The status of the U.S. lithium battery supply chain is a growing concern for industry experts. In the first two posts of this series, we focused on various aspects of a recently-released Li-Bridge report, Building a Robust and Resilient U.S. Lithium Battery Supply Chain.
Li-Bridge is a U.S. Department of Energy project created in early 2022 made up of the leading experts in battery technology from across the U.S. industry. Project members worked together to develop a strategy for establishing “a robust and sustainable supply chain for lithium battery technology in North America.”
In “Status of the U.S. Lithium Battery Supply Chain, Part I,” we discussed the lithium battery supply chain problem as described by Li-Bridge—as well as key takeaways and challenges.
In “Status of the Lithium Battery Supply Chain, Part II: Li-Bridge Goals and Recommendations,” we covered the next steps as described by Li-Bridge experts.
And in this last post in our series, we’ll talk about U.S. efforts to boost its lithium battery supply chain capacity through new partnerships.
Building partnerships
One way the U.S. is bolstering its lithium battery supply chain is by partnering with allies who can help fill in the gaps.
Japan
In late March, the U.S. and Japan announced a new trade deal related to the critical minerals needed.
The announcement says the new trade deal “builds on the 2019 U.S.-Japan Trade Agreement and will strengthen and diversify critical minerals supply chains and promote the adoption of electric vehicle battery technologies.”
“In particular, the Agreement memorializes the shared commitment of the United States and Japan with respect to the critical minerals sector to facilitate trade, promote fair competition and market-oriented conditions for trade in critical minerals, advance robust labor and environmental standards, and cooperate in efforts to ensure secure, transparent, sustainable, and equitable critical minerals supply chains,” according to the announcement.
Several “new commitments and areas for joint cooperation regarding electric vehicle battery critical minerals supply chains” between the U.S. and Japan were established by the agreement, including those related to:
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“Non-imposition of export duties on critical minerals;
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Domestic measures to address non-market policies and practices of other countries affecting trade in critical minerals;
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Best practices regarding review of investments within their territories in the critical minerals sector by foreign entities;
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Measures that promote more resource efficient and circular economy approaches to reduce the demand for, and environmental impact of, virgin material extraction and related processes;
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Engagement, information-sharing, and enforcement actions related to labor rights in critical minerals extraction and processing;
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Remedying violations of labor rights at entities connected to critical minerals supply chains; and
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Promoting employer neutrality in union organizing and operations.”
Canada
Canada is also stepping up to the plate, saying it is “ready to become a reliable provider of critical minerals to its international allies,” according to Reuters, which cited a senior official.
Noting that Canada and the U.S. have signed a joint action plan “to advance secure supply chains for critical minerals,” Reuters said Canada has similar agreements with Japan and the European Union.
“We view this resource has been very strategic, not only from an economic point of view, but also from a security point of view,” Canada’s minister of environment and climate change Steven Guilbeault told Reuters in Japan when he was visiting to take part in a G7 ministerial meeting on climate, energy, and environment.
“We have a lot of those critical minerals, we have almost all of them in Canada with a few exceptions. We can become a reliable provider of these resources or products for our international allies…,” Guilbeault reportedly said.
The “Critical Minerals Club”
Writing for Foreign Policy, Christina Lu also describes U.S. efforts to gain more and consistent access to the critical minerals needed.
“To reduce its reliance on Beijing in the coming decades, Washington is focusing on aligning with allies, including through the Mineral Security Partnership (MSP), an initiative that is designed to bolster supply chain security with Australia, Canada, the United Kingdom, France, Germany, Japan, South Korea, and other members,” Lu writes. “Outside of the MSP, the Biden administration is also pursuing new trade deals and is reportedly in discussions with the European Union for a new critical minerals club.”
“This is a major move away from a fundamental faith in the ability of market mechanisms to adequately supply the raw materials and the manufactured goods that are necessary for energy transitions,” Cullen Hendrix, a senior fellow at the Peterson Institute for International Economics reportedly said. “This is obviously a much more interventionist kind of stance than had been pursued in the past.”
Referencing the international angst created by Inflation Reduction Act requirements that linked EV tax credits with sourcing of mineral inputs for EV batteries from the U.S. or free trade partners, Lu notes that meant some of our key allies were excluded—including Japan, the European Union, and “top critical mineral producers such as Indonesia, the Philippines, and the Democratic Republic of the Congo.”
Citing the new agreement between the U.S. and Japan, Lu says similar agreements with others are in the works. In addition to the potential for new trade deals with Britain and Indonesia, she notes that the U.S. and the E.U. are “negotiating a similar trade deal that could later pave the way for the wider critical minerals buyers’ club that European officials have championed.”
A March 10 joint statement by U.S. President Biden and E.U. President von der Leyen provided some of the details being hammered out for a new agreement between the two.
“We will deepen our cooperation on diversifying critical mineral and battery supply chains, recognizing the substantial opportunities on both sides of the Atlantic to build out these supply chains in a strong, secure, and resilient manner,” the statement said. “To that end, we intend to immediately begin negotiations on a targeted critical minerals agreement for the purpose of enabling relevant critical minerals extracted or processed in the European Union to count toward requirements for clean vehicles in the Section 30D clean vehicle tax credit of the Inflation Reduction Act. This kind of agreement would further our shared goals of boosting our mineral production and processing and expanding access to sources of critical minerals that are sustainable, trusted, and free of labor abuses. Cooperation is also necessary to reduce unwanted strategic dependencies in these supply chains, and to ensure that they are diversified and developed with trusted partners.”
Lu says the U.S. is also focusing on building more significant relationships with the Democratic Republic of the Congo and Zambia, “which are rich in cobalt and copper, respectively”—along with helping to develop a processing facility for critical minerals in Tanzania.
Although such efforts may help move things along, Lu cites several experts who—similar to the Li-Bridge experts—warn that creating such major changes in a global supply chain that took decades to build won’t happen overnight.
Breaking free from China’s critical minerals grip
In an April 7 article entitled, “Is the US hostage to China for the critical materials needed for EVs?” — Jack Lifton, Executive Chairman of the Critical Minerals Institute, says the answer to that question is, “At this time, yes.”
“The twilight of domestic American process engineering is the major impediment to a secure domestic supply of critical minerals, refined metals, alloys, fine chemicals and the manufactured items dependent on them,” Lifton writes. “The Chinese economy is organized to maximize Chinese domestic security of supply of natural resources, their processing into industrially useful forms, and the production of end user consumer and military goods in order to assure and sustain the growth of the Chinese economy.”
After providing further details about China’s long game to make such goals a reality, Lifton minces no words regarding his opinion of the Biden Administration’s Inflation Reduction Act (IRA).
“With regard to the mandated domestic American sourcing of critical materials for battery powered electric vehicles, the Inflation Reduction Act (IRA) was clearly drawn in haste without appreciation of the domestic American barriers of politics, time, money and access to natural resources and the chemical and metallurgical processing necessary to comply with the IRA’s purely politically motivated strictures,” he writes. “The IRA is not the implementation nor the result of a coherent industrial policy.”
After providing additional perspectives, Lifton ends the article with this: “There can be no domestic American self-sufficiency or security of supply of raw materials and their processing without a dedicated program to understand the problem and a dedicated plan to solve it.”
Perhaps the Li-Bridge report was a good start.
In the following video, Lifton addresses “the problem of scalability of critical minerals in the EV supply chain.”
