Energy Security Matters | September 12, 2024

In this issue: SAFE explores?how we can tap America's abandoned?and legacy mines for their full potential; EIES takes the stage at GLOBSEC; Op-Ed: NATO must focus on mineral security; SAFE weighs in on critical minerals price controls efforts; take SAFE's new grid security quiz; and ReMo holds a roundtable on the future of fuel economy standards.

Reach us at?[email protected]?with questions or comments with questions or comments about this newsletter.

Tapping America’s Underutilized Resources to Power a Minerals-Based Economy

How can we unlock the potential of America’s half-million abandoned or underutilized mines to provide the critical minerals essential to advanced manufacturing, military technology, and the energy transition?

Last Thursday, SAFE’s Center for Critical Minerals Strategy?convened a panel of industry, government, and academic experts to address this key question.

A major takeaway from the conversation was that the federal government must do more to support these undertakings, which are risky, expensive, and complex, but in service of larger strategic and environmental goals.

The panel, which included Dr. Steve Feldgus, Principal Deputy Assistant Secretary of Land and Minerals Management with the U.S. Department of Interior (DOI), Dr. Elizabeth Holley, Associate Professor of Mining Engineering at Colorado School of Mines, Kate Sommerville, General Manager of Legacy Assets with BHP, and Luis Anderson, Global Lead for Copper with Hatch, agreed that the bipartisan Good Samaritan Remediation of Abandoned Hardrock Mines Act was a positive step. The bill limits liability for actors willing to tackle the expensive and risky job of cleaning up old mines.

But that there also needs to be closer coordination with federal agencies and funding for R&D, as well as efforts to streamline bureaucratic processes through permitting reform.

A National Defense Imperative

The conversation kicked off with opening remarks by retired General Richard Cody, a longtime member of SAFE's Energy Security Leadership Council (ESLC), and newest co-chair of SAFE’s Mineral Center, joining Tom Albanese, former CEO of Rio Tinto Group.

General Cody laid out what’s at stake, noting that the U.S. has moved from being a nation dependent on OPEC’s fluctuating barrel costs to a country that’s becoming too dependent on critical minerals and materials supply chains dominated by adversarial powers.

“If we allow China to control the supply chains of these critical minerals, we’re going to be in dire straits,” he said. While investing in revitalizing America’s mining and manufacturing capacity will be expensive, the alternative—risking war—will be significantly more so.

That point was recently underscored by Beijing’s recent announcement that it will place export restrictions on antimony products, essential to ammunition and solar cell production, starting this month.

Senior Policy Analyst with SAFE, Zoe Oysul, told E+E News that this most recent move by Beijing to weaponize its monopolization of the critical minerals supply chain was a reminder that affluent countries like the U.S. need to start developing more projects within their borders to help break that monopoly.

This is only the latest restriction imposed by the CCP on strategic minerals and materials, including gallium and germanium, both critical to production of microchips, fiber optic cables, solar cells, and other foundational components of everyday life.

The International Energy Agency predicts that demand for critical minerals could more than double by 2030.?

By 2050, this demand could more than triple. The U.S. Geological Survey estimates that the U.S. is more than 50% import-reliant for 41 critical and strategic minerals and 100% import-reliant for 17 of them. And it's China who has a chokehold on much of these supply chains.

As SAFE's Senior Vice President of Government Relations Avery Ash said in recent media interviews, this dominance gives the CCP tremendous power to manipulate prices and undermine U.S. and other market-oriented competitors.

A Quinoa Salad

The challenges associated with re-mining legacy assets vary depending on several things—the material you are after, the type of mine, etc. Holley noted that sometimes, trying to get a particular material out of waste piles at old mines is like trying to pick individual ingredients out of a quinoa salad.

Feldgus said that the U.S. Geological Survey is undertaking a massive mapping initiative to help identify where mines are and what is potentially in them. The DOI also has a forthcoming paper that will offer up some 64 recommendations to help spur these kinds of projects, recognizing that only a small fraction of the 500,000 mines will be economically viable, but many of them need to be remediated for environmental reasons.

The Human Cost

Onshoring and friend-shoring critical minerals has tremendous national security, economic, and environmental benefits. But there is also a vital human component. The Department of Labor (DOL) recently updated its list of products that involve forced or child labor to include nickel, key to battery manufacturing, from Indonesia.

This is a poignant reminder of the consequences of the “race to the bottom” incentivized by Beijing’s approach to cornering critical minerals supply chains at all costs

“We’ve long been aware that Chinese companies in Indonesia can produce low-cost nickel, despite the lower-grade ore, with cheap power and insufficient tailings management,” said Abigail Hunter, Executive Director of SAFE’s Center for Critical Minerals Strategy.

“The findings in the DOL report on forced labor further enabling below market cost end products shouldn’t come as a surprise. These non-market and unethical practices continue to undermine allied and IRA compliant nickel production like those in Australia and show the need for a strong FEOC,” she said.

