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US mineral mining badly lags Biden’s clean energy goals

08 February 2022 Amena Saiyid

Current US mining levels are barely making a dent in the volume of metals deemed critical to meeting President Joe Biden's goal of electric vehicles (EVs) accounting for 50% of sales by 2030 and a decarbonized power sector by 2035, mining analysts and environmental advocates agree.

They disagree, however, on the approach the US should take to reach that goal. While environmental groups say more recycling is needed, mining analysts say demand should be met by streamlining the permitting process to enable more mines to be developed on a faster timeline. Environmental groups insist that if there is to be any expansion of mining, it must be accompanied by a transparent regulatory process that factors in all the potential environmental impacts.

Analysts and environmental advocates agree though that the largest obstacle to reaching Biden's clean energy goals lies with a "virtual" absence of refining facilities to create the chemical compounds that US automakers, renewable energy manufacturers, and battery storage providers require.

In its 100-day supply chain risk report released in June, the White House acknowledged that the US has limited raw material production capacity and "virtually no processing capacity."

Moreover, China refines 60% of the world's lithium and 80% of the world's cobalt, "which presents a critical vulnerability to the future of the US domestic auto industry."

Compounds of lithium, nickel, and cobalt are essential for making EV and energy storage batteries. Copper is indispensable in making wind turbines, solar panels, EVs, and EV charging stations because of its durability, high conductivity, and efficiency.

Source: National Mining Association

Ample supply of minerals at home

"Everything that has to do with [President Joe Biden's] clean energy goals begins with mining," National Mining Association General Counsel Katie Sweeney told Net-Zero Business Daily.

"Our reliance on foreign sources has more than doubled in the last 25 years," Sweeney said. "We clearly need to take advantage of what we do have here domestically."

As of 1 February, the US had an estimated 48 million metric tons (mt) of copper that can be mined and processed economically, 69 million mt of cobalt, 340 million mt of nickel and 750 million mt of lithium, according to the US Geological Survey (USGS).

Despite having ample reserves of these four key minerals, the USGS mineral commodity summaries for 2022 reveal that the US barely mines its reserves and instead relies on imports to meet its needs. In 2021, 48% of US consumption of nickel, 76% of cobalt, 45% of copper, and more than 25% of lithium was imported.

However, Aaron Mintzes, senior policy counsel for nonprofit Earthworks, insists there is no need to excavate new mines as there are ample supplies of the minerals around the globe. Instead, he urged the Biden administration to emulate the EU's circular economy principles that call for reusing and recycling spent products.

He cited an April 2021 Earthworks-commissioned study by University of Technology Sydney's Institute for Sustainable Futures, which said mature end-of-cycle recycling processes are in place to recover lithium from spent lithium-ion batteries and cobalt, copper, and nickel from industrial processes. "Effectively recycling end-of-life batteries could reduce global EV mineral demand [by] 55% for newly mined copper, 25% for lithium, and 35% for cobalt and nickel by 2040," the study said.

The White House too has identified end-of-life battery recycling as a key component of securing raw materials to further its clean energy goals.

Clean energy goals not translating into permits for mines

As of 19 January, S&P Global Market Intelligence data show 25 operating copper mines, and one each for lithium and nickel in the US. Cobalt is produced as a byproduct of nickel and copper mining.

Biden's clean energy goals have provided an incentive for further investments in domestic mining, but this has not translated into actual projects or permits yet.

S&P Global Market Intelligence analysis shows 106 copper, 63 lithium, seven cobalt, and seven nickel mines in varying stages of development in the US.

Securing federal, state, and local approvals for a hardrock mine takes 10 years on average, often with duplicate requirements, and many of the copper projects cited by S&P Global Market Intelligence have been in development for at least five years, commodity analyst Aline Soares explained. These include Hudbay's Rosemont and Taseko's Florence mines in Arizona, and Sandfire's Black Butte mine in Montana.

Copper is by far the most indispensable of the four minerals under scrutiny and also the most widely mined commodity of all metals deemed essential for clean energy technologies.

According to an industry trade group, the Copper Development Association, conventional cars contain 48 lb of copper, hybrid electric vehicles 88 lb, plug-in hybrid electric vehicles 132 lb, and battery electric vehicles 183 lb. Among buses, a hybrid electric version contains 196 lb and a battery electric option contains 814 lb, most of which is in the battery.

Source: Copper Development Association

The US mined an estimated 1.3 million mt of copper in 2021, accounting for roughly 6% of global mine production, Soares said. Based on the potential number of mines in the works, she projects US copper production to increase to 1.6 million mt by 2026 provided environmental objections are resolved. Of course, the US competes globally for copper. Soares estimates 2.8 million mt of copper will be needed by 2025 to meet global demand to make wind turbines, solar panels, and EVs.

