Exploring means to generate sufficient domestic supply chains for rare earth has become a priority for Western countries like the United States of America (USA) and Canada has been dependent on its supplies from China and other countries for mining and processing of these valuable minerals for a long time. This big move has been further pushed by the onset of the COVID-19 pandemic and geopolitical crises across the globe, which has hampered the delivery of the commodities, further affecting the prices in the market.
USA Rare Earth announced its plans to raise IPO
In 2021, USA Rare Earth announced its plans to raise up to $ 500 million in an initial public offering (IPO). Such an offering will be to finance its mining and processing facility in Texas, which is expected to be in operation by 2023. USA Rare Earth seeks to develop an entirely domestic mine-to-magnet supply chain while partnering with Round Top to manufacture EV battery cells.
Rare earth magnets are necessary for defence, medical, green energy, and electric vehicle production. Currently, US companies get the vast majority of their rare earth materials and magnets from external suppliers.
In the same year, the Canadian and U.S Governments reaffirmed their commitment to strengthening the North American supply chain for critical minerals – essential to both countries’ national security and economic growth.
Consequently, the company has also commended US President Joe Biden’s Presidential Determination designating domestic mining and critical materials for the production of large-capacity batteries as essential to the national defence under the Defense Production Act of 1950 (DPA).
“We commend President Biden on this important step to support domestic battery mineral production. Establishing a vertically integrated domestic supply chain of these critical materials is necessary for advancing U.S. manufacturing capabilities and increasing national security. USA Rare Earth offers an abundant domestic resource to support the President’s plan for lithium production and processing,” Thayer Smith said in a statement.
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The Biden administration recently invoked a Cold War-era law by eyeing to boost the production of minerals used for an electric vehicle (EV) battery cell, including lithium and rare earth, to ensure robust domestic mining activities and promote cleaner energy sources, taking into account that 27% of greenhouse gasses emitted into the atmosphere comes from the transportation sector.
Under Biden’s order, the Pentagon is now authorized to use allocations from its Defense Production Act to provide capital for a host of mining business activities. Those activities include paying for feasibility studies to determine the economic viability of a proposed mine or to finance “co-product and byproduct production,” For example, a copper mine that could also produce nickel.
Furthermore, the administration said it will provide $3.1 billion in funding to support efforts to make electric vehicle batteries and components in the country, with an additional $60 million to support the reuse and recycling of used EV batteries.
The US government’s bold support for the auto and mining industry is pushing more manufacturers to likewise evolve and adapt to the policies, especially in the green revolution campaign. Electric vehicle use is about to hit a tipping point. Notably, there’s a significant increase in the demand for electronic vehicles in the U.S. According to reports, the number of EVs sold in 2020 was at more than 250,000, and it has been increasing since and is expected to ramp to more than 10% by 2025 or at least generate a round 2 million units in sales. In terms of EV battery production, it is expected to quadruple in 2025.
EV batteries are one of the most important components to power electric vehicles. Consequently, they are also the most expensive. First-world countries are taking a huge step toward reducing greenhouse gas emissions by ramping up a green revolution in the automotive industry, EVs will be replacing internal combustion engines, and they can drastically reduce pollution.
Minerals needed to manufacture EV battery cells
New types of EV battery cells are being developed to improve the performance of EVs. Here are the most common minerals needed to manufacture EV battery cells used for electric vehicles:
- Lithium-Ion (Li-Ion): Compared with traditional battery technology, Lithium-ion is important to create a low-maintenance, cost-efficient battery. Li-on is proven to be the most cost-efficient in terms of its higher power density and lightweight packaging. American automakers like Tesla currently rely on lithium-ion batteries. The price of lithium has increased fivefold since April 2021 as demand from automakers surged. However, EV demand remains strong to this date.
- Nickel Manganese Cobalt (NMC): This nickel-based blend is used to improve the energy and prolong the life span of batteries. EV battery manufacturers used this because of its high density and low cost.
- Nickel Metal Hydride (Ni-MH): Because of its affordability at an earlier period, the Nickel Metal Hydride chemistry was used in the manufacturing of the very first hybrid cars lineup such as the Prius.
- Lithium Sulphur (Li-S): Lithium Sulphur cells have a high-energy storage capacity, making them attractive for EV buses.
- Lead-Acid: Lead-acid batteries have been used in Low-performance EVs like golf carts.
With all policies still at the initial stage, scarcity in key raw materials to produce a sufficient number of EV batteries to meet demands would remain a hurdle for the industry. Therefore, the cost to produce EV also likely to surge over the next four years. Will automakers and battery manufacturers be able to catch on?
Companies dominating the supply chains of batteries for EVs
There are six companies dominating the supply chains of batteries for EVs. The YD, CATL, LG Energy Solution, Panasonic, Samsung SDI, and SK Innovation—were responsible for supplying 87 per cent of batteries and battery metals in passenger EVs in the second half of 2020.
- Contemporary Amperex Technology Co. (CATL)
EV makers served / under contract: BMW, Dongfeng Motor Corp., Honda, SAIC Motor Corp., Stellantis, Tesla, Volkswagen Group, Volvo Car Group
- LG Energy Solution
EV makers served / under contract: General Motors, Groupe Renault, Stellantis, Tesla, Volvo, VW Group
EV makers served / under contract: Tesla, Toyota
- Samsung SDI
EV makers served / under contract: BMW, Ford, Stellantis, VW Group
- BYD Co.
EV makers served / under contract: BYD, Ford
- SK Innovation
EV makers served / under contract: Daimler, Ford, Hyundai, Kia
- China Aviation Lithium Battery (CALB)
EV makers served / under contract: GAC Motor, Zhejiang Geely Holding Group Co.
- Gotion High-Tech
EV makers served / under contract: Chery Automobile Co., SAIC, VW Group
- Automotive Energy Supply Corp. (AESC)
EV makers served / under contract: Groupe Renault, Nissan
- Ruipu Energy Co. (REPT)
EV makers served / under contract: Dongfeng, Yudo Auto
Sources: Adamas Intelligence, Business Korea, Electrive, BMW, Ford, Honda, Volvo