U.S. domestic mines can’t alone supply all the critical minerals the world will need, but they can, when combined with sourcing provisions like the IRA’s Foreign Entity of Concern (FEOC) provision, be a vital link in fair, transparent, and humane supply chains.

The U.S. needs to take a stronger leadership role. That's the point?former UK Deputy Prime Minister and Foreign Secretary, the Rt. Hon. Dominic Raab, who?chairs the SAFE-Appian partnership called?the Sub-Committee on Opportunities and Risks (SCOR) in the Critical Mineral Sector, made in his recent op-ed in Mining.com.

He wrote: "[F]riend-shoring needs to be more ambitious. The U.S., let alone its allies, cannot be individually self-sufficient. We need to forge wider clusters of high-trust partnerships to provide broader, end-to-end supply chains. The Five Eyes intelligence and security alliance of the US, UK, Canada, Australia and New Zealand could expand its scope to cover critical minerals security – given the breadth of resources and capacities each brings to the table."

EIES Takes Center Stage at GLOBSEC

EIES’ Executive Director, Albéric Mongrenier was on the main stage at GLOBSEC Forum in Prague at the end of August. He joined Tomá? Pleska?, Member of the Board of Directors of ?EZ, Lykke Friis, Director of T?nketanken EUROPA, and Glenn Schmidt, Vice President of Government Affairs at BMW Group, for a discussion about driving competitiveness through energy security, moderated by Martin Tengler, Head of Hydrogen Research at BloombergNEF.

Mongrenier highlighted how the new geopolitical world order demands that Europe diversify supply chains, invest in full-value clean tech manufacturing, secure sufficient supply of energy through the deployment of local, zero- and low-emission technologies, and safeguard infrastructure from adversaries who continue to weaponize energy supply chains through economic, cyber, and hybrid warfare tactics.

SAFE and Munich Security Council CEOs Call for NATO to Focus on Mineral Security

SAFE Founder and CEO Robbie Diamond and MSC CEO and Vice-Chairman Benedikt Franke co-authored an op-ed in PoliticsHome calling on NATO to focus on the vital issues of critical minerals supply chains:

“The harsh truth is that neither NATO as an organization nor most of its member states are where they need to be on this issue. Much remains to be done to address severe vulnerabilities, reduce potentially weaponizable dependencies, and increase systemic resilience across the Alliance,” they wrote.

The Debate Over Price Controls for Critical Minerals Continues

News broke at the end of August that the Biden administration was considering setting price floors for certain critical minerals as a way to counter Beijing’s anti-market practices. Chinese oversupply of key minerals, like lithium, nickel, and cobalt, have caused prices to bottom out, hurting competitors in market-oriented economies.

SAFE recently convened critical minerals traders, producers, miners, academics, purchasers, and other expert stakeholders to discuss precisely the question of the efficacy of such price control policies.

Based on that conversation and ongoing dialogue with experts and industry stakeholders, SAFE’s Abigail Hunter told Politico that she has reservations about the government “getting their hands into commodity market pricing, which is very cyclical and complex.”

She said, “Policies need to be carefully calibrated to the specific commodity price dynamics, potentially peter off after projects reach economies of scale in production, and [be] coupled with other government support, all so taxpayers don’t end up supporting projects — especially unviable ones — indefinitely.”

How Well Do You Know Grid Security?

SAFE’s Center for Grid Security recently launched a new education effort aimed at raising awareness about the intersection between America’s power grid and national security by asking people to test their knowledge.

Do you know what percentage of Department of Defense installations rely on the commercial grid for power? Or what the main obstacle to distributing new power generation is?

Through this campaign, SAFE aims to educate policymakers and thought leaders about the vital national security implications of modernizing and expanding our power grid.

ReMo Hosts Roundtable on Rethinking ‘Fuel Economy’ to Address Sector-Level Emissions Reduction

SAFE’s Coalition for Reimagined Mobility (ReMo) hosted a roundtable discussion on August 27 focused on how to rethink the approach to "fuel economy" to accelerate system-level decarbonization of the global transportation sector.

Co-Chair of ReMo and former Chair of the California Air Resources Board, Mary Nichols, set the stage for the facilitated discussion reenforcing the need for a broader and bolder approach—one that addresses policy change, market realities and consumer demand/needs, and the viability for more sustainable mobility choices across the entire transportation system, rather than focusing exclusively on individual vehicle efficiency to address total emissions reduction.

The dialogue among participants highlighted the need for a comprehensive approach that considers realistic and long-term investment in infrastructure and technological advancements, policy frameworks, and educating consumers to help shift behavior to drive the significant change necessary to have an impact on reducing emissions across the transportation sector. Public and private sector attendees included representatives from U.S. and international automakers, academia, automotive suppliers, the trucking/freight sector, philanthropic organizations and former government regulators, and transportation policy experts.

Insights from the ReMo Roundtable will help inform and scope further research and policy recommendations to support system-level decarbonization across transportation.

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