President Joe Biden said the Inflation Reduction Act (IRA) contains “the most valuable resource ever to combat the deadly problem of climate change.”
To increase the country’s production of wind turbines, solar panels, and electric vehicles, the federal government will invest nearly $369 billion in climate change and energy security.
The IRA is increasing and expanding existing subsidies for electric vehicles, which can be as high as $7,500, although the tax credit is subject to battery mineral content source requirements.
At least 40% of the battery’s base metals, such as cobalt, lithium, manganese, and nickel, must come from the United States or one of our Free Trade Agreement (FTA) partners.
Automakers have strongly opposed the link, arguing that China still maintains a strong position and the United States is lagging behind in the supply of battery metal.
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To break China’s position and expand domestic vital mining capacity, or at least amicable, the relationship between subsidies and mining inputs is set to speed up this process.
According to Benchmark Mineral Intelligence, China currently produces 81% of the world’s battery cathodes, refines 75% of the world’s cobalt, and processes 59% of the world’s lithium.
Whereas the combined production of the United States and Canada refines only 3.0% and 3.5% of the world’s lithium and cobalt, respectively, and has a lower cathode battery capacity.
However, Argentina, which is experiencing a boom in lithium investment, and Indonesia, which is emerging as a battery-metal hub thanks to its massive nickel reserves, are not on the list.
Due to the lengthy construction of new mines, particularly in the United States, automakers are still struggling to qualify for subsidies.
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