Exploring the mining dividend

Mining in this part of the world has gone on for a very long time.  The reality of mining is that it has done more to raise the standard of living than any other activity, creating vast manufacturing capability that would eventually transform the industrial world.

Yet even as demand for minerals increases, driven by growing concerns about global warming and national security, mining’s position in the nation’s economy is being questioned and challenged as never before.

Why this debate about the single most important source of raw materials needed in the transition from fossil fuels to renewable energy sources?  The many minds that have focused on averting the worst effects from climate change have converged in the last few years on a single, all-encompassing strategy: make electric cars a growth business.  Rid the world of conventional vehicles by improving the capability and reducing the cost of electric cars so that the switch to electrified transportation occurs.  Here in the U.S., the transportation sector — mainly cars, trucks and planes — are the biggest source of carbon emissions.

Mining is critically important because electric car batteries require large amounts of lithium, cobalt and other metals.  There are the traditional opponents — not-in-my-backyard groups, environmentalists, Indigenous people concerned about mining encroachment on sacred land.  Some worry that the physical supply of minerals will run out, although geologists say there are ample resources — more than $6 trillion worth of minerals below the ground in the United States, mainly on public land.  But the supply of minerals has not kept pace with growing demand.  Consequently, most of the vital minerals like lithium and rare earths must be imported.

Can the U.S. rely on foreign suppliers?  The evidence is not good.  More than half of the battery metals are supplied by China, which recently cut off exports of two minerals needed for the manufacture of superconductor chips.  The question is whether China will do the same with battery metals.  In truth, we don’t know. For now, however, it is clear that the much higher levels of demand for electric car batteries will inevitably drive technological change and the search for alternative sources.

The problem is not that global supplies are scarce.  The problem is increasing international competition for the supplies.  Consider that three major suppliers of lithium — Argentina, Chile and Bolivia — have reportedly discussed creating a lithium cartel patterned after the OPEC oil cartel.  Indonesia, the world’s largest source of nickel, has floated the idea of forming a nickel cartel.  As it is, China dominates the global processing of lithium, nickel and other battery metals — and it gets to decide who gets the minerals first and at what price.

Let’s say it plainly: The U.S. needs to open more mines like the one proposed south of Omaha that would supply badly needed niobium, scandium, titanium and rare earth minerals.  Nebraskans should welcome this new mine since over the years it would bring tangible benefits to everyone here and now.

You might consider that both the World Bank and the International Energy Agency expect global demand for battery metals to skyrocket by 2035.  The need for lithium is expected to grow six times.  But in the U.S. there’s only one lithium mine, one cobalt mine, one nickel mine, one rare earth mine.  The risk of shortages is a rising worry for battery and automobile manufacturers.  But worries don’t translate into solutions unless the government steps in.  That will require action by the Biden administration and Congress to streamline the permitting process for new mines since a mine can take more than 20 years to go through the permitting process and eventually reach full production.

There is simply no credible way to address the critical need for minerals without changing the way we regulate mining.  If we don’t ramp up domestic mining soon, batteries and electric cars will only be produced in China.  Sounds unbelievable?  Today China has more electric cars on the road than any other country and produces more batteries than the rest of the world combined.

If any mining bill can win bipartisan support, modernizing the mine permitting process is it. But it will succeed only if the American people come together to make Congress act.