The world’s richest countries are realizing how poorly equipped they are to access the critical minerals needed for emerging technologies, especially renewable energy, energy storage, electrification, and smart devices.
But they may not yet realize the implications, according to Michelle Michot Foss, the fellow in energy and minerals at Rice University’s Baker Institute, including disruption of the falling cost curves that advocates of renewables and storage love to display.
“We’re in a very slow realization… that the US and and the OECD in general are not very well positioned on all of this,” Foss said this month during a Baker Institute conference on the energy transition. “We barely have a mining industry in the U.S. today versus when I was a young professional starting out.”
Even redeveloping a mining industry would not be enough of a solution, she added.
The 36 member states of the Organisation for Economic Co-operation and Development (OECD) tend to be free-market, developed economies that have moved away from mineral extraction or, in some cases, have depleted their resources.
They sit at a disadvantage as consumers of critical minerals for these reasons offered by Foss:
1 Resistance To Mining
“We have a lot of reluctance to support extractive industries and minerals processing in our countries.”
2 Past Mining
“Because we’ve extracted some of the higher quality stuff, our resources are not as good as what we can find in frontier areas.”
“Minerals processing is complicated, and the really sad thing is we’re not teaching that much.” Later in the discussion, Foss urged the attorneys present to bone up on mining agreements, intellectual property protection and arbitration related to mining activities.
“It doesn’t matter where you look in all of this, China dominates the minerals and material supply chains,” she said. “They are aggressive in controlling intellectual property. They certainly are aggressive in controlling and investing in manufacturing capacity.”
According to a May 2019 report in Foreign Policy, China controls 80 percent of rare earth elements (including the only REE mine in the U.S.), 94 percent of gallium, 70 percent of graphite, 59 percent of lithium, 56 percent of vanadium.
Soon after that article appeared, Felix K. Chang of the Foreign Policy Research Institute—who has a a higher estimate of the amount China controls—warned that China could weaponize rare earth elements in President Trump’s trade war:
“China might use its control over 90 percent of the world’s production of rare earth metals as leverage in its trade war with the United States. At any time, China could restrict or even embargo the export of the metals.”
But when the Baker Institute convened a workshop on critical materials recently, Foss said, most of the discussion focused on a common base metal: copper.
China has also invested heavily in Copper.
People need to realize, Foss said, when they’re looking at the falling costs for renewable-energy technologies and energy storage, that those costs depend on a supply chain controlled in part by China.
“If something were to happen in that and we had to actually pick up pieces of that capacity and do it ourselves, it would not look the same in terms of cost structure.”