Announcing a Series on Critical Minerals and the Energy Transition

At the Institute for Energy Research we released a report entitled “The Economic and Strategic Importance of Domestic Mineral Production” detailing the current state of mining policy here in the U.S. and its impact on our ability to reach net zero carbon emissions.  It examines each mine project under development in depth, examines the issue of our reliance on China, and analyzes the state of cost and supply for various minerals.

Mining is essential to our, and every other, energy economy. It produces the minerals and metals that go into everything from cell phones and computers, to medical technology, to cars, and so many other things that we use everyday. 

Demand for essential minerals has skyrocketed in recent years because of the “net zero” approach to energy policy. This policy seeks to move away from energy sources that emit carbon and towards those that do not. The technologies put forth by this approach, primarily wind and solar electricity generation alongside the proposed replacement of internal combustion engines with electric vehicles, require vast mineral resources. 

The mineral intensity of these projects poses a few problems. The first is that the majority of mineral processing and production is concentrated in China which raises important concerns about international security, as well as the reliability of supply if China were to cut or reduce it for some reason. 

The second problem is that domestic production of these minerals is hampered by the difficulty of permitting, constructing, and operating mines in the United States. There are many projects currently in development whose efforts have been hampered by the Biden administration in particular, and by the onerous nature of our regulatory structure in general. These include, Twin Metals Mine, Polymet Mine, Ioneer Ltd’s Lithium Mine, the Thacker Pass Lithium Mine, Resolution Copper Mine, Rosemont Copper Mine, Pebble Mine, and the Ambler Mining district. 

Projections for the transition to a net zero energy economy rely on decreasing costs of these technologies, but as demand for them grows, they become scarcer and more expensive. IEA’s sustainable development scenario projects massive increases in the demand for key materials, a 42-fold increase in lithium demand, a 25-fold increase in graphite demand, a 21-fold increase in cobalt demand, a 19-fold increase in nickel demand, and a 7-fold increase in rare earth demand by 2040 to meet the carbon emissions reductions goals currently set by various governments around the world. 

The prices for these and other essential minerals are on the rise already. Nickel, cobalt, and magnesium, the primary raw materials in lithium-ion batteries have seen a price increase of 164 percent from April of 2021 to April of 2022. Over the same period, the raw materials of lithium-ion phosphate batteries have increased by 393 percent. 

In order to clear a path for more domestic mining in the U.S. we need to reform the permitting system to ensure that projects are able to predict how long the process will take and how expensive it will be, and are able to plan based on reasonable and knowable time frames.

Critical minerals are becoming increasingly important. Going forward, China’s dominance in this space is going to be an issue worthy of considerable attention and consideration. This series will take a look at each of these issues in turn, and examine the implications of the “energy transition” on critical minerals and mining, as well as the international relations issues that are intertwined with these concerns.