Minerals Experts See U.S. Closing Gap With China in EV Tech

WASHINGTON – Benchmark Mineral Intelligence holds its annual conference here and issues a stellar report card on the Inflation Reduction Act that projects when the U.S. can expect to better compete with China on EV battery tech and production.

Simon Moores, CEO of the London-based price reporting agency, says the IRA “will go down in history as the legislation that changed everything.”

Passed in August 2022 with no Republican support in Congress, the IRA “was government rushing out policy to backfill this big megatrend that was happening, of building batteries and electric vehicles with western governments especially almost coming to the party too late,” says Moores.

Moores notes that in 2014 it was “all about China, electric buses, primarily LFP batteries and electric bikes. It was a very China-centric end market,” he says. “In addition, there was a niche technology company called Tesla. So, it was China and Tesla driving the narrative on batteries. And certainly, the raw materials to go into them weren’t on the radar.”

That has changed, reflected by the lineup of speakers at the Giga USA 2024 conference representing mining and minerals-processing companies.

In 2014, Moores reported that the era began at 60 GWh, the scale of the industry, with battery cell prices of $350/kWh.

“When I speak to friends who are economics editors, they’ve never seen anything like this,” he says. “They see this as the first chapter of how policy and politics will shape our industry going forward. And in terms of numbers, we’ve risen to 500 GWh of batteries and are probably going to be at 1,250 GWh this year. The average price is $78/kWh.”

West Virginia Sen. Joe Manchin, chairman of the Senate Energy and Natural Resources Committee and a keynote speaker, says the IRA should have been named the U.S. Energy Security Act.“First of all,” he notes, “there would not have been an IRA if it hadn’t been for the Ukrainian war. When I saw that Vladimir Putin had weaponized fuel against our allies in Europe, that’s what got me to the table.

The independent and former Democrat is retiring from the Senate this year and is known for long protecting the coal industry in his state.  “We in the United States of America have never depended on foreign supply chains, especially from countries that are unreliable. We’ve never done that. China controls anywhere from 60% to 100% of the global processing, depending on the mineral,” Manchin says.

“And just thinking about the transportation industry, China is responsible for 85% of battery cell production. They’re responsible for 90% of global cathode material and 97% of anode material production. We’ve let these things leave the country for far too long,” the senator says.

Gracelin Baskaran, founding partner of the Project on Critical Minerals Security at the Center for Strategic and International Studies, reports the U.S. “has less than 1% of the world's nickel, graphite and cobalt. Never mind that we opened and closed our only cobalt mine last year because of market volatility, but we also only have about 1.3% of the world's rare earth.”

Baskaran, warning about a permitting backlog in the US, adds, “One of the reasons China has been very successful is that minerals have been a core part of both its domestic industrial and foreign policy strategies for decades.”

Can the U.S. and Europe catch up?

“We probably can’t right now,” Andrew Miller, Benchmark chief operating officer, says in an interview. “But where I see a lot of opportunity in the U.S. is in developing the next stage of technologies, whether it be in extraction of raw materials or in developing different types of battery technology. China didn’t do everything overnight.”

Miller also supports tariffs as a means of leveling the playing field.On May 14, the Biden Admin. raised tariffs on Chinese EVs and li-ion batteries from 25% to 100% and from 7.5% to 25%, respectively. The European Union on June 12 raised Chinese EV tariffs to 38.1% effective from July.

Meanwhile, the minerals markets have been unstable, creating uncertainty moving forward.

Benchmark’s chief data officer, Caspar Rawles, warns that “Since 2023 we have seen lower prices across most critical mineral markets, delaying investments” estimated at $559 billion through 2030.

“Some of these operations face delays of up to 10 years or more in terms of initiating construction,” says Rawles. “Just under half, $223 billion, needs to be spent on upstream processes with the remaining balance, $336 billion, across the mid- and downstream operations.”

Upstream investments include $56 billion in nickel, $50 billion in lithium, $11 billion in cobalt, $3.5 billion in natural graphite, $3 billion in synthetic graphite and $800 million in manganese. Other unspecified minerals are projected to total $75 billion with recycling growing to $24 billion.

Downstream investments include $125 billion in battery materials and $211 billion in batteries. Battery materials include cathodes at $61 billion, anodes at $18 billion, and electrolytes and separators at $44 billion.

Investments in battery production, according to Benchmark’s forecast, will include $80 billion in new capacity and $131 billion in facility expansions.