Whether President Joe Biden’s Defense Production Act works as intended and jump-starts the mining of metals for batteries crucial to the country’s clean energy transition won’t be known for years, according to industry experts.
But it is already stoking unrest among environmental groups that have expressed concerns about mining on U.S. soil.
The Biden administration announced in an executive order Thursday that the president had invoked the act, which could boost mining by directing the Defense Department to support feasibility studies for mining projects.
“The basic idea is that it’s funding to stimulate exploration and further investment in understanding what the options are for producing these materials here at home domestically,” said Jessika Trancik, a professor at the Massachusetts Institute of Technology’s Institute for Data, Systems and Society. “That’s going to boost energy security.”
Finding the raw metals needed to produce batteries is quickly becoming a key bottleneck in the supply chain for electric vehicles and other battery-intensive technologies key to the energy transition, experts said. The hunt for battery metals has already sparked recent investment in companies that are trying to come up with new ways to find and extract the precious materials.
Simon Moores, the chief executive officer of Benchmark Mineral Intelligence, a company that tracks data on the electric vehicle supply chain, said it takes about seven years to develop a lithium mine, but only 21 months to build a battery plant. As the industry scales up, that dynamic has constrained demand for raw metals like graphite, lithium, cobalt, nickel and manganese.
“It’s going from a niche industry to mass market,” Moores said. “The raw materials aren’t growing anywhere near quick enough.”
After a prolonged decline, prices for these minerals are rising fast and that could threaten, to some extent, the pace of the energy transition.
The materials necessary for modern batteries are relatively rare, and China outpaces in the U.S. in terms of mining, leading to some concerns of trading fossil fuel dependence for a dependence on foreign metals.
U.S. companies race to mine lithium while protecting environmentOct. 19, 202104:10
“The prices of EV batteries has fallen by about 90 percent over the last decade and projections are it will continue to fall over the next decade,” said Dan Lashof, the U.S. director of the World Resources Institute. “But this jump in mineral prices definitely has the potential to interrupt that decline in prices for a period of several years, which would slow down the transition to electric vehicles at a time we can’t afford to do that.”
Emissions from transportation make up about one-third of all U.S. greenhouse gas contributions, and cutting them is imperative to combating climate change.
The U.S. has few operating mines extracting the most important metals for batteries, Moores said, and the administration hopes invoking the Defense Production Act will push capital markets to invest in domestic mining projects.
The Defense Production Act is a federal law passed in 1950 that in its current form gives the president a variety of powers to direct private companies and resources for national defense. Those powers are split up into different areas, one of which allows for the creation of incentives to stimulate industries.
Though often associated with wartime efforts, the act has been used by some recent presidents to address nonmilitary challenges faced by the U.S. Donald Trump used the act to spur private production of medical supplies at the beginning of the pandemic. Barack Obama used it to force telecom companies to disclose foreign-made hardware and software over worries about China’s espionage efforts.
Moores said that Biden’s order could jump-start the market in two ways. In the short term — perhaps within a year — it could spur the construction of facilities to extract critical clean energy metals at existing mines for other materials.
Small amounts of lithium, for example, could be brought to market as a byproduct from existing boron mining, Moores said.
In the long term, the effort could provide enough funding to shorten how long it takes to construct a new mine, by helping companies get past the bankable feasibility stage, which is when projects are evaluated to see if they’re financially worth developing.
Funding that feasibility process could reduce investor risk and draw those with big pockets.
“If the institutional money reacts positively and gets it, this will de-bottleneck the wheels, to de-risk all this New York money, this Chicago money, this Silicon Valley money to go into mining,” Moores said. “There’s a supply chain to build.”
Some remain skeptical that the new policy will spur fast growth.
Nadia Schadlow, a senior fellow at the Hudson Institute, a think tank, who served as a deputy national security adviser in the Trump administration, called it a “paper response” and said quick results could depend on loosening environmental regulations, which is not something the Biden administration has signaled its willingness to do.
Company maps minerals from the sky for electric vehicle batteriesNov. 13, 202103:03
“There’s not going to be a change with community views toward mines or environmental views on mines,” Schadlow said. “While the expression of will might be a good thing, meaningful change is going to require addressing the issues that have blocked mining production over the years.”
In a fact sheet about the order, the Biden administration said the Department of Defense would “implement this authority using strong environmental, labor, community, and tribal consultation standards.”
Some environmental groups have expressed opposition or wariness over the measure.
“The clean energy transition cannot be built on dirty mining. Earthworks strongly opposes the employment of the Defense Production Act to bolster mining because it adds to the generational trauma experienced by mining affected communities, particularly Indigenous communities,” wrote Lauren Pagel, the policy director for Earthworks, in a news release, adding that the administration should focus instead on acquiring minerals through recycling and by building a circular materials economy.
Frequent environmental litigator Earthjustice struck a similar tone, with legislative representative Blaine Miller-McFeeley saying in a news release that it was “vital” that the order was did not become a “business-as-usual scenario” for the mining industry and that mining reforms be implemented.