"The U.S. Can Counter China’s Control of Minerals for the Energy Transition" 7 November 2023

China recently rattled the world’s electric vehicle supply chains by announcing new export controls on graphite, a key component of lithium-ion batteries. If China uses the export controls, which take effect on Dec. 1, to reduce exports of graphite or to favor Chinese-owned companies operating abroad, it could slow down efforts to scale up advanced battery manufacturing globally...

The supply chains for many critical minerals, not just graphite, run through China. In the case of materials critical to the production of lithium-ion batteries, which power electric vehicles, the consulting group Benchmark Mineral Intelligence estimated that China controlled 58 percent of the global production of lithium compounds in 2022, 69 percent of nickel sulfate, 69 percent of synthetic graphite, 75 percent of cobalt, 95 percent of manganese and 100 percent of spherical graphite. China plays a similarly outsize role in the supply of materials used in solar panels and wind turbines...

China’s leverage over the global critical minerals supply explains why the particulars of the Inflation Reduction Act are so important...it is also designed to drive investment in domestic manufacturing and in supply chains that do an end run around China...

In some respects, this law is working...companies have announced $65.5 billion in investments since the act became law, including 15 new large-scale factories to produce batteries...

What the Inflation Reduction Act hasn’t done, however, is spur similar investments in mining and minerals processing... So as the United States expands investments in clean energy manufacturing, its dependency on global supply chains, dominated by China, will only grow.

Building more diverse and resilient supply chains for critical minerals requires action at home and abroad. First, the United States needs to reduce the hurdles to investing in domestic mines and mineral processing facilities...Reforming permitting processes to ensure better engagement with local communities and expedited environmental reviews is urgently needed...

Second, the United States needs to support investments that diversify global supply chains...

Climate action can no longer be about phasing out fossil fuels alone. It must also be about phasing in a new set of extractive industries needed to enable a clean-energy transition. China figured this out a decade ago. The United States and its free-trade partners now face a monumental challenge: scaling up production of critical minerals, diversifying supply chains to protect national security and doing so in ways that are both more just and more sustainable.