US critical minerals loan applications off to slow start
A 1 February deadline for US developers of "critical" mineral projects to apply for federal government backing passed without any reported application submissions, but the rare earth sector did receive support in the form of grants last month.
The deadline was just too early for newly admissible submissions to access the $17.7 billion-loan pot, although that isn't to say there wasn't interest, according to sources close to the situation. They said it is a sector that will require more support and funding up and down the supply chain for the electrification of the global economy, and the transportation sector in particular.
The loan funding became available on 1 December, when the US Department of Energy (DOE) issued a clarification about Advanced Technology Vehicles Manufacturing (ATVM) Program applications, inviting aspirant borrowers involved in the production, manufacturing, recycling, processing, recovery, or reuse of critical minerals and other minerals.
Previously, the ATVM Program only provided loans to automotive or component manufacturers for "re-equipping, expanding, or establishing manufacturing facilities in the US that produce fuel-efficient advanced technology vehicles or qualifying components, or for engineering integration performed in the US for advanced technology vehicles or qualifying components."
The ATVM program closed on about $8 billion in loans to five companies in its first phase as the Obama administration-including then Vice President Joe Biden-sought to kickstart a US economy battered by banking woes, tumult in the housing sector and what became known as the Great Recession. The last ATVM loan was issued in 2011.
Among the borrowers was Tesla, which received a $465 million loan and went on to become the world's largest automaker by share value as well as a major player in solar and battery storage. A $50 million loan to taxi manufacturer Vehicle Production Group, said most recent one, did not end quite so well; it was discontinued after the company ceased operations.
If there are going to be any more loans as a result of the changes to the potential pool of applicants, DOE is not letting on. "The department cannot comment on potential loan applications as it is considered business sensitive information," a representative told IHS Markit in the weeks following the announcement.
According to DOE, the US imports more than half of its annual consumption of 31 of 35 critical minerals, and 80% of its rare earth elements directly from China. The US has no domestic production for 14 of the critical minerals and is completely dependent on imports to supply its demand, it added.
Those 35 minerals, which the US Geological Survey designated as vital to US security and the economy, include barite, chromium, cobalt, graphite (natural), lithium, magnesium, niobium, the rare earth elements group, rubidium, and vanadium.
"Reliable access to domestically-produced critical minerals is of national importance. These critical minerals make up necessary products for our military, energy technologies, national infrastructure, and economy. Our country needs critical minerals to make airplanes, computers, cell phones, electricity generation and transmission systems, and advanced electronics," then Secretary of Energy Dan Brouillette said in the statement announcing the expansion of the ATVM program.
"For too long we have been reliant on foreign adversaries like China for the production and supply of these minerals. It is imperative we utilize the tools of the federal government to help establish a robust domestic supply chain of these 35 critical minerals," Brouillette added.
While loan applications failed to materialize this month, DOE did hand out $50 million in grant money to critical mineral projects in January. On 20 January, the agency announced funding for 15 projects focused on field validation and demonstration, as well as next-generation extraction, separation, and processing technologies. The funding came through the Office of Energy Efficiency and Renewable Energy's Advanced Manufacturing Office (AMO).
The biggest slice of the cash was allocated to a partnership between advanced materials to military drone provider General Atomics, Colorado-headquartered Rare Element Resources (RER), and a German laboratory testing a demonstration-scale plant. The nearly $22 million grant will support a rare earth separation and processing project currently under development, which, if it came to fruition, would involve a site in Upton, Wyoming.
"This funding evidences the federal government's commitment to secure an American supply chain as we face Chinese dominance in the rare earth market. The company remains focused on being the next domestic rare earth producer, and the DOE funding will provide key support to advance this goal through this demonstration project," RER CEO Randall Scott said in a statement following the announcement.
RER did not respond to an IHS Markit request for comment on whether it had applied for additional support through the ATVM Program. The company's demonstration plant will process stockpiled high-grade ore from its Bear Lodge mine in Wyoming. RER said it anticipates that, once funding is secured, the demonstration plant design will be finalized and followed by construction within a period of 18-24 months.
