Critical Mineral Supply Chains: America’s Pathway to a Circular Economy and Responsible Mining
Last week, the White House announced its new initiative on rebuilding domestic supply chains in six critical areas over the next year and in four specific sectors in the next 100 days. The latter group includes pharmaceuticals, critical minerals, semiconductors, and large storage batteries. Two of these—critical minerals and large-scale batteries—are deeply connected. In addition, critical minerals and large-scale batteries play an increasingly strategic role in successful execution of any ambitious climate policy.
In the last year, an explosion of global announcements by auto companies and governments have supercharged the timetable to reach vehicle electrification. Great Britain announced a ban on the sale of new petrol and diesel cars by 2030. France announced an $8 billion euro recovery investment in electric vehicles (EVs), while VW moved its targets forward to invest $86 billion and produce 60% electric vehicles by 2030. Then, GM committed to an accelerated 2025 timetable for plant conversions to produce EVs. A month later, Mary Barra, the CEO, announced that all of GM’s light duty vehicles would be electrified by 2035. A few weeks later, Ford announced it was meeting the 2030 target in its European operations. Even the iconic Ford F150 pick-up will have an electric version in mid-2022.
All these decisions have created significant opportunities for American manufacturers but only if we manage the supply chain risks and adopt new standards and practices for natural resource extraction in the U.S. No single link in the vehicle supply chain is more important than the minerals needed for battery production. Ignoring this issue and failing to perfect environmentally sustainable mining practices in North America today will sow the seeds of another energy dependency crisis as serious as the Arab Oil Embargo of the 1970s.
Earlier this year, Elon Musk issued a challenge to mining companies to develop sustainable supply chains for the minerals necessary to achieve the electrification of the transportation industry in America. Tesla is dependent on the mining of a number of precious metals, including nickel, cobalt and lithium. Many of these metals are currently being produced in parts of the world in violation of international environmental and labor standards, including the exploitation of child labor.
In December of last year, International Energy Agency research showed that to reach the stated policy goals of governments around the world we need to raise the plug-in and battery EV stock from 7.2 million in 2019 to over 140 million in 2030. To meet IEA sustainable development goals, however, would require 240 million EVs on the road by 2030. And that pace would only have to accelerate by 2050.
The first step that must be taken to establish domestic critical mineral supply chains is to embrace the principles for responsible mining in our country. The second is to enforce those principles with domestic content requirements and border adjustments based on environmental, labor and human rights standards.
Among the key principles of responsible mining are transparency, advanced technology, social license, the circular economy, and water and carbon accounting. Currently, the responsibilities for mining regulation are spread through several federal agencies. As part of its federal supply chain initiative, the Biden administration should implement some of the recent recommendations of the Labor Energy Partnership (LEP), a strategic initiative of the AFL-CIO and the Energy Futures Initiative, jointly chaired by President Richard Trumka and former Energy Secretary Dr. Ernest Moniz.
In its framework document, Energy Transitions, the LEP calls for three primary actions on critical minerals as part of its larger strategy to reach global climate targets. First is a multi-stakeholder initiative to develop standards and policies to implement responsible mining practices in the U.S.—standards which must be safeguarded with strong border adjustments to prevent the erosion of domestic sustainable mining standards.
Second is a national assessment by the U.S. Geological Survey of the availability of critical minerals in the U.S., including all closed or abandoned mines and any of their waste rock which could be used for mineral recovery such as the rare earths that have been identified in coal waste by the U.S. Department of Energy. Similar discoveries of lithium have been found in mine tailings in California by Rio Tinto.
Finally, the Departments of Energy, Labor, Interior, and the EPA should be charged with developing a new legislative and regulatory framework for the implementation of a 21st Century Circular Economy and Responsible Mining Initiative that integrates the authorities of each agency to ensure that our domestic needs for critical minerals are met domestically to the greatest degree possible and that they are produced under the highest labor and environmental standards that are technologically feasible. This approach would meet the Biden Administration’s pledge to “build back better.”
Mark Ritchie is the president of Global Minnesota and former Minnesota Secretary of State, 2007-2015.