Can the West ‘friendshore’ enough critical minerals? – Asia Times

Can the West 'friendshore' enough critical minerals? - Asia Times

Over the forthcoming years, European countries may require tremendous&nbsp, volumes&nbsp, of essential nutrients given the demand for mineral- wealthy technologies like electric vehicle batteries.

A well-known policy recommendation is “friendshoring,” where companion countries source extracted minerals from each other rather than relying on political adversaries, notably China.

For instance, Australia and the European Union lately signed a&nbsp, document of understanding&nbsp, to improve collaboration and investment in crucial nutrient supply chains.

In this author’s environment,” the West” covers countries piece of the&nbsp, Mineral Security Partnership—that is, Australia, Canada, Estonia, Finland, France, Germany, India, Italy, Japan, Norway, South Korea, Sweden, the United Kingdom, the United States and regions in the European Union.

Technically, these states collectively have significant&nbsp, reserves&nbsp, of essential nutrients, they just need to create more mines. However, building new mine requires not only reserves but successful reserves, which the West lacks for many essential nutrients.

The likelihood of a plant being built is determined by its possible success. Mine success relies on many variables, including the precise entity’s value, the girlfriend’s capital expenditures, operating costs, mechanical recovery rates, and—perhaps most crucially—the deposit’s scale and&nbsp, grade.

For some minerals, European countries have discovered and are mining most of their big- scale, higher- grade deposits, while different jurisdictions like African countries have more untapped large- scale, high- grade deposits.

For example, of the ten largest copper discoveries between 2012 and 2021, only&nbsp, 13 % &nbsp, of the discovered copper volume was in the West, with the majority of commercial copper deposits being discovered in Latin America and Africa.

Therefore, mining companies generally prefer to expand production at their existing mines or to develop large-scale or high-grade deposits in non-Western jurisdictions, rather than small-scale or low-grade mines in Western countries.

The copper industry displays this trend with the&nbsp, three largest copper- producing mines&nbsp, to commission this decade being in non- Western countries, namely the&nbsp, Oyu Tolgoi mine&nbsp, in Mongolia, &nbsp, the Kamoa- Kakula&nbsp, mine in the Democratic Republic of the Congo and the&nbsp, Antamina mine&nbsp, in Peru.

In nations like Chile, Botswana, Brazil, and the Democratic Republic of the Congo, the majority of the major new copper projects are anticipated to be finished in 2024.

Nonetheless, some mining companies may seek to develop less profitable deposits in the West.

To access higher grades, these mines are &nbsp, increasingly&nbsp, underground and usually incur higher costs with the&nbsp, complexity&nbsp, and safety risks of designing, constructing and operating mines&nbsp, thousands of feet&nbsp, beneath the surface. Given these higher costs, these mines are frequently economically untenable due to lower mineral prices.

For instance, the recent zinc glut caused lower zinc prices, and the&nbsp, first zinc mine&nbsp, to be placed on&nbsp, care and maintenance&nbsp, was Boliden’s Tara&nbsp, underground&nbsp, zinc mine in Ireland. Similarly, due to low cobalt prices, Jervois&nbsp, suspended&nbsp, final construction at its underground cobalt mine in Idaho until cobalt prices, which are currently around &nbsp,$ 12/lb, reach&nbsp,$ 25/lb.

Meanwhile, mines with higher profit margins, like the Chinese company &nbsp, CMOC&nbsp, in the Democratic Republic of the Congo, continue to produce cobalt. Even open-pit mines in Western nations face profitability challenges when prices drop.

Amid low nickel prices, First Quantum Minerals has &nbsp, placed&nbsp, its open- pit nickel mine in Western Australia on care and maintenance.

With higher mineral prices, new, less profitable mines in Western countries may be built and commission production. However, as more profitable mines become available online, a larger global supply may cause prices to drop, making higher-cost mines become unprofitable and thus non-operational as a result.

However, sustained, higher mineral prices could make mining these deposits in Western countries profitable. Notably, given the US Inflation Reduction Act, higher prices for minerals produced in the United States and free trade agreement countries ( e. g., Australia ) are possible.

Electric vehicle manufacturers that enter the American market may have to pay premium prices for battery minerals to allow their customers to claim tax credits, resulting in price bifurcation between higher-priced minerals that are in compliance with the Inflation Reduction Act and lower-priced non-compliant minerals.

Governments can support businesses that find and develop new mineral deposits as well as keep them profitable and operational rather than waiting for higher mineral prices to start new mines in the West.

Western governments could increase mineral exploration incentives and mine development loans to find and develop new mines. Western governments could raise the demand and thus the prices for these minerals by imposing higher tax credits on electric vehicles made of friendshore-produced minerals and collective tariffs on mineral imports from non-partner countries like China in order to keep those mines profitable and operational.

Moving forward, industrialized Western nations lack lucrative deposits in many different minerals, which could prevent friendshoring important mineral mining. Due to their higher costs, these mines may face long-term profitability challenges, even if companies do develop mines in Western nations.

The Friendshoring of crucial mineral mines is indeed possible with government support, such as subsidies and tariffs. Therefore, Western governments should assist businesses in discovering new deposits and building new mines in the West, as well as keeping existing Western mines profitable and operational.

Gregory Wischer works for the Colorado School of Mines ‘ Payne Institute for Public Policy and the Australian Strategic Policy Institute’s Northern Australia Strategic Policy Center.

Shubham Dwivedi is a Faculty Fellow at Georgetown University’s Science, Technology, and International Affairs program. &nbsp,