Meeting global demand from the EV sector by 2027 will require 1.74 million mt of copper, according to NMA estimates. In comparison, S&P Global Market Intelligence estimates are more bullish; it forecasts copper demand will increase to 1.84 million mt by 2025 for the global EV market, and to 929,000 mt for solar and wind generation.

Only one mine for lithium

Lithium is the most crucial element in EV and energy storage batteries, and the US has only one operating mine that extracts lithium from brine—North Carolina-based Albemarle's Silver Peak Mine in Nevada. It produced about 4,000 mt in 2020, accounting for just 0.8% of global production, Alice Yu, senior analyst in metals and mining research with S&P Global Market Intelligence, told Net-Zero Business Daily.

Albemarle shut another lithium mine in North Carolina in 2021 after prices tanked from late 2017 onwards. Prices staged a dramatic recovery last year though, but the North Carolina mine is still not open for business.

The majority of the world's battery-grade lithium is produced by one of two means: mining or acid leaching from spodumene ores, such as those found in North Carolina; concentration and precipitation as lithium carbonate from brines via evaporation ponds as is the case in Nevada.

The lithium sulfate solution that is produced from spodumene ore is converted to battery-grade lithium carbonate or hydroxide via electrochemical processes.

Doubling lithium capacity despite opposition

By 2025, Yu said, the US expects to nearly double its lithium production to 9,000 mt from a handful of lithium mining projects in varying stages of permit approval and development.

When and if these lithium mines commence production depends on the scale of public opposition to the impacts the mines pose.

The mines under development include the Carolina Lithium Project, for which developer Piedmont Lithium says it has full state approval, with county approval pending.

However, North Carolina's Gaston County Board of Supervisors has held off since last year on granting zoning permits over concerns about the mine's impact on groundwater and air quality.

S&P Global Market Intelligence's estimate for lithium also includes production from Thacker Pass Mine in Nevada, where mining and air pollution control permits from the state Division of Environmental Protection are pending. The US Bureau of Land Management (BLM) approved the project in January 2021 over objections from local environmental and indigenous groups to its environmental impacts.

Located on what is said to be the largest source of lithium deposits in the US, Thacker Pass remains embroiled in litigation over federal and state approvals.

A judge in Nevada is expected to rule as early as March on a lawsuit accusing BLM of rushing the environmental review process and approving the permit operations plan for Thacker Pass without considering the impacts on scarce groundwater resources and wildlife and without consulting local tribes.

When the mine reaches capacity operations, BLM's own analysis said it is expected to use 5,200 acre-feet per year (equivalent to an average pumping rate of 3,224 gallons per minute) in one of the driest regions in the nation.

Judge Melinda Du for the US District Court for the District of Nevada is yet to rule on the merits of the case, but she has twice rejected attempts by petitioners seeking to prevent the developer from carrying out an archaeological dig at the site to inventory the cultural resources. Her ruling is under appeal.

Permitting reform?

The objections to Thacker Pass are emblematic of the problems hardrock mine development faces in the US.

NMA's Sweeney said developers have to obtain multiple permits from state and federal regulators, and the long lead-times involved in environmental reviews add up to a decade's work. "And this is not counting the time spent in litigation," she added.

The Biden administration has made an attempt to address the length of the review process in the bipartisan Infrastructure Investment and Jobs Act of 2021.

The mining trade group would like to see the process of environmental reviews reformed, but that is seen by environmental advocates as an attack on environmental safeguards and cultural resources for affected communities, such as the southwestern US and Minnesota, where mineral resources abound. They are instead calling for reform of the General Mining Law of 1872, which allows prospectors to stake a claim on land based on minerals they found underneath.

The environmental and cultural impacts of hardrock mining, particularly acid mine drainage and destruction of sacred lands, cannot be overlooked, said John Hadder, executive director of the nonprofit Great Basin Resource Watch, which is involved in the litigation over Thacker Pass.

Biden is aware of these impacts and he has made consulting with indigenous and minority groups a priority of his administration, especially when it comes to permitting such mines.

Alternatives to mining

There are alternative methods of tapping lithium. The US Department of Energy is supporting private sector efforts to tap the geothermal brine underlying California's Salton Sea, created when floodwaters from the Colorado River overflowed its banks in 1905, as a potential source of lithium.

In October, a Lawrence Berkley National Laboratory study showed the Salton Sea represents by the far the largest potential lithium geothermal brine resource in the US, with potential production levels of 6,000 mt to 32,000 mt per year.

"As much as 15,000 mt per year of lithium carbonate could be recovered from a single geothermal power plant in the California's Salton Sea area, the most mineral-rich brine source in the US," the US Idaho National Laboratory wrote in a 10 January article.

