What the government is doing to boost its rare earth mineral supply

Legislators, legislatures, automakers and much of the automotive industry are putting the pedal to the metal on electric vehicles. Whether it's the state of California poised to ban the sale of gas-powered vehicles by 2035 or the Inflation Reduction Act spending billions of dollars on alternative energy resources, the full court press toward EVs and hybrid vehicles appears to be underway.

Here's the problem: The batteries that EVs rely on to move require several rare earth minerals that the United States has very little of. If demand for EVs intensifies, as it's expected to over time, the lack of these key minerals will prevent manufacturers from producing at a rate that's quick enough to satisfy that elevated demand.

In an attempt to address this brewing problem, the federal government is working with key stakeholders to shore up its rare earth minerals supply chain.

The one it's starting with is lithium. Found in smartphones, laptops, wireless headphones and more, lithium is used in a wide variety of electronics because of it conducts electricity, creating the positive charges necessary for current to flow. But the United States has next to no lithium from natural sources. Indeed, according to estimates from the U.S. Geological Survey, the U.S. is home to less than 4% of the world's lithium reserves.

Venkat Srinivasan, director of the Argonne Collaborative Center for Energy Storage Science at Argonne National Laboratory, told Supply Chain Dive that it's virtually impossible for the industry to mass produce EVs given this reality.

"Where is the supply? We don't make electrode materials," Srinivasan explained. "We don't make materials that go into the rest of the battery. We don't process the minerals. We don't even mine them."

Thus, when automakers and their sourcing partners need lithium and other vital minerals for fabrication, they have to import them from overseas, typically from China, Argentina and other countries where the mineral in question mined and found in higher quantities. But this activity winds up raising automakers' costs, which are passed on to the consumer.

Government is supporting lithium fabrication efforts
To bridge the divide, the government has awarded nearly $3 billion in grants to lithium suppliers. Speaking to this effort, President Joe Biden said 20 companies of the 200 that applied for these grants were ultimately given the funds.

"Together, these 20 companies are going to build new commercial-scale battery production and processing facilities all across America," Biden said. "They're going to develop lithium to supply over 2 million vehicles every year."

The White House has gone to other lengths in this matter as well. Earlier this year, the White House released the details of a $35 million investment in a magnet processing plant. Working with a company based out of California, the goal is to increase the output of rare earth minerals by optimizing extraction processes, so manufacturers have the materials they need to produce at a higher volume.

The Department of Energy is also working toward increasing refining capacity for other must-have minerals, like cobalt, nickel and graphite. It's a $140 million program that will create a critical minerals refinery that it says is the first of its kind.