Another recipient was American Battery Metals Corporation (ABTC), which received a little under $2.3 million for field demonstration purposes from the AMO. The company recycles lithium-ion batteries to recover battery metals as one of its three business lines. The other two are extraction from primary resources and exploration of new primary resources.
The company, which is in the midst of changing its name to American Battery Technology Company, had expected to begin production in the first quarter of 2021 at its pilot recycling plant in Fernley, Nevada, but spokeswoman Katie Baker said ABTC will announce updated permitting and construction timelines in early 2021.
"We are currently investigating whether we qualify for funding as part of the ATVM program. ABTC is eager to partner with state and federal agencies to invest in our clean technology platform that will help secure our domestic energy supply chain while bringing clean and green jobs to Nevada," Baker said in an email.
But even if ABTC didn't qualify, Baker said, the revamp of the ATVM program was welcome. "We're thrilled to see that the ATVM program is open to critical mineral developers. By doing so, the program can address the full supply chain that is needed to support the growth of the electric vehicle [EV] industry," she said.
"Specifically, it addresses that there is an inadequate supply of rare metals used in lithium-ion batteries. With more than 11 million [metric tons] of lithium-ion batteries reaching the end of their service life in the next 10 years, ABTC knows that many will go to a landfill unless we can grow recycling technologies like what our company is proposing," Baker said.
The company's pilot factory will be able to recycle 20,000 mt of lithium-ion batteries each year. "As electric vehicles evolve, our proprietary process will be able to address the demand for critical minerals while alleviating the growing amount of e-waste and returning raw materials back into the supply chain" for original equipment manufacturers (OEMs), Baker said.
The other recipient in a segment DOE termed "Improved Beneficiation, Separation and/or Processing" was PUREGraphite. The company plans to produce anode material for long-life batteries at a facility in Chattanooga, Tennessee, and received a grant of more than $5.5 million from the AMO.
Graphite is used to make advanced batteries not just for hybrid and electric cars, but for cellphones and laptops too, and according to DOE, the US is 100% reliant on imports. China produces over 60% of the world's graphite and almost all of the world's production of high-purity graphite needed for rechargeable batteries.
The graphite belt
But the US has a "graphite belt," centered on Alabama, according to Westwater Resources, where it hopes to build a processing facility that would manufacture three battery graphite products to service the lithium ion, alkaline power cell, and lead-acid battery markets. Graphite is used in the anodes of EV lithium-ion batteries.
Construction of the Westwater facility is set to start in 2022, if results from a pilot plant in the fourth quarter of 2020 and first three months of 2021 meet requirements.
Westwater expects to be purchasing graphite feedstock until 2028, by which time it hopes to open an Alabama mine that would supply the feedstock. Natural graphite tends to have significantly lower consistency and purity compared with synthetic graphite, the company said, adding that when it comes to batteries, it has a better rate capability and cycle life.
Westwater hopes to supply an Alabama EV battery factory to be built by Mercedes-Benz as well as automobile manufacturers Honda, Toyota, Hyundai and a Toyota-Mazda joint venture, each of whom have Alabama operations.
Further along the US Gulf Coast, Syrah Resources, a company listed in Australia, plans to produce battery-grade graphite in Louisiana while sourcing its feedstock from a resource the company owns in Mozambique. The company hopes to make a final investment decision (FID) in the second half of 2021 on a facility in Vidalia, Louisiana, General Manager Kristian Stella said in an email.
The company raised A$56 million ($42 million) in December 2020 to help carry out front-end engineering and design in a step aimed at formulating the groundwork for the FID, which Stella said was still subject to "end customer commitments or strategic/financial partnerships."
Syrah's partnerships once the FID is made could involve government funding, Stella said. "Syrah is aware of the DOE's ATVM loan program and similar government funding support alternatives, and continues to engage with a variety of stakeholders in government and the supply chain around the critical minerals theme and diversification of supply," he said in the email.
Under Syrah's plan, natural graphite concentrate would be transported from the Balama site in Mozambique to Vidalia. The natural graphite would then be shaped into a spheroid and purified to produce an anode precursor material. The precursor material would be coated and heat-treated to produce a finished active anode material.
