President Joe Biden will trigger the Defense Production Act to secure U.S. sources of critical minerals and materials like lithium, nickel, cobalt, graphite and manganese that are used to make batteries for electric vehicles and energy storage.
The order is in response to spiking gas prices and supply chain constraints caused by Russia’s war in Ukraine. It’s also part of Biden’s broader plan to respond to what his administration is cannily calling “Putin’s Price Hike” at the pump. Biden has also called for increased domestic production of oil and a historic release from the nation’s Strategic Petroleum Reserve to help form a bridge across the crisis.
“Because of Putin’s war of choice, less oil is getting to market, and the reduction in supply is raising prices at the pump for Americans,” reads the fact sheet.
Americans are paying on average $4.225 per gallon at the pump as of Thursday, in comparison to about $2.859 about a year ago, according to data from the American Automobile Association.
The Defense Production Act allows the president to direct private companies to prioritize orders from the federal government, to allocate materials for national defense and take actions to restrict hoarding of needed supplies. Because Biden is calling for a boost in domestic production, his administration might offer loans to American companies that mine and process battery materials, make purchases or even allow companies to coordinate with each other, which in other circumstances might be an antitrust issue.
“The Defense Production Act could provide capital for exploration, mining, processing and production of lithium and other minerals for electric vehicles and stationary grid storage batteries to help strengthen the foundation for a transition to cleaner energy use in the U.S.,” Kelli Hopp-Michlosky, who heads up communications at U.S. chemical manufacturing company Albemarle, told TechCrunch.
Albemarle recently started to assess a potential restart of lithium extraction at its Kings Mountain site, according to Hopp-Michlosky, who also noted the company is open to working with the U.S. government on projects using its Silver Peak, Nevada and Kings Mountain, North Carolina resources.
Today, about 60% of Albemarle’s lithium goes into energy storage uses like electric vehicles, grid storage and electronics.
“Given the rapid growth in demand for EVs, we are increasing our global conversion capacity largely to meet that need for lithium-ion batteries,” Hopp-Michlosky said.
It’s unclear exactly how broad the Defense Production Act will be applied. It’s likely that companies securing battery materials and battery manufacturers will also see a boost. Tesla has been producing batteries in the U.S. for a few years now, and a range of other automakers, like Toyota, General Motors, Stellantis, Ford and Volkswagen, have all set in motion plans to build battery facilities in the U.S., often as a joint venture with foreign suppliers like LG Chem, SK Innovation, Samsung and Panasonic.
Even though “the Department of Defense will implement this authority using strong environmental, labor, community and tribal consultation standards,” some climate activists worry that rushing production of precious minerals via extraction processes will bring about the next gold rush that will ultimately lead to more environmental degradation.
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