By Mark Mills
Sunday, July 05, 2020
Children scrabbling with bare hands, never mind shovels,
and carrying bags of rocks is not the image Elon Musk wants for his wildly
successful green-car company. So, in early June, Tesla signed a deal with
global miner, Glencore, to help “ethically” source an increased supply of
cobalt from the Democratic Republic of Congo (DRC), where child labor accounts
for “only” one-fifth of mining for that critical battery element.
For its part, Ford plans to get batteries for its
electric vehicles (EVs) from China’s BYD and leave it to that company to
determine sources of “energy minerals.” So it bears noting that about 60
percent of the world’s cobalt is mined in the DRC. There’s a lot more to the
supply-chain story when you look under the hood at what’s required to “fuel”
aspirations for a world dominated by battery-powered electric vehicles and
fields of solar and wind farms. For America, such a future would mean
dramatically increased energy dependencies.
A hidden-in-plain-sight fact: All green-energy machines
require minerals obtained almost entirely overseas. Much of it comes from
countries that are not our friends, and many entail labor and environmental
practices most companies are eager to ignore.
But now House Democrats propose that green-energy
subsidies must be a key feature in any infrastructure stimulus — and they’ve
recently been seriously considering a $1.5 trillion version of such a bill.
That legislation seems unlikely to pass the Senate, or a presidential veto, but
we can be sure the idea won’t go away. Ironically, this comes on the heels of
the coronavirus crisis exposing supply-chain vulnerabilities that have
triggered a push to on-shore many industries, not just medical manufacturing.
America imports some 80 percent of the electrical
components (i.e., the key stuff other than the concrete, steel, and fiberglass)
used in wind turbines. About 90 percent of our solar panels are imported. And
even if solar cells were fabricated here, the U.S. produces only 10 percent of
the world’s essential underlying silicon material. China produces half.
But the bigger story is in the staggering quantities of
materials needed to fabricate green hardware, many of them “critical minerals,”
from cobalt and lithium, to neodymium and dysprosium. Replacing machines fueled
by hydrocarbons with green machines entails, on average, using ten times more
primary materials for the same energy output.
For a sense of what this implies in material
dependencies, consider that wind and solar, which supply less than 4 percent of
America’s energy, will have to expand exponentially to replace the hydrocarbons
that supply 80 percent. And while essentially all hydrocarbons we use are
produced domestically, nearly all of the green “energy materials” are
produced overseas.
And many of those critical minerals are sourced from problematic or troubled
places such as Russia, Mozambique, Papua New Guinea, and the Philippines.
Chile, recently rocked by citizen uprisings, has the world’s greatest lithium
resources.
As it stands today, the U.S. is 100 percent dependent on
imports for some 17 key minerals and cannot supply even half its needs for
another 28. As recently as 1990, the U.S. was the world’s No.1 producer of
minerals. Today, it is in seventh place. Opening new mines has been out of
favor for decades.
Concerns over mineral dependencies have been flagged in
study after study for years, not least in one from the National Academy of
Sciences in 1999. The Dodd–Frank Act of 2010 even included a new SEC reporting
requirement for companies to flag potential use of “conflict minerals,” not
least because of direct linkages between consumer-tech products and, say, child
labor in the DRC. The quantity of minerals needed for the green-energy vision
would take our society to an entirely new realm of material demands and
dependencies.
The 1 million electric cars on America’s roads already
contain more cobalt than one billion smartphones. For an idea of the scope of
future cobalt demand — never mind all the other necessary minerals — note that
today’s EVs account for only 0.5 percent of America’s cars. And that’s just the
beginning. The push for grid-scale batteries to make wind and solar usefully
reliable would dwarf the quantities used in EVs.
The accounting looks the same for the entire panoply of
energy minerals. Consider nickel, another critical battery mineral: 1,500 to
3,000 percent more of that mineral will be consumed by battery-makers if EVs
were to replace 20 percent of the world’s cars. Doubtless that prospect makes
leaders such as Vladimir Putin smile; Siberia has one of the world’s biggest
nickel mines. In January 2020, Indonesia, with 25 percent of global nickel
resources, passed a law banning export of raw nickel ore, allowing export only
in refined battery-ready form. Their partner in building the processing plants?
China.
Commodity traders have long salivated over a global gold
rush for “energy minerals.” But as a recent Goldman Sachs analysis notes, that
dream won’t come true without an “attractive regulatory framework” — i.e.,
mandates and subsidies. Eager green advocates never mention how their plans
will impact America’s import dependencies and geopolitical interests. Global
oil and gas supply chains will be replaced with equally critical but bigger
mineral supply chains. An analysis from The Hague Centre for Strategic Studies
summarized the “security dimension” of green energy by drily noting “import
dependent countries may use military capabilities to secure mineral resources.”
If the green-energy lobby has its way, globalization will come roaring back from its coronavirus-induced dormancy. Green dreams will require an economic and geopolitical swap of epic proportions for America. It may be a lot to ask, but perhaps for a change Congress will consider supply-chain dependencies before rather than after another crisis. There is an obvious solution: For every extra dollar of green-energy subsidies, Congress could require that an extra pound of minerals be mined in America.
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