The Biden administration is considering using federal dollars to prop up U.S. critical minerals projects being hammered by an influx of cheaper Chinese materials, an Energy Department official familiar with the potential move told POLITICO…Under the policy, the department would set a price floor and agree to pay the difference when market prices fall below that threshold for critical minerals produced by certain U.S. projects. The effort comes in response to delays and cancellations of many U.S. minerals processing projects, including those that were set to receive a collective $1 billion in grants from the Biden administration…Such a federal backstop would help meet a major goal of the Biden administration’s climate and manufacturing agenda — boosting the domestic production of minerals for clean energy technologies such as electric vehicles, a global supply chain that China now dominates. It would add to a growing trend of bipartisan support for government intervention in the economy, including former President Donald Trump’s call for widespread tariffs and Vice President Kamala Harris’ push for tougher penalties on price gouging…Chinese oversupply has crashed the price of lithium, nickel and other minerals key to the clean energy transition, making it harder for owners of U.S. minerals projects to secure financing despite grants and other support they’re receiving from President Joe Biden’s administration. Those struggles have led some in the industry and the administration to believe the government must do more than provide an initial capital investment…The goal of the policy under consideration would be to help reassure investors and customers that domestic suppliers can overcome China’s efforts to maintain its stranglehold on the critical minerals industry…Even if minerals prices stay high enough that the government never needs to disburse the funds, the promise to do so can help projects secure purchase agreements from customers that are crucial to financing their construction…The industry laid out its predicament to DOE in response to a request for information that the MESC office published this spring, seeking feedback on the dynamics of the critical minerals market. Companies expressed “strong support” for the department to implement “demand-side tools,” such as a price floor or contract for differences, to address the market concerns, according to a summary of the responses the agency released on Friday…To secure financing, minerals project owners typically need to sign agreements with potential buyers such as automakers or battery cell manufacturers that show they will generate enough revenue to pay back investors…But those customers have been loath to sign long-term purchase agreements with U.S. suppliers given the possibility that mineral prices will keep falling, and the fact that American-made minerals are more expensive than Chinese ones to begin with, companies say…U.S. producers and government officials have accused China of subsidizing its producers to flood the global market with cheap minerals produced with lower social and environmental standards. A top State Department official, Jose Fernandez, told POLITICO this month that China is engaged in “predatory pricing” to frustrate U.S. efforts to develop its own high-standard sources of minerals…But some companies say the Energy Department needs to go beyond supporting capital construction by implementing a backstop mechanism, which would guarantee that specific producers can receive a minimum price for their minerals even if market prices slip…“Offtake backstops help derisk project development and enable developers to access project financing,” the think tank Federation of American Scientists, which researches science-based policy solutions, wrote in a recent report calling on DOE to create such a mechanism…The idea may be able to find some traction on both sides of the aisle in Congress and in Europe, which is also seeking to wean itself off Chinese minerals.

Today, one strategic imperative for the US (and the West) is becoming increasingly urgent, namely the vulnerability of supply chains, and in particular the critical minerals vital for electric vehicles, battery storage and the wider energy transition…The International Energy Agency estimates that we need an extra $800 billion of investment in new mining projects by 2040 to meet the 1.5 °C target. To appreciate the scale of the challenge, compare critical minerals to oil, with its historically fraught impact on international relations…Whilst no single country has more than a 15% share of oil supply, China has a more than 80% share in gallium, magnesium, tungsten, to take just three critical minerals – and controls almost all the mines in the Democratic Republic of Congo which produces over 70% of cobalt…The West is 20 years behind China, which avails itself of the subsidies, price control and long-term planning that only a command economy can, creating a massive cost of capital disadvantage for Western investors. In such a concentrated market, over-production – take nickel – can deflate the price artificially, undermining Western investment despite massive long-term demand. It is now a major geopolitical fault line, exposing Western vulnerability…The current US administration is considering demand-side tools like contracts-for-difference, fixed price floors, and loan guarantees to try to off-set the cost of capital disadvantage Western firms face. The aim of promoting a race to the top – with the highest ESG standards in mining reflected in investor pricing – is laudable…Second, friend-shoring needs to be more ambitious. The US, let alone its allies, cannot be individually self-sufficient. We need to forge wider clusters of high-trust partnerships to provide broader, end-to-end supply chains…Finally, we need better public-private partnerships. Businesses can bring investor acumen, technical expertise, innovation and high ESG standards…For its part, in addition to financial support, governments need to streamline permitting, and collaborate better to provide diplomatic and security assurances, and deploy aid in ways that support supply chains – for example, financing roads, rail and port infrastructure in developing countries.