Graphite materials remain the dominant active anode material used in lithium-ion batteries, demand for which is soaring as the energy transition gathers pace, even as batteries using vanadium, nickel, or zinc as the key element gain more prominence.
An announcement by General Motors-still the US' largest carmaker-on 28 January that it intended to sell only electric versions of its light-duty vehicles by 2035 only served to illustrate how important that ramping up of critical minerals production will be.
GM became the first of the traditional US automakers to set the lofty goal of all EVs. CEO Mary Barra linked it to her earlier pledge that the company is aiming for company-wide carbon neutrality by 2040.
GM declined to discuss its current or future lithium sourcing when IHS Markit inquired prior to the 28 January announcement. But as GM and its competitors like BMW hoist their EV goals higher, they will need lithium or partners who have access to lithium.
BMW aims to have more than 7 million electrified vehicles on the roads by 2030—two thirds of them fully electric. BMW inked a deal with China's Ganfeng Lithium in late 2019 to buy €540 million (about $650 million) of lithium hydroxide that will be sourced from Australia.
However, two-thirds of the world's lithium reserves are found in Latin America, according to the automaker, so it commissioned two American universities to conduct a scientific analysis of water consumption in the lithium extraction process. The aim of the University of Alaska-Anchorage and University of Massachusetts-Amherst study will be to investigate the impacts of lithium extraction on the hydrologic environment in Latin America, it said 16 December.
Domestic lithium for batteries
At least one prospective US producer does not expect such hydrological problems in sourcing lithium. Robert Mintak, Standard Lithium CEO, said the company's plans for a commercial production plant in Arkansas do not require the same amount of water that its rivals in Chile or the Western US might, nor are there the same level of water constraints as there are in such regions.
Standard Lithium expects to take an FID of its own in the first half of 2021. The company is currently operating a demonstration plant in El Dorado, Arkansas. The decision on whether to move forward on a commercial plant, after the demonstration plant was built and brought online in the midst of a global pandemic, could be affected somewhat by the health crisis, Mintak told IHS Markit in an interview.
Standard Lithium's site in Arkansas is located adjacent to a Lanxess Corporation brine processing plant-from which it extracts bromine. Should the commercial plant be up and running, it would be able to produce a total of 20,900 mt/year of lithium carbonate following a phased buildout. Mintak said that should an FID be taken, then a first phase commercial plant would be ready in 18 months.
But Mintak said the company has not applied for ATVM backing from DOE. It is not ready for that, he said, given the February 1 deadline for applications. The company was not aware of the program until October, but DOE took the time to ask Mintak why Standard Lithium had not inquired about the possibility of aid, he said.
Mintak does not expect anyone in the lithium space to be able to meet the deadline, but he said the backing would help level the playing field for US companies with China and Europe.
A neighbor in the lithium space in Arkansas is Charlotte, North Carolina-based Albemarle. The company has brine resources in the state. It straddles both the bromine and lithium space.
"We are aware of the [ATVM program] and are reviewing the details to determine how it would benefit Albemarle," company spokeswoman Hailey Quinn said in an email.
Albemarle announced 7 January it would be doubling lithium carbonate production capacity at its Silver Peak, Nevada, facility, which produces lithium from brine extracted from the Clayton Valley basin.
As global demand for EVs grows, North American automotive manufacturers are seeking to regionalize their supply chain for greater security and sustainability, Albemarle said, adding that its investment in Silver Peak would support this increased demand for domestic lithium.
Starting in 2021, the company plans to invest $30 million to $50 million to double production in Nevada site by 2025, "making full use of its brine water rights," it said. Also in 2021, the company plans to commence exploration of clay and evaluate technology that could accelerate the viability of lithium production from clay resources in the region, it added.
"As a leader in the lithium industry, our priority is to optimize our world-class resources and production. This includes Silver Peak, a site uniquely positioned as the only lithium-producing resource in the United States," Eric Norris, president, lithium, said in the statement announcing the investment. "This investment in domestic capacity shows that we are committed to looking at the many ways in which Silver Peak can provide domestic support for the growing EV market."
Albemarle is keen to see the wider development of the sector, teaming up with other players in the space to form the Zero Emission Transportation Association (ZETA), which was launched in November 2020. The coalition will advocate for the "full adoption" of EVs by 2030, seeking 100% EV sales by that point.
