The United States is leaving no stone unturned as it invests billions and forms global alliances to ensure it has access to the critical minerals necessary for its future aspirations.
The Biden administration has promised billions from its budgets to drive domestic exploration and development – with a major focus on freeing up the critical minerals supply chain.
In late March, the financial powerhouses in the US government provided an overview of how the recently introduced Inflation Reduction Act (IRA) can support the nation’s critical minerals aims.
The update, from the Department of Treasury and the Internal Revenue Service (IRS), is aimed at driving investment in critical minerals and battery supply chains within the US.
“(The) Treasury’s new notice of proposed rulemaking marks a critical step towards building our clean energy future while honouring our ‘Made in America’ commitments,” the two departments declared.
This guidance clarifies how manufacturers may satisfy the critical mineral and battery component requirements of the clean vehicle tax credit introduced by the IRA.
“Since the enactment of the IRA, over US$45B in battery investments across at least 75 facilities have been announced across all segments of the domestic battery supply chain, ranging from the extraction of critical minerals to the manufacturing of battery packs,” the release stated.
“The Biden-Harris Administration also remains committed to building the American economy from the bottom up and the middle out, and the new clean vehicle tax credits have been designed to ensure that clean vehicles are accessible to all Americans and targeted at the middle-class and hardworking families.”
Global partnerships
While the IRA confirms the US government’s clear focus on creating a domestic critical minerals industry, it has also been quick to sign global agreements with a range of nations.
March saw the United States and Japan sign a historic critical minerals agreement, which builds on the 2019 US-Japan Trade Agreement. It aims to strengthen and diversify critical minerals supply chains and promote the adoption of electric vehicle (EV) battery technologies.
In particular, the agreement memorialises the shared commitment between the United States and Japan with respect to the critical minerals sector to facilitate trade, promote fair competition and market-oriented conditions for trade in critical minerals, advance robust labour and environmental standards, and cooperate in efforts to ensure secure, transparent, sustainable, and equitable critical minerals supply chains.
“(This) announcement is proof of President Biden’s commitment to building resilient and secure supply chains,” said US Ambassador Katherine Tai.
“Japan is one of our most valued trading partners and this agreement will enable us to deepen our existing bilateral relationship.”
The agreement establishes several new commitments and areas for joint cooperation regarding EV battery critical minerals supply chains between the United States and Japan, including those related to:
- Non-imposition of export duties on critical minerals
- Domestic measures to address non-market policies and practices of other countries affecting trade in critical minerals
- Best practices regarding review of investments within their territories in the critical minerals sector by foreign entities
- Measures that promote more resource efficient and circular economy approaches to reduce the demand for, and environmental impact of, virgin material extraction and related processes
- Engagement, information-sharing, and enforcement actions related to labour rights in critical minerals extraction and processing
- Remedying violations of labour rights at entities connected to critical minerals supply chains
- Promoting employer neutrality in union organising and operations
Ambassador Tai added, “This is a welcome moment as the United States continues to work with our allies and partners to strengthen supply chains for critical minerals, including through the Inflation Reduction Act.”
US – EU Task Force
A recent meeting in Washington D.C. between US President Joe Biden and his EU counterpart, Ursula von der Leyen, has confirmed a commitment to deepening cooperation on the diversification and strengthening of critical mineral and battery supply chains.
“Both parties recognize that these objectives are at the heart of the US Inflation Reduction Act and the EU Green Deal Industrial Plan,” said the US and EU in a joint statement, highlighting their commitment to addressing the climate crisis, accelerating the global clean energy economy, and building resilient, secure, and varied clean energy supply chains.
“By building and strengthening our own clean energy industrial bases and investing in the industries of the future, the United States and the European Union will create good-paying jobs and spark virtuous cycles of innovation that drive down costs for clean energy technologies in the global market, making those technologies more affordable and advancing a global just energy transition that will leave no community behind,” it added.
“The EU-US Task Force on the IRA has productively deepened our partnership on these common goals and has taken practical steps forward on identified challenges to align our approaches on strengthening and securing supply chains, manufacturing, and innovation on both sides of the Atlantic.”
US and Canada
Due to its geographical closeness, Canada is a major focus for US plans to build a secure critical minerals supply chain.
In late 2022, the two governments unveiled the Canada-US Joint Action Plan on Critical Minerals Collaboration, a strategic plan aiming to advance bilateral interest in securing supply chains for the critical minerals needed. These are necessary for strategic manufacturing sectors, including communication technology, aerospace and defence, and clean technology.
The joint action plan is guiding cooperation between officials in areas such as industry engagement, innovation, defence supply chains, improving information sharing on mineral resources and potential, and cooperation in multilateral fora.
Canada already supplies many of the minerals deemed critical by the United States: in 2020, bilateral mineral trade was valued at C$95.6B, with 298 Canadian mining companies and a combined C$40B in Canadian mining assets south of the border.
The US government is also making significant investments supporting Canadian critical minerals exploration and development.
US and Australia
As the world’s leading producer of several critical minerals it is no surprise that Australia was an early target for the US government.
In November of 2019, the US and Australia formalized an initial partnership on critical minerals. The two partners outlined specific steps to strengthen an existing Memorandum of Understanding (MOU) by collaborating on research and increasing critical mineral capacity for both countries.
The activities identified at that time focused on joint critical mineral potential mapping and quantitative mineral assessments, determining geological controls on critical mineral distribution, and developing data analytics capability to understand supply and demand scenarios for developing critical minerals trade between the two countries.
The two nations have continued to work together on a number of critical minerals projects since then and reaffirmed their commitment in late 2021, again highlighting the importance of cooperation to build resilient supply chains going forward.
