Critical Minerals: What’s On & What’s Next
Welcome to the 22nd edition of FTI Consulting’s weekly Critical Minerals Newsletter, where we dive into key global business, policy, regulation, and legal developments surrounding critical minerals, including anything from production and processing to electric vehicles and upcoming events.
In this week’s newsletter, we discuss President Biden visit to a U.S. client, the International Seabed Authority failing to pass deep sea mining regulations, the U.S. clean vehicle tax credit under the Inflation Reduction Act, a new UK-Australia mineral cooperation statement of intent, and an Argentinian delegation discussing lithium investments with China, among other developments. Read more below.
FTI Consulting Highlight
- President Biden kicks off “Investing in America” tour at FTI client’s headquarters: Earlier this week, our client, Wolfspeed, hosted President Biden at its North Carolina headquarters as the first stop of the administration’s “Investing in America” tour. We are tremendously proud to have supported the Wolfspeed team, including CEO Gregg Lowe, CTO Elif Balkas, CLO Brad Kohn, CFO Neill Reynolds, VP of IR Tyler Gronbach, and Director of Corporate Communications Melinda Walker, among others, throughout this visit and beyond. Our team of experts in strategic communications has worked with Wolfspeed to promote its incredible story as an American manufacturing company and as the global leader in silicon carbide technology.
- If you are interested in learning more about FTI’s capabilities and how we can support your organization, please reach out to Ed Goodwin, Greg Mecher, or Alex Miehls.
Global Developments
- International Seabed Authority fails to approve deep sea mining rules and regulations: After two weeks of negotiations, the International Seabed Authority (ISA) failed to approve rules or regulations governing deep sea mining despite calls from various countries and organizations to implement a ban or moratorium until there is more scientific research its potential effects on deep-sea ecosystems. If the ISA fails to approve rules and regulations by July 9, countries and companies can apply for provisional licenses despite the industry being in its infancy. Additionally, without rules or regulations, there is uncertainty about how the provisional licenses would be issued and what they would entail.
Americas Developments
- Argentinian delegation in China to discuss mineral investment: The Governor of Argentina’s Catamarca province, its Ambassador to China, the General Secretary of the Federal Investment Council, and the President of two companies will meet with a variety of organizations in China to discuss new lithium investment opportunities in Argentina. Notably, the Chinese embassy is analyzing and promoting the expansion of six lithium investments in Argentina, including the Tres Quebradas and Laguna Verde, in Catamarca, Cauchari and La Providencia in Jujuy, and Mariana and Centenario Ratones, in Salta, which could result in over $6 billion in exports by the end of 2023.
- U.S. Treasury Department releases clean vehicle tax credit guidance: On March 31, the U.S. Treasury Department released its proposed guidance on component and assembly requirements in the Section 30D New Clean Vehicle Credit under the Inflation Reduction Act (IRA). The credit is split between battery components and the vehicle’s point of final assembly and aims to develop America’s EV supply chain. While mostly in line with the white paper released last year, included below are the notable portions.
- First, the Treasury will use a loose definition for “free trade agreement” (FTA), allowing countries who do not have a traditional FTA with the U.S. to qualify if they have an agreement that reduces or eliminates trade barriers on a preferential basis, refrains the parties from imposing new trade barriers, establishes high-standard disciplines in key areas affecting trade (such as core labor and environmental protections), and/or reduces or eliminates restrictions on exports or commits the parties to refrain from imposing such restrictions like the S.-Japan critical minerals agreement and the one the U.S. is developing with the EU. Sens. Ron Wyden (D-OR) and Joe Manchin (D-WV), among others, have critiqued the guidance and this portion in specific, calling the guidance “horrific” and noting that “Free trade agreements cannot be unilaterally decided by the executive branch” and that “They require consultation and consent from Congress.”
- Second, battery components and minerals can’t come from a “foreign entity of concern” starting in 2024 and 2025, respectively. Notably, the guidance does not define the term but notes the Treasury Department and IRS will at a later date.
- Third, the guidance classifies cathodes and anodes as minerals, not battery components, excluding them from the domestic or FTA requirements.
- The guidance will be formally published in the Federal Register on April 17, 2023, at which point it will go into effect and open a 60-day comment period. Following its publication, the U.S. Department of Energy will publish a list of vehicles that qualify for the credit – whole or partial. It is expected the number of vehicles that qualify for the credit will lower.
- If you’d like to learn more about this guidance or additional upcoming tax guidance under the IRA, please reach out to Will McCown.
- First Nations in Saskatchewan claim all critical minerals in the province: The Federation of Sovereign Indigenous Nations, which represents 73 First Nations in Saskatchewan, are claiming rights to all critical minerals and rare earth elements in the region on the grounds of inherent and treaty rights. The dispute centers around the “depth of plough” clause in Treaties 4 and 6, with the First Nations maintaining it does not cover mining rights. Saskatchewan has 23 of the 31 minerals designated as critical minerals in Canada, making the area an important part of the country’s newly released Critical Mineral Strategy.