"The US is tracking behind other countries in driving the adoption of EVs and, as a result, the benefits EVs contribute to the environment," Norris said when the coalition was announced.
ZETA also wants an expansion of the ATVM Program, according to a roadmap released 12 January. This would include support of medium- and heavy-duty electric vehicles (MHDEVs), off-road vehicle electrification, and domestic expansion of the advanced battery supply chain. The coalition is also looking for a 30% investment tax credit for the MHDEV sector not unlike the one that benefits the solar and wind sectors, it said.
ZETA's 28 founding members included Albemarle, ABB, Con Edison, Duke Energy, Pacific Gas & Electric, Rivian, Salt River Project, Tesla, Uber, and Volta.
ZETA isn't the only lobby group seeking support for the sector in Washington. In December, the Battery Materials & Technology Coalition emerged. The coalition currently contains two lithium companies, two graphite companies, two silicon firms, and one battery technology company.
Piedmont Lithium is a member of both coalitions. It plans to build a 22,700 mt/year lithium hydroxide chemical plant in Kings Mountain, North Carolina. On 3 December, Piedmont Lithium said it had received a North Carolina Department of Environmental Quality air permit for building and operating the facility. Piedmont received a Section 404 Clean Water Act permit in November 2019 from the US Army Corps of Engineers for its planned concentrate operations.
The company is in the process of redomiciling from Australia to the US. Most of its investors are in the US, as are its assets, according to Tim McKenna, an investor and government relations advisor to the firm. Also in the first half of 2021, the company plans to apply for a North Carolina State Mining Project and to complete local rezoning processes for the integrated project.
Piedmont Lithium has looked at what is available under the ATVM program, but can't say any more, said McKenna. The company is actively looking at what will be available under the Biden administration, he added. Given the last ATVM loan was issued in 2011, "clearly, the Biden administration will look to make better use of it," he said.
The program might be expanded to miners, it depends on the Biden administration, Piedmont Lithium CEO Keith Phillips said in a phone call, adding that he hopes the incoming administration will be pro-business in all respects.
Back in Nevada, another lithium project developer, Cypress Development, which is developing a "world-class" claystone resource, said it had made an application to DOE before the December announcement. The company is also working on a pilot plant. A representative declined to provide any more details on its application, saying the company was currently in a "quiet period." The company is conducting a pilot plant test program in the first half of 2021, according to its website.
Another player in Nevada, Global Energy Metals (GEM) also told IHS Markit in December it had contacted the LPO to request information on its eligibility for an ATVM loan. CEO Mitchell Smith said 1 February that GEM had had talks with DOE since then, but no application had been submitted "at this time."
GEM holds an 85% stake in the Lovelock Cobalt Mine and Treasure Box Project, a lithium opportunity "on the doorstep" of the GigaNevada battery production plant Tesla and Panasonic built in Nevada.
However, observers said mining companies could not expect receive loan funding, at least in the round of activity ending in the 1 February deadline. There were talks about extended the loans to miners, but it was a step too far, one observer said.
There won't be any money on top from the agency that regulates mining leases on federal US lands, the Interior Department's Bureau of Land Management (BLM). "While BLM does not have the statutory or regulatory authority to offer funding support to rare earth and metals miners, we are currently considering updates to our regulations in response to EO 13817 and SO 3359," a spokesman for the agency told IHS Markit in the final days of the Trump administration, referring to earlier Trump instructions.
However, January did see the Trump BLM issue a Record of Decision for Lithium Americas' Thacker Pass project following completion of the National Environmental Policy Act process. Thacker Pass would be located 70 miles northwest of Winnemucca, in Humboldt County, Nevada. The project will be developed as an open-pit mining operation using conventional continuous mining equipment.
And two days after President Biden was sworn in, the company said it had closed a $400 million share offering, the proceeds from which will be used to fund development of Thacker Pass. Demand was such that the size of the offering was bumped up from around $350 million when it was priced.
With Biden promising to create 1 million new jobs in the American auto industry and support domestic auto supply chains and auto infrastructure more support for the critical mineral sector could emerge through the ATVM program or other policies.
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