In 1944, when the outcome of World War II hung in the balance, the rapid advance of Allied forces across Europe suddenly stalled due to fuel shortages. In the famous words of then-Gen. George Patton: “My men can eat their belts, but my tanks have gotta have gas.”…Patton’s quote is a testament to the crucial role of supply chains and logistics in military operations. Simply stated, supply chains win wars and save lives. Materials need to be in the right place at the right time…For the United States today, those materials include many more resources than fuel for tanks. A host of so-called critical minerals are essential to building and maintaining modern weapons systems. In today’s globalized world, the United States and other major world powers are alarmingly dependent on other nations—first and foremost China—for these materials…Russia’s invasion of Ukraine demonstrated the dangers inherent in heavy dependence on another state, especially a hostile one…If you’ve heard of critical minerals before, then it was likely in the context of climate change and the energy transition. Lithium, cobalt, nickel, graphite, and many other minerals are critical for building electric car batteries, wind turbines, solar panels, and other clean energy technologies. Russia’s war in Ukraine has hastened the clean energy transition and pointed a spotlight on the availabilities of these minerals…The United States and its allies do not produce anywhere near enough of these minerals to maintain our military’s technological edge in the coming decades…Developing advanced weaponry will require new critical minerals and the supply chains that deliver them…The U.S. Geological Survey keeps a list of these and other minerals critical to U.S. national security, economic, infrastructure, and energy needs…Although some of these minerals can and are sourced by ally-shoring, other minerals and intermediate products are sourced primarily from China. Moreover, after mining, these minerals must be refined and processed along an international value chain. The same lithium-ion batteries that power electric vehicles in the suburbs also have military applications, including electric-powered tactical vehicles, autonomous systems, and austere operational concepts…Last fall, Congress authorized $1 billion for the National Defense Stockpile to acquire strategic and critical materials, an important step toward creating additional buffer stocks in the event of crises and disruptions in supply chains. However, the appropriation for fiscal year 2023 only included $93.5 million for the stockpile and about $373 million for minerals-related purchases under the Defense Production Act…Over the past few years, the Pentagon has pushed to strengthen domestic production of critical minerals. A framework for this plan was pursued under the 2019 use of the Defense Production Act and was expanded under the Biden administration to include battery materials. 

The EU announced its intention to set up a central purchasing agency in charge of buying critical raw materials, outlined in the proposed Critical Raw Materials Act (CRMA) published yesterday…The proposal, in chapter 2 article 24 of the legislation, would see the EU set up and operate a system to "aggregate the demand" of consumers of critical raw material (CRMs) in the bloc and set up a purchasing system for the entire bloc. While details will emerge in the coming months as the European Parliament and Council ratify the deal, it could resemble similar functions in other markets, such as the Chinese State Reserve Bank (SRB) and the US national defence and strategic stockpiles…The SRB has periodically entered the Chinese domestic market to buy CRMs such as cobalt metal, used in batteries. Recently, the administration of US president Joe Biden said it would increase and update the list of CRMs used in its federal stockpiles…Metals listed in the EU CRMA include battery metals such as cobalt, lithium, manganese and battery-grade nickel, as well as natural graphite, magnesium, titanium and rare earth elements. Depending on the level of engagement the new EU agency has with the markets, this could put significant upward pressure on prices, as has been the case in the past when the Chinese SRB enters the market…The CRMA highlights the bloc's overreliance on single sources for certain materials…"The EU sources 97pc of its magnesium in China. Heavy rare earth elements, used in permanent magnets, are exclusively refined in China. 63pc of the world's cobalt, used in batteries, is extracted in the Democratic Republic of Congo, while 60pc is refined in China. This concentration exposes the EU to significant supply risks," the act reads…The move comes at a time of increasing nationalism, protectionism and attention on global resources needed to transition towards a greener economy. The act references several events that have spurred its development…"Disruption in the supply of essential goods during the Covid-19 crisis and the energy crisis sparked by Russia's war of aggression against Ukraine have highlighted the EU's structural supply dependencies and their potentially damaging effects in times of crisis”…The EU also aims to catch up with China and the US in terms of recognising the importance of these materials. 

Japan and Germany vowed to deepen cooperation on defense and climate protection and work more closely together to reduce excessive dependencies in critical areas such as raw materials….“The international community is facing a time of great change and Japan and Germany need to cooperate even more closely than before to maintain and strengthen the free and open global order based on the rule of law,” Kishida told reporters after the meeting…In a declaration issued after the summit, the two governments condemned Russia’s war in Ukraine…Agencies from the two countries will collaborate on critical minerals supply, according to the statement. Germany and Japan also discussed possible joint procurement of raw materials between companies in their respective economies, Scholz said during the news conference…Major developed nations such as Germany and Japan are competing fiercely for increasingly scarce resources, with access to metals and rare earths seen as crucial for the transition to cleaner and more technologically advanced economies…In the global race for many of the commodities, China has become the dominant supplier or processor, leading to warnings about the government in Beijing wielding excessive influence…Scholz has repeatedly stated that democratic nations must work more closely together to counter the influence of economic rivals with different political systems…German carmakers and their suppliers are trying to secure direct access to raw materials such as lithium and cobalt needed in the production of battery cells for electric vehicles…Russia’s war in Ukraine exposed the dangers of over-reliance on a single supplier for energy imports and Scholz’s ruling coalition is keen to avoid similar dependencies when it comes to raw materials.

