Why miners are cheering Biden's move to help EV makers

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The White House has deemed EV battery production to be in the interest of national defense, and an unlikely group is cheering the move — miners.

On Thursday, as part of a wave of energy announcements, the White House and Pentagon invoked the Defense Production Act to ensure the availability of components for large-capacity batteries amid the war in Ukraine. Those components include minerals that need to be mined such as lithium, nickel, cobalt, graphite, and manganese.

National Mining Association President and CEO Rich Nolan appeared on Yahoo Finance and said the move signals the country's seriousness when it comes to sourcing minerals from the U.S.

“[It's] really important that folks know that the United States is open for business, and what's made in America should also be mined in America,” said Nolan, whose group represents a range of companies including those involved in coal mining.

President Joe Biden called the move “a directive to strengthen our clean energy economy,” adding that it’s part of an effort to “end our long-term reliance on China and other countries for inputs that will power the future.”

But in the immediate term — as EV makers like Tesla (TSLA) scramble to source nickel and Rivian (RIVN) warns of supply chain woes — miners will benefit the most from the administration's directive.

A general view shows Zapolyarny mine of Medvezhy Ruchey enterprise, which is a subsidiary of the world's leading nickel and palladium producer Nornickel, in the Arctic city of Norilsk, Russia August 24, 2021. Picture taken August 24, 2021. REUTERS/Tatyana Makeyeva
A mine in Russia operated by a subsidiary of Nornickel, the world's leading nickel and palladium producer. Picture taken in August 2021. (REUTERS/Tatyana Makeyeva)

‘It also affects our economic security’

The effort is part of a broader push to encourage American independence when it comes to these precious minerals, which fuel much of modern life but come from places like Russia and Ukraine as well as China.

"We are currently vulnerable to unreliable supply chains, which affects our national security [and] it also affects our economic security as well,” National Economic Council Director Brian Deese told reporters on Thursday.

Nolan says that we're behind China when it comes to both mining and processing key minerals. He says it's important to catch up to avoid “trading one concern of geo-petro politics for another related to metals mining and metals processing for the things we need for everyday life.”

The invocation of the Defense Production Act of 1950 — which allows the president to require businesses to take actions deemed necessary for national defense — allows the White House to force the building up of domestic production capability in these key materials. In other words, it paves the way for more mining.

Demand that is only expected to go up

Prices for many of crucial metals have shot up in recent weeks. The price of nickel made huge jumps in March before returning to Earth a bit. The copper and aluminum markets saw similar spikes.

Russia supplies about 20% of the world’s nickel, and both Russia and Ukraine are central to global supply chains of other precious metals. China dominates lithium production.

And demand — no matter how long the war in Ukraine drags out — is set to keep growing in the coming years as part of the transition away from fossil fuels to clean energy like electric vehicles. Demand for nickel and lithium and copper could grow from anywhere between 500% and 1000% over the next 20 years, according to the National Mining Association.

Policymakers have also focused on the so-called rare earth minerals largely originating in China. In a recent Yahoo Finance interview, Sen. Mark Kelly (D-AZ) called the minerals "a national security risk."

‘If we don't get moving now, we're going to be in real trouble’

The problem in the nickel and other markets has captured the administration’s attention for months with the Commerce Secretary telling Yahoo Finance in March that it's working with private companies to stockpile the existing minerals.

SUIXI, CHINA - AUGUST 13 2021: Women assemble lithium batteries in a factory in Suixi in central China's Anhui province Friday, Aug. 13, 2021. (Photo credit should read Feature China/Future Publishing via Getty Images)
Workers assemble lithium batteries at a factory in central China's Anhui province in 2021. (Feature China/Future Publishing via Getty Images)

And now the focus is on increasing the supply. Nolan notes that, because of the long lag between deciding to mine and the finished projects like batteries, delays now could impact the availability of these materials for coming generations of electric vehicles.

“If we don't get moving now, we're going to be in real trouble,” he says.

The White House also says further action could be coming via the Defense Production Act on this issue if it is deemed to be in the national interest.

Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.

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