Trump 2.0 won’t reverse Biden’s emphasis on critical minerals: Andy Holm

LONDON (AP) — Donald Trump has branded the Inflation Cut Act a “green scam” and vowed to repeal it after returning to the White House in January.

That’s bad news for sectors like electric vehicles and wind energy, which have been major recipients of the Biden administration’s signed $369 billion energy transition law. But some of the “green new deal” money has also been deployed to the American industrial base, such as $75 million allocated to upgrade Constellium’s aluminum rolling mill in West Virginia.

Will this also be held back? This seems unlikely because there is remarkable cross-party consensus when it comes to rebuilding American industrial capacity and reducing the country’s critical mineral dependence on China. In fact, it was then President Trump who declared the country’s “undue dependence” on “foreign adversaries” for critical minerals a national emergency in 2020.

In his second presidential term, Trump is unlikely to reverse his mission of metals self-reliance. It can also prove to be an accelerator.

Both the Department of Energy and the Department of Defense have invested billions of dollars in rebuilding US metals capacity.

DOE has invested massive amounts of money into EV battery inputs like lithium, manganese and graphite. The DOD has splashed cash far more widely, targeting a spectrum of esoteric elements ranging from antimony to zirconium, including an unidentified “critical material” that is inconsistently described as “protecting human life” and Ammunition packaging is said to be essential for both.

The Biden administration claims that due to the government’s generosity, companies have announced investments of $120 billion in domestic battery and critical mineral capacity.

Yet much of that investment is focused on the bottom of the supply chain.

Seventeen new US battery plants have been announced since the IRA went into effect in July 2022, increasing pipeline capacity by 68% by 2030, according to research house Benchmark Mineral Intelligence.

When it comes to investing in the metals needed to supply those gigafactories, most projects receiving federal funding are looking to increase existing recycling capacity. New primary smelting projects remain conspicuous by their absence. Century Aluminum has been awarded a potential $500 million to build a new aluminum smelter, but there has been no update since the original announcement in March.

Even DoD’s high-priority rare earth processing venture with Australia’s Lynas Rare Earths has fallen into trouble. Earthworks at the Seadrift site in Texas have been halted due to problems obtaining a wastewater permit, Lynas said in its latest quarterly report.

New mines are needed to supply the new smelting capacity and this is where the US minerals investment boom is still struggling to gain momentum.

Most of the funds committed to the mining sector have been directed at lithium, both at new mines such as Lithium Americas’ Thacker Pass and several projects experimenting with direct extraction technology. South32’s Hermosa zinc-manganese project in Arizona is a non-lithium stand-out, qualifying for both DOD and DOE funds and the first mine to qualify for the Fast-41 accelerated permitting process.

However, many others are stuck in the country’s complex permitting process.

The Biden administration has struggled to reconcile its desire to produce metals needed for a green energy transition with its environmental credentials.

Large copper projects such as the Pebble mine in Alaska and the Twin Metals project in Minnesota have been closed. Trump has already promised to reverse Biden’s 20-year ban on mining in Minnesota’s Superior National Forest within “about 10 to 15 minutes” of taking office.

This in itself would not be a green light for the Twin Metals project, which still requires state approval, but it is a sign that the Trump administration will not be deterred by a green-on-green Cabinet clash. Which is the specialty of the last four years.

The new Trump administration is also likely to take a tougher stance on critical metal imports from entities linked to China.

Talon Metals has been allocated funding by both DOD and DOE to advance its Tamarack Nickel Project in Minnesota and explore more resources in the state.

However, it is a difficult time to stay in the nickel business, as the mining boom in Indonesia has crushed prices and driven many existing operators out of business. Most of Indonesia’s nickel capacity is controlled directly or indirectly by Chinese entities, which has not stopped American carmakers like Ford from joining the race for Indonesian nickel.

Price trumps politics when it comes to securing a key metal for EV batteries.

Depending on the structure of the joint venture between Ford, Vale and China’s Zhejiang Huayue Cobalt, nickel from the new plant in Indonesia could also count as IRA-compliant and qualify for federal EV subsidies.

Such sourcing ambiguity seems unlikely to sustain the new Republican administration’s Make America Great Again focus.

Indeed, every indication so far is that Trump 2.0 will double down on the US mineral self-reliance campaign, even if it means admitting that not all IRA funds are “green scams.”

The opinions expressed here are those of the Reuters columnist author.

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