America has to get back in the business of mining – DOE official

Securing minerals crucial to the energy transition is a national security issue that many have yet to grasp, a top US Energy Department official working on the issue said at the CERAWeek by S&P Global conference in Houston.

The International Energy Agency, the US government and other groups have sounded the alarm on a potential shortfall of minerals for wind turbines, electric car batteries and more as expected demand threatens to tax current and projected supply levels. The DOE is in the initial phases of a "mine of the future" research and development program, Brad Crabtree, assistant secretary of the DOE's office of fossil energy and carbon management, said during a panel at the conference.

"We have to get back in the business of mining in this country," Crabtree said.

The DOE is engaging with industry and other stakeholders to get feedback on the program and hopes to be investing in, researching and commercializing new mining technologies by 2025 "in the same way we've done with clean energy technologies for generations," Crabtree said. Currently, the US and much of the world depend on China for production and processing of many critical minerals, Crabtree noted.

"Most people in this room probably know this, but most Americans do not," Crabtree said. "It's becoming a topic of greater concern and awareness — our dependence on China from a production standpoint. But also, a lot of people don't realize that there are metals we produce today that we can't refine and they're still sent to China. So, we have a double vulnerability."

Ernest Moniz, former US energy secretary under the Obama administration and now president and CEO of the Energy Futures Initiative think tank, said he was not concerned that a lack of metals would stall the energy transition since the US is ramping up efforts to mine and process more materials.

"We have a lot of mines that have been closed that could reopen. We have new discoveries in certain areas like lithium," Moniz told S&P Global Commodity Insights on the sidelines of the conference. "There's often a misconception that God put all of the critical metals and minerals under China. Well, that's not true."

Lower prices for several energy metals in recent months and weaker-than-expected demand for electric vehicles have discouraged miners that were set to expand production. However, "we're seeing what typically happens in the mining industry," Moniz said.

"I do believe that we can find, let's say, congestion points along the way because it's a pretty long effort to establish a mining and mineral processing industry. So there's going to be rough spots," Moniz said. "Lithium prices have cratered this year because the demand side did not grow as rapidly as it was projected. So, a lot of supply was increased, and the demand was not met. But the demand is going to catch up, and we'll have the typical volatility that we see in these commodity prices."

For long-term investments in new supply, price stability is the "dream" but likely not possible either, Sinead Kaufman, chief executive of minerals for mining giant Rio Tinto Group, said on stage at CERAWeek. The uncertainty in market pricing is particularly challenging for mining companies due to the amount of time it takes to find a resource and develop and permit a mine ahead of production. Calls for faster permitting timelines have increasingly gained the attention of elected officials, but little has been accomplished so far on permitting reform.

Tommy Beaudreau, US Deputy Secretary of the Interior, said at a panel that the US needs to reform permitting. The Interior Department is responsible for leasing and permitting mining activity on federal lands.

"I'm not saying in the United States we have to rewrite the nation's minerals laws every century," Beaudreau joked during a panel discussion, referring to existing mining laws written in the late 1800s. "But maybe every other century, we should take a look and see how well they're serving our current policy imperatives including, right now, how important these materials are to energy transition and technology development."

Kaufman also noted that mining is a very capital-intensive business, which presents a barrier to new projects. Miners can be shy about capital spending on new resources, often preferring to send cash to shareholders and avoid the risks of a potential market downturn. However, broader interest in the sector is drawing in large potential capital providers, both public and private.

One example is Big Oil opening its big pockets to lithium. That includes Chevron Corp., which is still in the early phases of investigating opportunities in the lithium industry, Colin Parfitt, vice president of midstream at Chevron, told Commodity Insights.

"If it's in the pure mining sector, I'd say, well, actually, a mining company might do that better than a traditional oil and gas company," Parfitt said. "But as soon as you get anything that looks a little bit like exploration and processing — and lithium has some of those characteristics — that fits more into, I would call it, the core strength that we would have."