A final report for the California state legislature due by 1 October 2022 will help answer questions about the full impact of geothermal lithium extraction and how it should be regulated. The Latinx community that provides labor to the surrounding farmlands in California's Imperial Valley already is suffering from acute air pollution problems owing to an accumulation of dust.

Nickel too has only one operating mine

The US in 2021 produced 17,000 mt of nickel, principally from Lundin Mining's Eagle mine in Michigan, and about 1,000 mt as a byproduct of smelting and refining platinum group metal ores from Sibanye Stillwater's mine in Montana, according to USGS and S&P Global Market Intelligence data.

S&P Global Market Intelligence Commodity Analyst Jason Sappor said nickel production is expected to rise to 25,200 mt by 2023, primarily from Canadian firm Polymet's NorthMet mine in northern Minnesota, before dropping back down to 9,500 mt by 2026 as the Eagle mine reaches the end of its life. PolyMet is controlled by Switzerland-based mining giant Glencore via a 72% stake in Toronto-based firm.

The NorthMet mine, which is expected to yield significant quantities of copper, nickel, and cobalt, is not yet operational as it has been fending off challenges since it began seeking environmental permits in 2005, including a crucial permit to mine. On 24 January, the Minnesota Court of Appeals ruled in favor of six of seven challenges to the water pollution permit Polymet received from the state. The court remanded the permit back to the state to resolve a challenge pertaining to groundwater discharges from mining activity that could have the potential to contaminate surface water quality.

Polymet CEO Jon Perry noted in July that the NorthMet mine, once operational, will be able to extract enough copper annually to make batteries for 6.7 million EVs, enough nickel for 2.6 million EVs, and enough cobalt for 690,000 EVs.

Sappor also pointed to Tesla's recent agreement with Talon Nickel, a US subsidiary of Talon Metals, to secure a supply of nickel concentrate from the Tamarack Nickel Project in Aitkin County, Minnesota.

Unlike nickel and lithium, cobalt is produced as a byproduct of copper and nickel operations. US extraction of cobalt compounds comes primarily from Lundin Mining's Eagle mine. In 2021, Yu said, Eagle yielded about 700 mt of cobalt, representing 0.5% of global production.

Recycling minerals

The White House in June acknowledged the key role recycling can play in supplying minerals required for the US to meet its clean energy goals.

"Increasing US processing capacity alone would bolster the supply chain, and coupled with recycling, is the most promising pathway to securing the supply chain for minerals where the United States does not have significant reserves from which to extract," the White House said.

Earthworks' Mintzes says "there is no shortage of minerals. The gap lies in the supply chain midstream," he said, adding: "We need battery recycling and reuse on a massive scale."

The US, however, has not updated its battery recycling legislation since 1986.

According to IHS Markit analyst Georgie Lamb and senior analyst George Hilton, the recently enacted, bipartisan infrastructure legislation references second-life batteries, alongside recycling. That bill provides $100 million in grants for demonstrating applications that the second life of a used battery can provide.

In early January, Massachusetts-based Battery Resources announced plans to open the largest lithium-ion battery recycling plant in the US in Covington, Georgia, in August. The plant will have a processing capacity of 30,000 mt of discarded batteries and scrap per year.

The company said its facility would return battery-grade lithium, cobalt, and nickel back into the battery supply chain, reducing US dependence on imported lithium and the need for mining the metal.

According to the USGS, there are 25 companies operating in the country with the capacity to recycle spent lithium batteries. The real challenge is to find enough material to recycle.

The most recent IHS Markit projections show that at least half the global demand for lithium-ion batteries used by plug-in EVs may be met at least a decade from now through a threefold increase in recycling. The analysis estimated 9,300 kt of lithium, 55,000 kt of nickel, and 9,800 kt of cobalt will be needed between 2020 and 2050 to meet global demand. Of these totals, 48% of lithium, 47% of nickel, and 60% of cobalt demand can be met through recycling.

Lithium-ion batteries typically have eight-to-10-year warranties, so batteries used in EVs hitting the roads today won't be available for recycling until the end of the decade, according to IHS Markit analysis.

Mining waste tailing is another recycling avenue that many companies are exploring in the US and the federal government is backing.

Although Earthworks cites DOE claims that Pennsylvania's coal mine waste ponds hold as much cobalt as the mines of the Democratic Republic of Congo (DRC), the world's largest source, the group warned that mining and remining from waste tailings—though a source of minerals—also produce toxic waste, climate pollution, and unjust impacts on communities.

Globally, however, there is no question that demand for lithium and cobalt will outpace supply, S&P Global Market Intelligence's Yu said.

Right product for batteries

It is not enough to just mine lithium or cobalt or to recycle them from end-of-life batteries, the two metals once extracted have to be refined and processed for reuse.