The Development Bank of Southern Africa has approved as much as $200 million for the US-backed Lobito corridor rail project that will haul critical minerals from central Africa’s copperbelt to an Atlantic port in Angola…“The railway line is part of a broader strategy to support the energy transition by facilitating the export of critical minerals needed for renewable-energy technologies,” Mpho Mokwele, executive for transacting at DBSA, said in a statement Tuesday. “The Lobito corridor is expected to become the most competitive route for exporting these minerals, offering significant cost and time savings for exporters.”…The lender is providing the financing alongside the US International Development Finance Corp., which has approved $553 million for the project…The project is part of a US plan to secure access to critical minerals such as copper and cobalt, while at the same time trying to gain influence in a region that China has dominated. 

China, Tanzania and Zambia signed an initial agreement to rehabilitate a decades-old railway aimed at improving the rail-sea transportation in resource-rich East Africa, Chinese state media said on Wednesday…President Xi Jinping witnessed the signing of the memorandum of understanding on refurbishing the 1,860 kms (1,156 mile) Tanzania-Zambia Railway Authority (TAZARA) railway with the Tanzanian and Zambian presidents, who were in Beijing attending the Forum on China-Africa Cooperation, according to the state-run Xinhua news agency…The single-track TAZARA railway was built between 1970 and 1975 through an interest-free loan from China, offering a cargo transport route from Zambia's copper and cobalt mines to the sea on Tanzania's coast that bypasses South Africa and the former state of Rhodesia.

Leaders and senior officials from 50 African nations are gathering in Beijing on Wednesday for a three-day summit hosted by Chinese leader Xi Jinping, part of China’s decades-long effort to be seen as a champion for the developing world…The forum is an opportunity for Xi to bolster the claim of a special relationship with the continent and to revitalize his signature “Belt and Road” trade and investment program from its pandemic slump…“The more complex the international situation becomes, the more Global South countries must uphold independence,” Xi told Ramaphosa, according to Chinese state media…China’s focus on its relationship with Africa stretches back to the time of Mao Zedong, who became the founding leader of the Communist Party-run People’s Republic of China in 1949. Even before then, the Chinese Communist Party aligned itself with African liberation movements as a fellow fighter against colonialism…To this day, Chinese state media regularly describes the relationship as being forged in a global struggle against “imperialism,” and it is tradition for the Chinese foreign minister to begin each year with a trip to the continent…Despite the political rhetoric, economic interest has driven Chinese engagement for the last decade. After Xi announced his signature Belt and Road infrastructure investment initiative in 2013, financing from Chinese banks shot up to a high of $28.4 billion in 2016…But that flurry of Chinese spending on roads, railways and ports — as well as to secure oil, gas and critical minerals — began to drop in 2019…More recent loan data suggests the new approach is gathering momentum. Last year, China’s loans to Africa reached $4.6 billion, the highest in five years and the biggest annual increase since 2016, according to Boston University data released last week…Most loans in 2023 went toward the financial sector, reflecting China’s effort to share financial risks with local partners…There has also been an uptick in Chinese support for renewable power. Until recently, China’s renewable-energy sector was mostly interested in buying African raw materials such as copper, cobalt and lithium, which are used to make batteries…But companies are increasingly seeing the continent as an opportunity for exports and manufacturing investment as well…Chinese electric carmakers and solar panel manufacturers are increasingly searching for buyers in the developing world after the European Union and the United States raised tariffs.

South Korea's Posco Future M said on Wednesday that it is suspending a plan to build a new battery materials factory with China's Zhejiang Huayou Cobalt in South Korea, citing slowing demand for electric vehicles.