Biden uses Cold War-era law to spur EV battery metal production

Riley Beggin
The Detroit News

Washington — A Cold War-era law designed to bolster the U.S. economy in times of war will soon be used to help the country get a leg up in a global race to build electric vehicles.

President Joe Biden announced on Thursday that he would add critical minerals used in electric vehicle batteries to the list of products covered by the Defense Production Act, which has most recently been used to order companies to build ventilators, N95 masks, tests and vaccines to combat the COVID-19 pandemic. 

Projects to produce lithium, nickel, cobalt, graphite and manganese within the United States would be eligible to benefit from financial help with feasibility studies; production at current operations; mine waste reclamation; modernization projects to increase productivity, environmental sustainability or workplace safety; and more. 

"We need to end our long-term reliance on China and other countries for inputs that will power the future," Biden said. "I'll use every tool I have to make that happen."

The directive does not allow the government to directly buy minerals or issue loans outside of traditional channels, and it would not allow companies to bypass environmental reviews or other permitting requirements.

Biden also announced Thursday that the administration would release more oil from the strategic petroleum reserve, putting an additional 1 million barrels of oil on average on the market every day for the next six months.

Biden condemned oil companies that he said have chosen to "sit on record profits" and not increase production to bring down prices. He called upon Congress to make companies pay fines for not using leases they already have on public lands. 

The two announcements were framed as both a short- and long-term strategy to ease price shocks and better prepare the country for global energy market fluctuations in the future. 

"We and the whole world need to reduce our dependence on fossil fuels altogether," he said. "We need to double down our commitment to clean energy and tackling the climate crisis."

Russia's invasion of Ukraine has sent gas prices skyrocketing, colliding with massive inflation that has crunched American consumers amid the ongoing economic recovery from the pandemic. Crude oil was trading at more than $101 per barrel on Thursday afternoon, up from nearly $60 a year ago. 

Soaring 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. 

Both Biden and former President Donald Trump have used the Defense Production Act to respond to the coronavirus pandemic. Trump used the 1950 law 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. 

The presidential memorandum sent Thursday to the Department of Defense states that the government should promote the supply of EV battery minerals "through environmentally responsible domestic mining and processing; recycling and reuse; and recovery from unconventional and secondary sources, such as mine waste."

This language is in part why the president's decision received praise from both environmental and mining advocates.

Environmental groups said they supported the policy that could speed a transition to low-emission vehicles, but added that it should not be a license to trample community concerns. 

“The Sierra Club appreciates President Biden taking steps to invest in clean energy and help further lead the world in the transition," Ramón Cruz, the group's president, said in a statement Thursday. "However, it’s essential that this be done properly. We must ensure that labor and environmental standards are not sidestepped, nor are the crucial consultations with Tribal nations and communities who would be directly affected."

National Mining Association President Rich Nolan said in a statement that the action was "limited in scope" but sends a clear signal to international markets that the mineral supply chain underpinning the EV transition is "at risk from a perilous and growing import dependence" and should prompt additional action.

Eagle Mine in the Upper Peninsula is the nation's only operating nickel mine. It could benefit from Defense Production Act help if it found more nickel and copper ore in the area, said Matt Johnson, external relations manager for the mine. 

But the real impact, he said, could come from more federal support for domestic refining and processing. 

"What would really help would be to stop shipping concentrates around the world for processing," he said. Right now, Eagle has to ship its product out of the country to be refined before it returns to the U.S. for use in batteries and other products. 

Meanwhile, Talon Metals Corp.'s proposed Tamarack nickel mine in northern Minnesota is at the early stages of permitting, but has received funding from the Department of Energy for carbon storage at their project. Once it comes online, it would be the only other nickel mine in the nation besides Eagle. 

"Potential support from the government for technology development that will help us to better protect the environment or reduce waste or extract more material will be really helpful," said Todd Malan, chief external affairs officer for Talon Metals Corp.

The Alliance for Automotive Innovation, an advocacy group representing most automakers selling vehicles in the U.S., did not immediately comment on the president's directive, but noted that the group has consistently called upon federal officials to pass policies that support the EV battery and recycling supply chains.  

rbeggin@detroitnews.com

Twitter: @rbeggin