S&P Global Market Intelligence analysts told Net-Zero Business Daily the US is lagging behind not only in extracting these minerals, but also in refining and processing them for end use—which the White House also highlighted in its supply chain report.

Their data shows there are only two operating lithium refineries in the US owned by Albemarle and Livent, respectively, and two cobalt refineries in Canada.

Yu noted that cobalt produced from the Eagle mine in the US is not processed domestically.

In the refining and processing step of the supply chain, "the United States has an even more significant deficit than in raw production capacity as critical minerals mined in the United States are often exported for processing," the White House said. "Increasing US processing capacity alone would bolster the supply chain, and coupled with recycling, is the most promising pathway to securing the supply chain for minerals where the United States does not have significant reserves from which to extract."

The issue is whether there will be enough of the "right" battery-grade product of these two metals to meet EV demand, Yu said.

The White House is aware of this conundrum, as it noted that simply increasing the pace of battery recycling without processing capacity would merely result in exports of raw lithium for processing only to be re-imported.

Boosting processing capacity

The US is looking to boost its processing capacity though.

Among the projects in the pipeline, Piedmont Lithium is expected in 2023 to begin extracting spodumene ores from its mine in North Carolina with the goal of producing up to 30,000 tons per year of battery-grade lithium hydroxide from a conversion plant.

Ontario, Canada-based First Cobalt, which has been renamed Electra Battery Materials, is in the process of building North America's only cobalt refining facility, which is anticipated to start producing battery-grade cobalt sulfate in the fourth quarter of 2022, with an annual production target of 5,000 mt that will expand to 6,500 mt.

Yu noted, however, the Canadian refining facility will be supplied by cobalt sourced from the DRC, the source of more than 70% of the world's mined cobalt production. Meanwhile, China remains the world's leading producer of refined cobalt, most of which is produced from partially refined cobalt imported from the DRC.

Glencore's Kamoto Copper Company in the DRC will supply approximately 1,000 mt of unrefined cobalt sulfate to Electra's refinery under a five-year tolling agreement signed 31 December. Under this deal, the quantity of cobalt tolled from Glencore would represent 20% of the initial 5,000 mt a year that the refinery is expecting to produce, and 15% of the expanded production rate down the road.

In addition, Electra is looking to develop the Iron Creek mine in Idaho that in 2019 revealed an indicated resource of 2.2 million mt of ores that could yield roughly 12.3 million lb of cobalt and copper contained in ores. But that mine is still under development.

Until the Electra facility comes online, the US remains dependent on China for refining the raw minerals for battery-grade products, which is a cost into itself.

Given the 400% increase in lithium prices in 2021 to more than $30,000/mt, it is becoming extremely expensive to generate lithium compounds—lithium hydroxide and lithium carbonate—for use in EVs and energy storage.

Both compounds go in to making lithium-ion batteries, such as the lithium iron phosphate, nickel manganese cobalt oxide, or nickel manganese aluminum oxide options.

The price of making these two compounds from brine and ores varies significantly though, according to S&P Global Market Intelligence, which estimated the total cost of producing lithium concentrate from ores ranged from $1,151.81/mt to $4,643.35/mt of lithium carbonate equivalent in 2021. The cost of producing lithium chemicals from brine ranged between $4,053.87/mt and $11,730.67/mt

As of 19 January, it also said the all-in sustaining cost of cobalt production ranged from $3.14/lb to $37.25/lb, with Eagle Mine in the US at $6.23/lb in 2021.

Alliances for responsible sourcing

To meet US demand for EV and energy storage, Yu said, "you just can't look at what is being produced in the US, you have to look at what is being produced across the continent as a whole."

She pointed to alliances with Canada where Electra is building its refining and processing facility, but noted that Canada too is having difficulty bringing some lithium projects online owing to environmental concerns.

Albemarle, which operates the US lithium mines in Nevada and North Carolina, also holds assets in Brazil and Chile, the world's largest repository for lithium, but Chile too is running into problems with extracting the metal from saltwater brine owing to local concerns about groundwater contamination.

Mintzes agrees that the clean energy revolution will require the use of minerals, but he said the US government can promote sound and responsible mining practices globally through participating in the Oslo-based Extractive Industries Transparency Initiative, which sets voluntary international standards for openness around the governance of oil, gas, and mineral resources.

As demand for copper, lithium, nickel, and cobalt grows to meet clean energy goals not just in the US but across the globe, "you will need metal for the green revolution, but at the same time you will need to make sure these mining projects are performing in a responsible way," Soares said. "This is a dilemma we will face more and more in the future."

Posted 08 February 2022 by Amena Saiyid, Senior Climate and Energy Research Analyst

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