If someone had suggested 20 years ago that dependence on imported minerals — and not oil or natural gas — would become the dominant natural resource problem facing an incoming administration, I would have said it was absurd. Having been in the oil business for 50 years and seen the ups and downs of our industry during that time, I now see dark clouds on the horizon for the minerals industry.
Back in 2000, U.S. mines were producing a diverse mix of minerals. But with the shutdown of many domestic mines in recent years due to cheaper imports, U.S. dependence on minerals from abroad has doubled and we now rely heavily on imports for 31 of the 35 minerals that the Interior and Defense Departments have deemed “critically important” to our national security and the nation’s economy. China is a major supplier of half of the minerals, ranging from rare earth elements to metals for electric car batteries and weapons systems.
Import dependence is exacerbated by countries like China that subsidize the mining of minerals. This has lulled many American companies into using minerals from China, even if doing so carries serious risks. The parallels with our past dependence on foreign oil are unmistakable.
The transformation of the auto industry shows that China is a force to be reckoned with. Thanks to aggressive government policies aimed at nurturing the growth of high-tech industries, China now possesses half of the world’s EVs. In 2010, there were only 17,000 EVs worldwide. By 2019, the number had swelled to 7.2 million. Today China has a larger EV market than the U.S. and Europe combined.
By using EVs to leapfrog ahead, China can overtake established automakers and increase its share of the world market. Morgan Stanley expects EVs to account for 35% of the global auto market by 2030. IHS Markit projects EVs will be 60 to 80% of cars sold by 2050. And, make no mistake, China is poised to dominate a number of other high-tech industries, including super conductors, telecommunications, artificial intelligence, robotics, and advanced aircraft manufacturing.
To achieve its goal, China is investing heavily in minerals production and processing. However, China has demonstrated an inclination to use its growing power to undercut accepted rules and to coerce other countries. China’s firms have locked up supplies of minerals and metals using a combination of state-directed investment and state-backed capital with far-reaching implications for minerals security.
China already dominates the global supply of lithium, a necessary ingredient for EV batteries. A lithium-ion battery weighs about 1,000 pounds. It typically contains about 25 pounds of lithium. But state-supported Chinese companies control 80% of the global lithium supply, which has given China leverage in trade negotiations with the U.S.
As the manufacture of EVs ramps up, demand for lithium is expected to soar. Tesla, the largest electric car maker in the United States, expects its need for lithium to grow eight-fold.by 2050. And that’s only one EV company. There are at least 50 EV manufacturers worldwide.
Can we reduce this dependence on lithium from China? The answer may shape our economy and the international system for decades.
Without access to lithium and other battery metals like nickel, graphite and cobalt, America’s auto manufacturing industry may not survive. Reducing dependence on China-sourced lithium needs to be an integral part of our nation’s industrial policy. But for such a policy to succeed, the U.S. needs to kick-start domestic production of critical metals instead of relying on imports. The U.S. has vast mineral resources. With appropriate policies, we can bring hundreds of thousands of jobs back home, increase domestic manufacturing, bolster mining in the U.S., and boost the productivity of U.S. auto companies.
Dr. Robert W. Chase holds B.S., M.S., and Ph.D. degrees in Petroleum and Natural Gas Engineering from Penn State. He served as professor and chair of the Department of Petroleum Engineering and Geology at Marietta College from 1978 to 2015. He worked previously for Halliburton Services, Gulf Research and Development Company, and the Department of Energy and has consulted for numerous companies. You can reach him at [email protected]