What’s the outlook for EV critical minerals?

Over the past year, critical minerals have captured national attention in the automotive industry—and deservedly so. Policymakers have acknowledged the reality that a seamless transition to widespread electric vehicle (EV) adoption is predicated in large part on a stable and established domestic supply chain of critical minerals, the very backbone of EV batteries. The policy progress achieved thus far is laudable; sizable investments through the newly-enacted Inflation Reduction Act and Bipartisan Infrastructure Law will help incentivise consumers to purchase EVs containing domestically-made components and promote EV battery material manufacturers to expand capacities domestically. However, critical mineral price volatility may be one impediment to a greener future.

EV adoption is predicated in large part on a stable and established domestic supply chain of critical minerals

Currently, shortages are rampant across the critical minerals spectrum. Graphite, lithium, and copper are all expected to reach deficits by 2030 based on current projections of supply. Because metals and mining operations require long lead-times, supply chain disruptions are almost inevitable, contributing to price fluctuations and hesitation regarding the substantial capital investments necessary to build out production capabilities. In fact, according to Benchmark Mineral Intelligence, the price of spodumene, a lithium-rich raw material, increased by nearly 480% between January 2021 and January 2022. This poses a significant threat to the nation’s goal to have EVs comprise half of all new passenger vehicle sales in the US by 2030, as well as states such as California that are seeking to ban the sale of new gasoline vehicles by 2035. Demand for lithium is expected to increase 18 times by 2030 relative to 2015, necessitating new and more diversified supply sources in order to meet clean energy goals.

In order to alleviate reliance on foreign sources of materials, which often exacerbates supply chain issues, contributes to price volatility, and can introduce geopolitical concerns, the US must prioritise domesticating as much end-to-end production as possible and diversifying supply sources that are not immediately available domestically by relocating those resources as near as possible. Historically, critical minerals are heavily imported; China accounted for the highest share of the US’s graphite imports between 2017 and 2020 at 33%. Meanwhile, North America produced only 4% of the world’s graphite supply with production exclusively in Canada and Mexico.

As a result, emphasis should be placed in practices to enhance domestic production and manufacturing. This can be accomplished by accelerating the exploration and development of conventional mineral resources, streamlining permitting timeframes, growing the critical mineral workforce, and advancing research devoted to recycling and reprocessing technologies. With these efforts, a more secure supply chain can be realised that will help facilitate critical mineral price stability.

The quicker the sourcing and processing of critical minerals domesticates, the faster automakers can meet the demand posed by consumers. We can’t afford to wait—as demonstrated by the recent federal declarations and legislation, minerals are a matter of national security. With the right prioritisations, the US will more swiftly accelerate into an EV future. 

The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.

John DeMaio is Chief Executive of Graphex Technologies

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