Amplified by COP27, the volume continues to increase on the importance of moving away from fossil fuels towards sustainable sources of energy. In turn, this movement fuels the need for critical minerals to support the burgeoning battery electric vehicles (EV) market.
Demand for these critical minerals is set to soar, with the International Energy Association forecasting that EV demand will require 50 new lithium projects, 60 new nickel mines, and 17 cobalt mines by 2030. The need for robust supply chains, highlighted by the COVID-19 pandemic, is coupled with the desire to unlock China's grip on the sector, where 90% of rare earths and 60% of lithium are processed. China has been pursuing a critical minerals strategy for many years, but what are the governments of other countries actually doing to catch-up with China and support the requirements of the EV industry?
The loudly trumpeted US Inflation Reduction Act in 2022 has seen the US Government pledge to provide US$7.5 billion in tax credits for EV buyers if their battery uses raw material extracted or processed from the US, from trade partner countries, or through recycling. This has caused a virtual stampede to relocate supply chains to the US, with companies committing over US$13.5 billion worth of investment since it was enacted (more than double the investment in the previous three months).1 This Act also promises to accelerate the long-awaited streamlining of the 'permitting' of new US mines.
In Canada, the Government has now launched its critical minerals strategy, which aims to boost the extraction, processing, manufacturing, and recycling of critical minerals.2 The Canadian strategy again recognises the need to streamline the regulatory approval process for new mines and fast-track environmental approvals, combined with investment in new infrastructure (i.e. roads, rail, and ports) to unlock new mineral projects. This boost to the domestic sector has been coupled with an announcement that the federal government would prevent foreign state-owned enterprises from owning and participating in Canada's critical mineral sector, which was quickly followed by ordering three Chinese groups to divest their stakes in Canadian critical minerals companies, on the basis that these investments posed a threat to national security.
Australia, likewise, updated its critical minerals strategy in 2022, which includes substantial subsidies.3 The strategy also recognises the need to strengthen international partnerships and proposes various initiative in this regard.
The UK Government is not in a position to pledge much to the sector, but instead the UK's critical minerals strategy focuses on relieving the bottle necks in the supply chain by accelerating what the UK can produce domestically, as well as collaborating with its allies in order to diversify supply.4
Most recently, the European Commission has proposed the European Critical Raw Material Act, which aims to help boost supplies of minerals such as lithium and rare earths – by identifying potential projects along the supply chain, from extraction to refining and processing to recycling – as well as build up reserves.5
The various governments seem to have adopted a common approach: to focus on supporting their own domestic sectors, but also to collaborate with 'friendly' jurisdictions to develop and strengthen the much needed critical minerals supply chain. However, given the significant head start that China have gained in the race to secure critical minerals, time will tell whether the profusion of strategies from western governments is too little too late.
1. Reported by Benchmark Mineral Intelligence.
2. 'The Canadian Critical Minerals Strategy', Natural Resources Canada, (2022).
3. 'Critical Minerals Strategy', Australian Government: Department of Industry, Science & Resources, (16 March 2022).
4. 'Resilience for the Future: The UK's critical minerals strategy', UK Government: Department for Business, Energy & Industrial Strategy, (22 July 2022).
5. 'Critical Raw Materials Act: securing the new gas & oil at the heart of our economy I Blog of Commissioner Thierry Breton', European Commission, (14 September 2022).
Originally Published by Global Mining Review
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