The head of Canada’s top mining association said Ottawa’s strategy to build an electric vehicle industry could fail if it doesn’t encourage miners through tax credits and other incentives to construct the mines needed to produce critical minerals that power EVs, such as nickel and lithium…Existing policies have encouraged the hunt for new mineral deposits in Canada, and have brought investment from big automakers and battery companies such as Volkswagen Group and LG Energy Solutions in the past year, said Pierre Gratton, head of the Mining Association of Canada…But the government “appears to have taken for granted” miners, who require millions of dollars to construct mines, Gratton said ahead of the federal budget on March 28…“We have projects now that are almost shovel-ready but they are having trouble raising financing,” said Gratton, who represents a group of about 50 of the country’s biggest miners. “They sort of have taken our sector for granted, just assumed that Canada is a mining powerhouse, and we are going to be fine, but we are not.”…The demand for electric vehicles has increased globally as nations work on ways to meet their climate goals. Canada is looking to build a low-carbon EV industry and in its last budget allocated $3.8 billion to boost the critical minerals sector…It was a move that Gratton lauded at the time. However, 12 months on, the sector hasn’t benefitted as expected. He said that none of the $1.6 billion so far allocated under the government’s Strategic Innovation Fund (SIF) will benefit an advanced mining project nearing construction…“If these car companies think that we are going to be able to supply them on the track that we are on now, they are mistaken, so we have got to do something to turn that around,” said Gratton…Gratton’s main concern is that Canada’s production of metals such as cobalt and nickel — both of which are used in EVs — have decreased in the past decade. He said the government needs to take steps to change the trend…Natural Resources minister Jonathan Wilkinson told the Financial Post March 7 that the government has a “comprehensive strategy” to focus on all parts of the EV value chain. “Getting to where we need to get to in terms of the volumes of minerals we are going to need in 2035 is a challenge ,there is no question about that,” he said.

Budget 2023 has the opportunity to place our sector at the forefront of critical minerals development. Supports in last year’s budget, most recent Fall Economic Statement, and the Canadian Critical Minerals Strategy are positive, but most of the government’s attention — and success — has been downstream, attracting new investments in electric vehicles and battery manufacturing…However, the endurability of the electric battery ecosystem is contingent on more metals — a lot more — being mined. Put simply, Canada needs to attract more investment into the mining sector, or Canada’s position in the race for advanced technology manufacturing — and the benefits that flow from that — will be significantly diminished…The EU and US, particularly the latter’s Inflation Reduction Act (IRA), which commits billions towards the country’s clean energy tech and domestic mining sector, are prioritizing their place in the global green supply chain to a much greater degree than Canada…Given the fact that minerals and metals mined in Canada use less carbon intensity than almost any other mining jurisdiction, Canada should be the leading supplier of these critical materials to meet global demand. In order to enhance our sector’s competitiveness and capture this opportunity, the 2023 Budget needs to commit to additional programming and/or tax incentives to the mining and mineral processing segment of the value chain, or we risk being left behind and instead having these materials supplied by competitors with far lesser ESG (environment, social and governance) credentials…Announcements from auto manufacturers, including companies like Volkswagen, which recently chose Ontario as host to its first North American EV battery plant, will only come with increased frequency if investments are made into our mining sector…Why do they choose Canada? For its supply of critical minerals, ESG standards, Indigenous engagement and clean electricity, among many other attributes – but, we need many more Canadian mines, smelters and refineries to feed the needs of battery plants and the EV value chain. Budget 2023 is our opportunity, right now, to signal Canada’s attractiveness as a destination for battery manufacturing by prioritizing a secure, sustainable and long-term supply of domestic battery grade materials, including expanded production of the raw inputs essential for their manufacturing…We don’t have another year to wait for the government to prioritize the minerals and metals, particularly critical minerals, essential to the battery and EV supply chain. Budget 2023 can level the playing field with the IRA and other competing regions and empower Canada to advance an active position to succeed in the critical minerals race. Time is of the essence and Canada must come to the table if our goals to be the global mining supplier of choice are to be realized.

Volkswagen AG said lucrative new US incentives for EV makers were just too good to pass up when weighing to pick a partner or build its own factory to make cars for the new Scout brand. The German manufacturer this month moved ahead with plans for a $2 billion factory in South Carolina to produce electric SUVs as part of Scout Motors Inc. The factory is due to open in 2026 and will eventually churn out 200,000 EVs annually…“We view it simplistically a little bit like the Gold Rush,” Scott Keogh, chief executive officer of the Scout brand said Monday, equating the 1849 California Gold Rush with the federal Inflation Reduction Act that provides incentives for domestically produced EVs. “There’s never been a better time to build a factory in America.”…VW considered hiring a contract manufacturer like Taiwan’s Foxconn Technology Group to build its new plug-in pickups and rugged SUVs. But the IRA signed into law in August by President Joe Biden expanded consumer credits of up to $7,500-a-vehicle and added incentives to build EVs and batteries in America. That convinced VW to break ground on its own facility on 1,600 acres near Columbia, South Carolina, which will employ 4,000 workers when it opens in 2026.