For decades, the world’s largest group of oil producers has had significant influence on the American economy and the popularity of the American president through its control of the world’s oil supply, and by decisions of the Organization of the Petroleum Exporting Countries, the United States’ The amount that the consumer pays is determined. pump.
As the world transitions to cleaner energy sources, controlling the energy sources required for that transition remains a challenge.
China now dominates global processing of vital minerals that are in increasing demand to make batteries for electric vehicles and renewable energy storage. In an attempt to gain more control over its supply chain, U.S. officials have begun negotiating a series of agreements with other countries to expand U.S. access to key minerals such as lithium, cobalt, nickel and graphite.
However, it remains unclear which of these partnerships will be successful and whether they will be able to produce near the mineral supplies the US is expected to need for a wide range of products, including electric vehicles and batteries that store solar power. .
The heads of state of Japan, Europe and other developed countries meeting in Hiroshima said they were facing political threats from Beijing, which has a history of weaponizing its supply chains, as the world relies on China for more than 80% of its mineral processing. They agreed that their country was vulnerable to pressure. in times of conflict.
On Saturday, G7 leaders reaffirmed the need to manage risks posed by fragile mineral supply chains and build more resilient resources. The United States and Australia have announced a partnership to share information and align standards and investments to build more responsible and sustainable supply chains.
“From our perspective, this is a big step, a big step forward in the fight against the climate crisis,” President Biden said on Saturday as he signed the deal with Australia.
But figuring out how to access all the minerals America needs remains difficult. Many countries with abundant mineral resources have poor environmental and labor standards. And while speeches at the G7 emphasized alliances and partnerships, rich countries are still competing for resources that are inherently scarce.
Japan has an important minerals agreement with the United States, and Europe is in the midst of negotiations. However, as in the United States, these regions have significantly greater demand for critical minerals to supply their factories than reserve supplies.
Kirsten Hillman, Canada’s ambassador to the United States, said in an interview that the allies are important industry partnerships, but also to some extent commercial competitors. “It’s a partnership, but it’s a partnership with some tension,” she said.
“This is a complex economic and geopolitical time,” Hillman added. “And we are all committed to reaching the same goal, and we will work together to achieve it, but we also intend to work together to achieve it in a way that is good for our business. is.”
“We have to create markets for products that are produced and created in ways that are consistent with our values,” she said.
The State Department said,Mineral Security Partnership, 13 governments are seeking to promote public and private investment in critical mineral supply chains. European officials have also advocated establishing a “buyers’ club” of important minerals with the G7 countries, which could establish some common labor and environmental standards for suppliers.
Indonesia, the world’s largest nickel producer, has floated the idea of joining forces with other resource-rich countries to form an OPEC-style producers’ cartel, a deal that seeks to shift power to mineral suppliers. ing.
Indonesia has also approached the United States in recent months for a similar deal with Japan and the European Union. Biden administration officials are weighing whether Indonesia should be given some priority access through an independence deal or as part of a trade framework the United States is negotiating in the Indo-Pacific.
But some U.S. officials have warned that Indonesia’s lagging environmental and labor standards could bring materials into the U.S. that undermine the country’s early mines and values. Such a deal is likely to provoke fierce opposition in Congress, with some lawmakers criticizing the Biden administration’s deal with Japan.
National Security Advisor Jake Sullivan alluded to such trade-offs in a speech last month, saying that while negotiations with key mineral-producing countries are necessary, they raise “hard questions” about those countries and U.S. labor practices. said it would. broader environmental goals.
It was unclear whether the new U.S. deal would take the form of an important minerals club, more serious negotiations, or something else, and Sullivan said, “We’re trying to find out. It’s in full swing,” he said.
Karen Hendricks, senior fellow at the Peterson Institute for International Economics, said the Biden administration’s strategy to build a safer international supply chain for minerals outside of China has so far been “a bit incoherent and difficult to achieve its goals.” is not always sufficient,” he said.
Demand for minerals in the United States was largely driven by President Biden’s Climate Change Act, which gave tax incentives to investments in the electric vehicle supply chain, particularly in battery final assembly. But Hendricks said the legislation appears to have had more limited success in rapidly increasing the number of domestic mines supplying these new plants.
“The United States cannot go it alone,” he said.
Biden officials agree that ensuring a safe supply of the minerals needed to power electric vehicle batteries is one of the most pressing challenges. US officials say global supplies of lithium alone will need to increase 42-fold by 2050 to meet the growing demand for electric vehicles.
While battery innovation may reduce the need for certain minerals, the world is currently facing a long-term shortage that is by any measure dramatic. And many officials say Europe’s reliance on Russian energy after the invasion of Ukraine has helped highlight the dangers of foreign dependence.
Global demand for these materials could trigger and intensify a wave of resource nationalism. Outside the United States, the European Union, Canada and other governments have also introduced subsidy programs to encourage competition for new mines and battery plants.
Indonesia Restrictions were gradually tightened Exports of raw nickel must first be processed domestically. Chile is a major producer of lithium, nationalized the lithium industry Similar to Bolivia and Mexico, it aims to better control how resources are developed and deployed.
And Chinese companies are still investing heavily to acquire mining and refinery capacity around the world.
For now, the Biden administration seems reluctant to strike deals with countries with more mixed working and environmental records. Officials are looking for changes needed to develop U.S. capabilities, such as speeding up the permitting process for mines and closer partnerships with mineral-rich allies. Canada, Australia, Chile.
The White House said on Saturday: to question parliament Adds Australia to the list of countries where the Department of Defense can fund significant minerals projects. This standard currently applies only to Canada.
Todd Mullan, chief foreign affairs officer at Talon Metals, which is proposing a nickel mine in Minnesota to supply Tesla’s North American production, said he wanted high production standards on the environment, labor rights and indigenous participation. He said it was important to add key allies such as Australia, which has , adding to that list was a “wise choice”.
But Maran said expanding the list of countries eligible for benefits under the administration’s new climate change legislation beyond countries with similar labor and environmental standards would help strengthen the U.S. supply chain. It said it could undermine efforts to build the chain.
“If you start opening the door to Indonesia or the Philippines or other countries that don’t have common standards, that’s a departure from Congress’ intent to encourage domestic and friendly battery supply chains,” he said. I will see,” he said.
But some U.S. officials say the supplies of critical minerals in wealthy countries with high labor and environmental standards are insufficient to meet demand, and new agreements should be made with resource-rich countries in Africa and Asia. Without it, the US is very likely to leave. Vulnerable.
The Biden administration is seeking to streamline the permitting process for new mines in the United States, but it could take years, if not decades, to get such projects approved. Automakers, major U.S. employers, have also warned of expected shortages of battery materials and are arguing for more flexible and lower-priced deals.
G7 countries, together with countries that have free trade agreements with the United States, are estimated to produce 30 percent of the world’s lithium chemicals and about 20 percent of refined cobalt and nickel, but natural flake graphite is just 1 percent, according to Benchmark Minerals Intelligence pricing analyst Adam Megginson.
Jennifer Harris, a former Biden White House official who worked on critical minerals strategy, said the country should move more quickly toward developing and permitting domestic mines, but the U.S. has multilateral negotiations involving major powers. He argued that a new framework for mineral exporter.
Governments could also set up programs to stockpile minerals such as lithium when prices drop, he said, so miners would have more certainty of finding somewhere to ship their products.
“It’s really a ‘both/and’ world because there’s so much to do,” she says. “The challenge is that we had to responsibly lift more stones out of the ground yesterday.”
Jim Tankerslee Contributed to a report from Hiroshima, Japan.
