Column: Trump 2.0 won't reverse Biden's critical minerals push: Andy Home

Constellium SE

21/11/2024 14:37

By Andy Home
       LONDON, Nov 21 (Reuters) - Donald Trump has described
the Inflation Reduction Act (IRA) as a "green scam" and vowed to
repeal it after he returns to the White House in January.
    This is bad news for sectors such as electric vehicles (EV)
and wind power, which have been major recipients of the Biden
administration's signature $369 billion energy transition
legislation. 
    But some of the "new green deal" money has also been
channeled to the U.S. industrial base, such as the $75 million
allocated for an upgrade of Constellium's  CSTM.N  aluminium
rolling mill in West Virginia. 
    Will this too be clawed back? It seems unlikely because when
it comes to rebuilding U.S. industrial capacity and cutting the
country's critical minerals dependency on China, there is
remarkable cross-party consensus. 
    Indeed, it was then-President Trump who in 2020 declared the
country's "undue reliance" on "foreign adversaries" for critical
minerals a national emergency.
    Trump in his second presidency is unlikely to reverse the
drive to metallic self-sufficiency. He may even prove to be an
accelerator. 
    
    INVESTING IN AMERICA
    Both the Department of Energy (DOE) and the Department of
Defense (DOD) have pumped billions of dollars into rebuilding
U.S. metals capacity. 
    The DOE has largely channeled funds to EV battery inputs
such as lithium, manganese and graphite.
    The DOD has sprinkled the cash far more widely, targeting a
spectrum of esoteric elements ranging from antimony to
zirconium, including an unidentified "critical material"
incongruously described as essential both for "the protection of
human lives" and ammunition packaging. 
    The Biden administration boasts that thanks to government
largesse companies have announced $120 billion in investment in
domestic battery and critical minerals capacity. 
    Yet most of that investment has been concentrated on the
downstream part of the supply chain. 
    Seventeen new U.S. battery plants have been announced since
the IRA came into effect in July 2022, boosting pipeline
capacity by 68% through 2030, according to research house
Benchmark Mineral Intelligence. 
    When it comes to investing in the metals needed to supply
those gigafactories, most of the projects receiving federal
funds are those looking to enhance existing recycling capacity. 
    New primary smelting projects remain conspicuous by their
absence. Century Aluminum  CENX.O  has been awarded a potential
$500 million to build a new aluminium smelter but there has been
no update since the original announcement in March. 
    Even the DOD's high-priority rare earths processing venture
with Australia's Lynas Rare Earths  LYC.AX  has run into
trouble. Earthworks at the Seadrift site in Texas have been put
on hold due to problems getting a wastewater permit, Lynas said
in its latest quarterly report. 
    
    STUCK IN THE GROUND
    New smelting capacity needs new mines to supply it and
that's where the U.S. minerals investment boom is still
struggling to build momentum. 
    Most of the funds committed to the mining sector have been
directed at lithium, both for new mines such as Lithium
Americas'  LAC.TO   Thacker Pass and multiple projects
experimenting with direct extraction technology. 
    South32's  S32.AX  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. 
    Many others, however, remain mired in the country's tortuous
permitting process. 
    The Biden administration has struggled to reconcile its
desire to produce the metals needed for the green energy
transition with its environmental credentials. 
    Big copper projects such as the Pebble mine in Alaska and
the Twin Metals project in Minnesota have been killed off.
    Trump has already promised to reverse Biden's 20-year ban on
mining in the Superior National Forest in Minnesota in "about 10
to 15 minutes" of taking office. 
    That in itself won't be a green light for the Twin Metals
project, which would still have to get state permitting
sign-off, but it's a sign that the Trump administration won't be
hobbled by the green-on-green cabinet conflict that
characterised the last four years. 
    
    FOCUS ON CHINA
    A new Trump administration is also likely to take a much
tougher line on critical metal imports from entities linked to
China. 
    Talon Metals  TLO.TO  has been allocated funds by both the
DOD and DOE to progress its Tamarack nickel project in Minnesota
and explore for more resource in the state. 
    It's a tough time to be in the nickel business, though, as a
mining boom in Indonesia has crushed prices and forced many
existing operators out of business. 
    Most of Indonesia's nickel capacity is controlled either
directly or indirectly by Chinese entities, which has not
stopped U.S. carmakers such as Ford  F.N  from joining the
Indonesian nickel rush. 
    Price has trumped 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 Huayou Cobalt, the nickel from
the new plant in Indonesia could even count as IRA-compliant and
qualify for federal EV subsidies.
    Such sourcing ambiguity seems unlikely to survive the Make
America Great Again focus of a new Republican administration.  
    Indeed, every sign so far is that Trump 2.0 will double down
on the U.S. minerals self-sufficiency drive, even if it means
accepting that not all of the IRA funds are a "green scam". 
    
    The opinions expressed here are those of the author, a
columnist for Reuters.
     

 (Editing by Mark Potter)
 ((andy.home@thomsonreuters.com, 44-207-542-4412 and on Twitter
https://twitter.com/AndyHomeMetals))