May 17, 2022

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The United States looks to the Anglosphere for important minerals. and Europe?

The US Department of Defense has asked Congress to include Australia and Great Britain in the new package of defense funds. Investing in new industrial capabilities in the raw materials sector, which is essential for military and green technologies, will be critical. While Europe…

To face the growing dangers along The Suppliers of raw materials The United States is critical of the military industry and renewable technologies, and is looking forward with great interest to new partnerships with traditionally allies, including Australia, Canada and Great Britain.

This is confirmed by the recent initiative of the Ministry of Defense, which asked Congress to make an important amendment to Defense Production Act (DPA), a legislative tool that was improved upon during the Cold War, and is also widely used during the Covid-19 emergency by the Trump administration and recently summoned To revive domestic production of strategic assets, such as semiconductors and batteries. It is a mechanism that also provides for the possibility of requiring companies to give priority to the production of certain materials, according to a list of priorities established by the relevant federal agencies. A partial revision of the List of Important Substances by the USGS is also recent.

Pentagon officials are actually working to include them in the future National Defense Licensing Actthe process of authorizing military expenditures in the national budget, and some items that could be useful to address the raw materials crisis and restart US production of lithium, cobalt, rare earths and other critical minerals needed for the transition green technology.

Currently, only Canadian companies, as well as US companies, are of course eligible for access to DPA funds. The proposal would like to broaden the definition of “local source“For Australia and Great Britain, giving their own companies access to federal funding, thereby extending the concept of a ‘national industrial base’ to countries that are allies and on which strong and competitive business partnerships can be built. There are two aspects that will be critical to meeting the technical and industrial challenge with the Republic of China. Popularity, which controls most of the upstream and downstream sectors of the supply chain.

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Australia, a country with a mining tradition, is already a reference point in global markets for lithium production, while Britain recently revised its industrial ambitions with the goal of becoming a major player in battery production, as well as which – which Important main center For circular economy and refining of important metals such as nickel, rare earths and lithium.

The United States and Australia have long started multilateral dialogues and signed important agreements with the approval of the House of Representatives Ministry of Defense, especially to revitalize important domestic production of rare earths on US soil, as evidenced by the commitment of the Australian company Lynas Corporation to build a heavy rare earth separation plant (critical for state-of-the-art military systems) in Texas, funded by the Pentagon with $30 million. MP Materials has benefited from similar funds, with nearly $45 million to shift from extractive activities to activities with greater added value, such as separating and manufacturing metal alloys: the bottleneck is the truth supply risk for the US technology industry, in which current federal intervention may not be sufficient to ensure a Equal chances between Chinese and American production.

In general, the amendment in question could lay the foundations for “circumvention”, in the medium to long term, for China by diversifying supplies from Like-minded countries, thus reducing risks to American companies by deepening competition with Beijing. The war in Ukraine and the invasion of Russia, two countries that contribute significantly to exports of palladium, nickel, aluminum and other raw materials, albeit in different volumes and markets, have in fact relaunched the topic of “geopolitical risks” of dependence. on authoritarian countries for the material supplies critical to decarbonization.

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In early May, the US Department of Energy announced $3.1 billion as part of Bipartisan Infrastructure LawTo stimulate local production of batteries and components (anodes and cathodes) as well as launch pilot projects to recycle and reuse materials with an allocation of nearly $60 million. Both initiatives are looking toward a 50% auto market made up of electric cars sold by 2030, as well as being part of previous Biden presidency initiatives to bolster the supply chain for battery metal And ensuring adequate supplies to national industries, as the lithium battery market is set to explode in this decade.

From a transatlantic perspective, the EU’s role in this global commodity race remains poorly understood. As reported in these columns, strategic ambitions and freedom from fossil fuels set Europe on a path paved with opportunity and danger, particularly with regard to Suppliers An important mineral. Desire to revive European production of key renewable technologies – such as wind turbines, photovoltaic panels, batteries And hydrogen cells – to ensure a fair, green and competitive transition (the Green Deal) will increase exponentially European demand for raw materialsTransferring geopolitical risks from downstream to upstream. A two-headed strategy apparently, according to Policy Summary The joint project between the European Council on Foreign Relations and the Rhodium group, risks being dangerous and counterproductive.

The Ukrainian conflict and the context of increased competition between great powers prompted a renewed focus on dependencies on authoritarian states. “China’s increasing dominance in critical sectors of these supply chains deserves attention,” since the i . case policy makers Europeans “not if, but how they should respond” to an international crisis that could affect supply chains in the future. Especially since “geopolitical considerations have not received much attention in traditional risk assessments along renewable supply chains.” the solution? Dependencies map, to anticipate the future disturbanceidentifying intervention tools aimed at meeting the needs and characteristics of each industry and sector of the value chain, mobilizing the private sector and resorting to public procurementWith the aim of sustainability as an added value for companies. Above all, avoid chasing autonomy.

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“Full resettlement is a very expensive option,” which could increase costs and delay the adoption of technologies useful to achieve the energy transition goal. Instead, a multidimensional but realistic approach will be required. “The most sensible approach is for European decision makers to assess their exposure to risks from China, rather than trying to remove all links with Chinese companies in the supply chain.”

Rewriting the geography of globalization, through an approach that rewards reliability and transparency, shared technological standards and agreed political and social goals can be in the threads of the EU-US Trade Technological Council, the renewed Group of Seven, and the Organization for Economic Co-operation and Development. However, more coordination will be needed in a transatlantic perspective of the raw materials and downstream sectors, to prevent the West from collapsing by resorting to protectionist practices, with distorting effects on the security and competitiveness of emerging supply chains.