- Notably, some provinces already have resource revenue sharing agreements with some First Nations, including Ontario, where 35 First Nation communities receive 45% of annual revenue from contributing forest management units, 40% of the annual mining tax and royalties from operational mines, and 45% from future mines in the areas covered by the agreements.
APAC Developments
- Australia and UK increase cooperation on critical minerals: On April 4, UK Minister for the Indo-Pacific Minister, Anne-Marie Trevelyan, and Australian Minister for Resources, Madeleine King, signed a statement of intent in Perth, Australia, to develop their critical minerals supply chains and support their net-zero targets. Specifically, they will “identify and promote investment opportunities in clean energy technologies and upstream extraction, promote high environmental, social and governance standards in critical minerals processing, encourage the exchange of skills and expertise between Australian and UK firms.”
- This commitment builds upon the UK’s Critical Minerals Strategy, which identified that the UK was relying primarily on China for critical minerals, leaving it vulnerable to market shocks, geopolitical events, and logistical disruptions.
- Australia predicts lithium to be fifth-largest commodity by 2028: On April 3, Australia’s Department of Industry, Science and Resources released its Resources and Energy Quarterly: March 2023, which provides an outlook for global commodity prices, demand and supply, and relevant data, among others. Notably, resource and energy exports are projected to earn Australia more than AUD$2 trillion by 2028, and lithium and base metals exports, including their raw material inputs, will match the export value of coal exports by 2027–28, becoming the fifth-largest commodity. It also predicts lithium and base metal products will earn roughly AUD$47 billion in the current financial year.
- Related: Supporting this data, Federal Resources Minister Madeleine King highlighted the significant role Australia’s resources will have in global decarbonization. From Australia’s vast reserves of critical minerals such as lithium, vanadium, rare earth elements (REEs), and silicon to the traditional minerals such as iron-ore and bauxite, which are key inputs for steel and aluminum, “In order to decarbonise, the world needs our resources industry and our critical minerals,” said King.
- Chinese officials are expressing concern over Australia’s tightening business environment: On April 3, Chinese Vice President of Commerce Minister Wang Shouwen voiced concern over Australia’s newly enforced scrutiny of Chinese business operations in the country, urging for a “fair, open and non-discriminatory business environment for Chinese enterprises,” during a meeting with Australia’s Deputy Secretary for foreign affairs and trade. However, speaking at the Boao Forum for Asia conference on March 30, Andrew Forrest, Founder of Fortescue Metals Group, said Australian and Chinese businesses had “weathered the storm” of strained ties and that there had been many “expressions of interest” by Chinese businesses to work with Australia.
EMEA Developments
- U.S. Vice President visits Africa to boost diplomatic and economic ties: U.S. Vice President Kamala Harris visited Ghana, Zambia, and Tanzania last week, where she sought to improve diplomatic and economic ties, countering China and Russia’s influence on the continent. Notably, she announced initiatives to advance the U.S. partnership with Zambia, including an MOU between the Export-Import Bank of the United States (EXIM) and the government of Tanzania to facilitate $500 million in financing for U.S. companies to trade and invest in Zambia. She also announced a U.S.-supported plan by LifeZone Metals to open a new nickel processing plant in Tanzania that means “raw minerals will soon be processed in Tanzania, by Tanzanians.”
Looking Ahead
April
- Argonne National Laboratory is hosting Bridging the Gap: Advancing America’s Battery Manufacturing and Supply Chain II virtually, on April 11: This event will address the climate crisis and build a clean and equitable energy economy that achieves carbon pollution-free electricity by 2035 and puts the U.S. on a path to achieve net-zero emissions, economy-wide, by 2050. Batteries for transportation and stationary storage are central to this transition.
- Fisa and GL Events are hosting Expomin in Santiago, Chile, on April 24-27: This event is the largest mining show in Latin America and serves as a space to promote the transfer of knowledge, experiences, and technologies that contribute to innovation and increase the productivity of mining processes.
- Beacon Events is hosting Mines and Money London in London, United Kingdom, on April 25-26: This event is Europe’s premier mining investment event, connecting miners with money, and investors with opportunity.
- The Organisation for Economic Co-operation and Development is hosting its 2023 Forum on Responsible Mineral Supply Chains in Paris France, on April 25-28: This event will reflect longstanding and emerging priorities in fostering responsible mineral supply chains, with sessions spanning new conflict risks, corruption and environmental risks in mineral supply chains, drivers of responsible trade and systemic issues like regulatory developments and taking responsible finance to scale. A key theme will be on leveraging due diligence to foster synergies between the objectives of a responsible and reliable supply of minerals critical to the energy transition.
- AME Mocambique and AMETrade are hosting Mozambique International Mining & Energy Conference and Exhibition in Maputo, Mozambique, on April 26-27: This event will focus on key developments, policies, and projects in Mozambique’s extractive industries, making it an important platform for stakeholder networking and showcasing the opportunities in these sectors.
- Mining Conferences is hosting Mining World Congress 2023 in London, United Kingdom, on April 27-28: This event fosters debate on mining industry, equipment, exploration and business.
