According to persons familiar with the situation, President Joe Biden is prepared to use Cold War powers this week to stimulate domestic production of crucial minerals for electric car and other types of batteries.
The White House is considering adding battery materials to the list of items covered by the 1950 Defense Production Act – the same authority used by Harry Truman to manufacture steel for the Korean War and Donald Trump to stimulate mask production in response to the coronavirus pandemic – according to the people. They requested anonymity due to the fact that the specifics are not yet public.
Shares of MP Materials Corp., the lone US producer of rare earth metals required for electric vehicles, and Lithium Americas Corp., which operates a Nevada facility, soared on news of the administration’s intentions. Piedmont Lithium Inc., which operates a project in North Carolina, reversed course and increased by as much as 6%.
Adding lithium, nickel, graphite, cobalt, and manganese to the list may enable mining corporations to access $750 million from the Defense Production Act’s Title III budget, according to the sources. Additionally, one of the individuals stated that the move might assist in the recycling of battery components.
Rather of providing loans or making direct mineral acquisitions, the direction would subsidise production at existing facilities, productivity and safety improvements, and feasibility studies, the individual added. The guideline would also apply to large-capacity batteries in addition to EV batteries.
According to one of the persons, the decision to activate the DPA, which might come as soon as Thursday, is not final and the timetable could change.
Administration officials are ensuring that manufacturing adheres to stringent environmental and labour rules, a source familiar with the matter said. Amid criticism from detractors, including some Democratic members of Congress, advisers are ensuring that presidential acts do not circumvent environmental studies or permit procedures, the individual said.
The endeavour would be overseen by many agencies, including Energy and Interior, the individual added.
Additionally, the mandate would clear the path for Congress to increase funding for the initiative, according to Ben Steinberg, co-chair of Venn Strategies’ critical infrastructure group in Washington, D.C.
“The president’s signature sends a strong signal, but Congress must appropriate funds commensurate with the magnitude of the challenge,” Steinberg said. The DPA’s funding is a “tiny piggy bank” in comparison to the industries it must cover, which range from aerospace and defence to the automobile industry, he explained.
The Intercept revealed last week that the Biden administration was writing an executive order under the DPA to increase the availability of minerals used in electric vehicle batteries. According to those acquainted with the subject, Biden’s command would take the form of a so-called “presidential determination.”
The Biden administration has already committed significant resources – including $6 billion as part of the infrastructure plan – to building a domestic battery supply chain and weaning the car sector off its reliance on China, the world’s largest manufacturer of lithium-ion cells. Energy independence activists have also pressed the administration to prioritise mining and mineral processing, a critical step in the EV sector, which is also mostly dominated by China.
The number of mineral commodities, excluding fuels, for which the United States is reliant on imports for more than a quarter of demand has increased to 58 from 21 in 1954, according to a July White House assessment on the nation’s supply chains.
Nickel, lithium, and cobalt prices have soared this year in response to growing global EV demand, supply chain disruptions, and Russia’s invasion of Ukraine, which drove nickel prices skyward. The price fluctuations contribute to inflation while highlighting the fragility of the US sector as it converts to clean energy.
The move would act as a political olive branch to the mining industry, which has been marginalised by the Biden administration’s push for green energy transition and on-shoring of local manufacturing skills.
While the DPA would facilitate finance for battery metal projects, it does not expedite the permitting process for mine approval.
Climate change activists, environmental groups, and indigenous groups have all spoken out against mining’s nasty side effects, which include damage on water sources and local communities. A year ago, the USDA directed the Forest Service to revoke two contracts finalising a land transfer involving Native American territory in Arizona that would have become North America’s largest copper mine.
Copper is often regarded as the most crucial metal required for electric cars and the energy transition in terms of volume. The Resolution copper mine was halted last year following vociferous protest from the nearby San Carlos Apache tribe, who claimed the mine was located on a sacred and holy site.