The US Department of Energy has awarded contracts worth $2.8 billion to develop a supply of critical minerals used to make batteries for EVs and energy storage.
- The US Department of Energy (DOE) has awarded $2.8 billion to 20 companies across 12 States to build and expand domestic battery manufacturing.
- Recipients will match the federal funds with over $6.2 billion of their own funds to bring a total $9 billion to bear on expanding commercial scale battery facilities.
- The White House estimates that more than $135 billion will be invested to build the country’s electric vehicle (EV) future.
The US government plans to accelerate domestic battery production by awarding contracts for the procurement of critical minerals. It is currently a net importer of two of the five critical minerals needed for battery production, but the supply chains are at risk of disruption.
The Biden administration is turning to international partners for help. It also said it will take into consideration sustainability issues associated with mining operations, both at home and abroad. Engaging with local authorities and communities, including tribal nations, will require careful planning and consideration.
DOE minerals contracts kicks off procurement spree
The US DOE has awarded contracts worth $2.8 billion as part of the first set of projects funded by the Infrastructure Investment and Jobs Act (IIJA). The projects are intended to expand domestic capacity to make batteries for EVs and the electrical grid. The contract recipients will invest $6.2 billion, meaning a total of $9 billion will be deployed.
The funds will be used to build commercial-scale facilities across 12 States by 20 companies spanning 21 projects. These will focus on the extraction and processing of battery materials, such as lithium and graphite, as well as manufacture of battery components, including the use of recycled parts.
Almost all EVs in use today use lithium-ion batteries. The goal of the DOE contracts is to produce enough battery-grade lithium for 2 million EVs and sufficient battery-grade graphite for 1.2 million EVs annually.
Plans for the production of battery-grade nickel to supply 400,000 EVs are also under development. Based on Australia’s Commonwealth Scientific and Industrial Research Organisation’s critical energy minerals roadmap, the amount of nickel needed in EV batteries is five times the lithium required.
US looks to end reliance on imports for critical minerals supply
The US Government said five minerals are critical to EV battery manufacture. A report by the Congressional Research Council (CRC) warned that the domestic supply of lithium, cobalt, manganese, nickel and graphite are potentially at risk for disruption.
The US is reliant on imports for 48% of its nickel and over 25% of its lithium needs. It also imports all of the manganese and graphite it uses, as well as 76% of its cobalt requirements. Several companies have plans to begin mining for these minerals across the US, but this will come at a heavy environmental cost.
Expanding mining operations for minerals has environmental and social impacts
A report by the non-profit Friends of the Earth details the environmental impacts of lithium mining. The environmental impacts from the extraction of lithium harms the soil and causes air contamination and water pollution. Processing lithium requires the use of toxic chemicals which pose a risk to local communities, affecting food production and ecosystems.
The CRC has proposed the deployment of tax incentives to domestic miners and import tariffs to benefit domestic mineral production. The latter, however, may not be immediately applicable to manganese and graphite, as there is no domestic production as yet.
China is the world’s largest producer of graphite. Between 2017 and 2020 it supplied 33% of the US’ annual needs. Artificial graphite was excluded from the section 301 tariffs until 2020, which was extended until November 2022 following lobbying efforts from EV makers.
US needs to engage with various stakeholders to secure supply chain
The US announced the establishment of the Minerals Security Partnership (MSP) in June 2022. The MSP includes Australia, Canada, Finland, France, Germany, Japan, South Korea, Sweden, the UK and the EU, in addition to the US. It aims to build a supply chain to support “economic prosperity and climate objectives”.
Development of the mining sector is part of the Biden administration’s plans to secure its domestic critical minerals supply chain. To do this it will need to engage effectively with state and local governments, as well as local communities and tribal nations. As seen with the federal government’s experience with the Keystone Pipeline, this may pose further challenges, and cause delays, if not handled properly.