- Canadian Institute of Mining, Metallurgy, and Petroleum is hosting CIMTL 23 Convention and Exhibition in Montreal, Canada, on April 30-May 3: This event features an extensive program consisting of expert-led short courses, three full days of technical presentations on insightful topics, a complete student/young leaders’ program, daily social networking opportunities, and the CIM/Caterpillar Awards Ceremony. It also includes the premier mining marketplace for business with over 450 exhibitors at the EXPO.
May
- Fastmarkets is hosting Asian Battery Materials Conference 2023 in Shangri-La, Singapore, on May 1-3: This event is an opportunity to learn more about the challenges affecting the supply chain, the opportunities to improve its efficiencies, learn about the latest battery chemistry innovations and developments in sustainable material extraction.
- StoneX is hosting Energy & Metals Outlook: Managing Risk in a Greening Economy in New York, New York, on May 3-5: This event will give exposure to deep-domain experts in major sectors across the industrial supply chain, where attendees will gain fundamental and strategic analysis of the outlooks for the changing shape of the metals and energy industries as we move toward net zero emissions, including content presented by our carbon solutions team.
- Society for Mining, Metallurgy & Exploration is hosting SME’s 8th Current Trends in Mining Finance Conference in New York, New York, on May 8-11: The conference will bring together many subject matter experts and interested stakeholders to discuss the outlook, trends, and non-technical and technical issues that affect capital raising in the global mining industry and how management and investors can employ best practices and technology to anticipate, track, manage and reduce the risks associated with mining projects.
- Automotive Logistics is hosting Finished Vehicle Logistics North America in Waterfront Beach Resort, California, on May 9-11: This event will cover the most important issues for vehicle logistics through a program of hard-hitting panels and sessions, interactive workshops, and innovator showcases.
- The European Union and EIT RawMineral e.V. are hosting the Raw Mineral Summit in Brussels, Belgium, on May 15-17: This event will feature leading players in the international raw materials industry, innovators, educators, researchers, prominent figures from the European Commission, NGOs, and more. Key discussions will be on the major innovations, policy initiatives, challenges, and opportunities facing the raw materials sector will take place.
- Mexico Mining Center is hosting the Discoveries 2023 Mining Conference in Sinaloa, Mexico, on May 30-June 1: This event includes over 50 talks covering topics ranging from the latest geological discoveries; new technologies applied to mining and exploration; social, legal, and political issues affecting the industry; and the challenges and obstacles confronted and overcome on the way to production.
June
- UNSURE is hosting the International “Astana Mining & Metallurgy” Congress in Astana, Kazakhstan, on June 1-2: This event facilitates the expansion of intersectoral investment cooperation, the conclusion of new contracts, and the development of joint solutions that meet modern challenges.
- ExpoGroup is hosting the 7th Minexpo Africa in Nairobi, Kenya, on June 1-3: This event shows the widest range of latest technology in the mining and processing of minerals industry, as well as safety equipment.
- REIA is hosting REIA 2023 Annual Conference and General Assembly in Barcelona, Spain, on June 21-23: The event will bring together key stakeholders from the rare-earth sector, drawn from industry, academia, government and the investment community. Participants will hear about the latest developments in pricing and market dynamics, resource and supply challenges and solutions, new and improved technology development, sustainability and the circular economy, and efforts to advance the role of rare-earth elements in meeting the demand challenges to come, for decarbonization.
- The Commonwealth Scientific and Industrial Research Organisation (CSIRO) is hosting World Mining Congress in Brisbane, Australia, on June 26-29: This event is an exceptional opportunity for international delegates to gain insights into Australia’s world class mining operations, R&D, METS, and Universities.
In Case You Missed It
- The Korea Times: LG Energy Solution signs deal with China’s Yahua on lithium supply in Morocco
- The West Australian: Carmakers buy into lithium miners in drive to survive
- The Hill: Biden administration unveils $450 million to develop renewables on mine sites
- Australian Financial Review: Big banks to miss ‘future facing’ commodities mining boom
- The Wall Street Journal: Lithium Prices Are Down, Cheaper Batteries and EVs Could Follow
- Mining Weekly: WA invests A$40m in critical minerals
- Quartz: China’s rare earths industry has a raw materials problem
- Financial Times: Lithium shortages threaten Europe’s electric car transition
- Reuters: Exclusive: Chinese lithium producers set price floor as demand evaporates, sources say
- Business in Vancouver: Canada-China trade not expected to change much amid critical mineral protectionism
- E&E News: Top DOE official: Permitting mines takes ‘too long’
- Bloomberg: Tesla Pursues Building a New US Plant With China’s Dominant Battery Maker
- The Globe and Mail: Canada takes small step forward in critical mineral ambitions with restart of Quebec lithium mine
- Reuters: Australia risks losing pole position in critical minerals race
- Semana: According to studies, fewer and fewer Latin Americans consider that mining is good for their countries
- Reuters: Ford in $4.5 bln deal for EV battery materials plant
- The West Australian: Mineral Resources boss Chris Ellison calls on Albanese Government to invest in local lithium battery industry
- Financial Times: Indonesia business presses US over green subsidies for EV minerals
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The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.
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