Fortune Minerals : Cobalt News

The New York Times - November 6, 2023

China recently rattled the world's electric vehicle supply chains by announcing new export controls on graphite, a key component of lithium ...

Unlike in the 20th century, when China was largely a bystander in petroleum politics, the country has achieved new geopolitical significance by scaling up investments in clean energy manufacturing and the critical minerals that work requires…The supply chains for many critical minerals, not just graphite, run through China. In the case of materials critical to the production of lithium-ion batteries, which power electric vehicles, the consulting group Benchmark Mineral Intelligence estimated that China controlled 58 percent of the global production of lithium compounds in 2022, 69 percent of nickel sulfate, 69 percent of synthetic graphite, 75 percent of cobalt, 95 percent of manganese and 100 percent of spherical graphite. China plays a similarly outsize role in the supply of materials used in solar panels and wind turbines…But this isn't simply a story about China's geological good fortune. The country's reserves of most of these minerals aren't actually that large. Instead, it is a story of strategy. Over the past decade, China has systematically invested in overseas and domestic mines that feed into Chinese-owned refineries, where raw materials from around the world are processed into the high-grade materials needed for advanced manufacturing…China's leverage over the global critical minerals supply explains why the particulars of the Inflation Reduction Act are so important. The law, passed in August 2022, is not just the most consequential piece of climate and energy legislation in U.S. history; it is also designed to drive investment in domestic manufacturing and in supply chains that do an end run around China. It does this, in part, by providing generous incentives for domestic production of critical minerals, battery components and batteries…Consider its $7,500 tax credit toward electric vehicle purchases. For a vehicle to be eligible for the subsidy, in addition to meeting price caps, final assembly must take place in North America, and an increasing percentage of the critical minerals and battery components must be sourced from North America or, in the case of critical minerals, from free-trade partners…What the Inflation Reduction Act hasn't done, however, is spur similar investments in mining and minerals processing…So as the United States expands investments in clean energy manufacturing, its dependency on global supply chains, dominated by China, will only grow…While a new battery or E.V. factory can be brought online in a few years, identifying, permitting and commissioning mines and refineries often stretches out over a decade or more…Second, the United States needs to support investments that diversify global supply chains…What isn't going to solve the supply problem, at least in the coming decades, is recycling. Given the global goals for scaling up clean-energy deployment, nowhere near enough of these critical minerals are available for recycling to meet the rapidly growing demand. The International Energy Agency forecasts that if the world is going to meet its most ambitious clean-energy goals by midcentury, production of critical minerals will need to increase to six times 2020 levels by 2040…Climate action can no longer be about phasing out fossil fuels alone. It must also be about phasing in a new set of extractive industries needed to enable a clean-energy transition. China figured this out a decade ago. The United States and its free-trade partners now face a monumental challenge: scaling up production of critical minerals, diversifying supply chains to protect national security and doing so in ways that are both more just and more sustainable.