Biden to use defense act to boost mineral mining for electric vehicles

Riley Beggin
The Detroit News

Washington — President Joe Biden plans to invoke the Defense Production Act to increase the mining of critical minerals for the batteries used in electric vehicles, the White House confirmed Wednesday. 

The move comes amid high oil prices after Russia's invasion of Ukraine. Greater federal support for alternatives to fossil fuels would reduce the leverage of Russian President Vladimir Putin and others on matters of U.S. national and economic security, though it reflects a long-term play rather than an immediate response to the economic damage caused by the war.

Biden's directive employing the Defense Production Act would provide a meaningful financial incentive to develop a domestic supply chain for electric vehicles and enable the shift away from gasoline-fueled autos.

Putin's assault on Ukraine began more than a month ago, rattling global energy markets for petroleum and natural gas in ways that would likely hurt growth worldwide. U.S. crude oil was trading at more than $107 a barrel on Wednesday morning, up from nearly $60 a year ago as inflation has emerged as a persistent threat.

Skyrocketing gas prices have dovetailed with Biden's months-long push to accelerate domestic production of electric vehicles. Automakers are already investing billions into transitioning their fleets from gas-powered cars to electric ones, but they're challenged by shortages or foreign dependencies for crucial minerals needed to build EV batteries. 

The Democratic president is looking at invoking Title III of the 1950 Defense Production Act, which would provide the government with economic authorities to address industrial shortfalls. Mining companies could access money under the law for production of minerals including lithium, nickel, graphite, cobalt and manganese.

The government would not be issuing loans or directly purchasing minerals. The funding would instead cover feasibility studies, production at current operations and modernizing safety standards. It would not allow companies to bypass environmental reviews or permitting processes. 

Adding battery minerals such as lithium, nickel, graphite, cobalt and manganese would crack open a piggy bank of around $750 million through the Defense Production Act, according to Bloomberg, which first reported the news Wednesday. 

Both Biden and former President Donald Trump have used the law to respond to the coronavirus pandemic. Trump used the Defense Production Act to order General Motors Co. to produce ventilators and 3M to produce N95 masks, and to prevent the export of personal protective equipment needed by hospitals. Biden has used it to accelerate coronavirus vaccine and test production. 

Early in his presidency, Biden ordered executive branch agencies to do a comprehensive supply chain review for critical goods, including EV batteries. The report released last June noted that high-grade nickel, lithium and cobalt are "primary upstream supply chain vulnerabilities" and recommended that both the public and private sector consider increasing domestic production. 

It also noted the U.S. has an even more significant dearth of refining and processing capability for EV battery minerals. "Coupled with recycling, [increasing processing capacity] is the most promising pathway to securing the supply chain for minerals," the report said. The Defense Production Act funds could potentially be used to support processing and refining projects as well. 

The price of battery minerals has risen in recent months as automakers ramp up EV plans and as global supply chains struggle under the continued pandemic disruption and the war in Ukraine, which dramatically pushed up nickel prices in early March. 

Mining industry advocates have pushed Biden to do something to help boost mineral production to align with the administration's goals, while environmental advocates and Indigenous groups have frequently raised concerns about potential water contamination and other pollution from mining projects. 

Associated Press contributed.

Twitter: @rbeggin