and electric mobility, marking a growing matter of political concern.
“Over-reliance on foreign sources and adversarial nations for critical minerals and materials posed national and economic security threats,” reads a statement by the White House published on February 22.
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Following up on a supply chain assessment published in mid-2021 that recommended expanding domestic mining, production, processing and recycling of critical minerals and materials, the US administration has taken action to update mining laws and regulations, along with the federal list of critical minerals. It has also strengthened its critical mineral stockpiling, paving the way for the private sector to set in motion a new investment cycle in the sector.
Rare-earth minerals
The Department of Defense’s industrial base analysis and sustainable programme awarded Nevada-based mining firm MP Materials a $35m contract in February to support the construction of a commercial scale processing facility for heavy rare-earth elements (HREE) at Mountain Pass, California — the country’s only active rare-earth minerals mine.
Although these minerals are not rare in a geologic sense, they are seldom found in commercially viable deposits, Roderick Eggert, deputy director of the Critical Minerals Institute at the Colorado School of Mines, explains. China, which made rare-earth production a national priority, is the global epicentre of the industry with 60% of mined rare-earths and the necessary scientific and engineering know-how, Mr Eggert says. The 17 elements classed as rare-earths are integral to the production of many things seen and used in everyday modern life, from magnets, TVs and computers, to electric vehicle (EV) batteries and wind turbines.
“The ability to mine, process and refine rare-earths at Mountain Pass is foundational to a national effort to secure the US rare-earth supply chain,” said MP Materials Chairman and CEO, James Litinsky, in a statement on February 22.
In addition to its Mountain Pass operation, MP Materials is developing a rare-earth metal, alloy and magnet manufacturing facility in Fort Worth, Texas. Materials sourced from Mountain Pass will be transformed into manufactured products at this new facility, restoring a wholly domestic and vertically integrated US magnetics supply chain.
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Job creation
MP Materials domestic push, with the White House now expecting the company to invest $700m and create 350 jobs in the magnet supply chain by 2024, is already getting noticed by major clients in the automotive industry. In December 2021, it entered into a long-term agreement with General Motors to supply the US-sourced and manufactured rare-earth materials, alloys and finished magnets for the electric motors used in several GM models using Ultium batteries.
We just want the most capable suppliers in places that make the most sense from a total cost standpoint
Dan Hearsch, managing director of the automotive practice at Alix Partners in Detroit, thinks the move to source locally will attract both domestic and foreign investment. “We just want the most capable suppliers in places that make the most sense from a total cost standpoint. Vertically integrated sourcing is a strategic move. It will always apply to certain things which will change over time,” he comments.
Nevada-based Redwood Materials is taking a different route to the development of a domestic, vertically integrated supply chain of EV batteries: recycling. The company, founded in 2017 by JB Staubel, Tesla’s fifth employee and former chief technology officer, relies on used batteries — salvaged from everything from cars to toothbrushes — as the inputs for the materials to be used in EV batteries. It claims these can be recycled many times. It has now signed up major automakers of the likes of Ford and Volvo for its battery recycling programme, beginning in California, to establish efficient, safe and effective recovery pathways for end-of-life hybrid and EV battery packs.
“Scaling production of EVs, increasingly from recycled materials, domestically, is the only way we can create a circular and, therefore, sustainable and secure supply chain to meet the US’s electrification plans,” the company said in a statement in February.
Annually, six gigawatt hours of lithium-ion batteries (the equivalent of 60,000 EVs) come through Redwood’s doors, according to company figures.
Breaking ground
The White House also announced that Berkshire Hathaway Energy Renewables (BHE Renewables) is planning to break ground on a new demonstration facility in Imperial County, California, to test the commercial viability of their sustainable lithium-extraction process from geothermal brine as part of a “multibillion-dollar investment in sustainable lithium production over the next five years”. If successful, this sets the company on a path towards commercial scale production of battery-grade lithium hydroxide and lithium carbonate by 2026. Once at scale, BHE Renewables facilities could produce 90,000 metric tonnes of lithium per year, according to the February 22 White House statement.
A sharp pick-up in the adoption of EVs is the main force behind the booming demand for lithium and other critical minerals like nickel and cobalt needed in lithium-ion batteries. Major automakers worldwide have announced investment plans to electrify their production base.
The global consulting firm Alix Partners has calculated that as of June 2021, announced plans to invest in EVs had risen to $330bn through 2025 — 41% higher than the previous year — and that was before a spate of multibillion dollar announcements from the likes of Toyota, Nissan and Ford, as well as a host of start-ups. The firm warned however that while EV-related investments were accelerating, they were “well ahead of natural sales demand … or industry profitability”.
In the US alone, GM’s EV official budget through 2025 has risen from $20bn since 2020 to $35bn today. The company’s CEO, Mary Barra, has hinted it could go still higher. She said GM has already invested $14bn in 10 sites across North America, including Canada and Mexico. It is all in service of building a “strong, sustainable, scalable and North American-focused” supply chain, and selling one million EVs per year by 2025. Ms Barra also insists that to drive EV adoption, many of GM’s EVs must be affordable, which she says its proprietary, modular Ultium battery enables.
Ford, too, has committed $30bn to electrifying its production by 2030, and has been reportedly setting aside another $20bn for the purpose.
This article first appeared in the April/May 2022 print edition of fDi Intelligence.