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Biden expands Defense Production Act scope to additional minerals

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Electric vehicles charging at a car park. The Biden administration invoked the Defense Production Act to support domestic supply chains of minerals needed for large-capacity batteries, including those used in EVs.
Source: Richard Newstead/Moment via Getty Images

U.S. President Joe Biden expanded the number of critical minerals production projects that may receive funding under the Defense Production Act in a memorandum issued Feb. 27, a move industry observers praised as an additional boost for domestic minerals production.

The memorandum opens up funding for projects related to all of the strategic and critical materials, including lithium, rare earths and electronics inputs like tantalum, outlined in a June 2021 White House report and a February 2022 Department of Defense report. The executive action advances policy toward meeting Biden's goal of onshoring the rechargeable battery supply chain that will be crucial for the energy transition.

The move is a "doubling down of the direction [the Biden administration] was already headed in," said Ben Steinberg, an executive vice president and co-chair of the critical infrastructure group at lobbying firm Venn Strategies. Steinberg pointed to Biden's invocation of the Defense Production Act, or DPA, in March 2022 to support production of minerals critical to large-capacity batteries, as well as critical minerals provisions in the Inflation Reduction Act as part of a trend of federal incentives for domestic mining.

The memorandum waives certain limitations written into the DPA on how agencies may distribute money aimed at encouraging domestic industrial manufacturing, including mining. Those actions are funded with the DPA Fund, which has an end-of-year balance cap of $750 million. The new memorandum removes that cap, said Steinberg.

"The cap being lifted is really helpful, as is existing funding," said Steinberg. "This adds to the toolkit of modern industrial policy."

Producers of minerals now eligible for DPA support also praised the memorandum's changes.

"The International Zinc Association applauds President Biden's new memorandum on the Defense Production Act," Andrew Green, executive director of the International Zinc Association, said in a statement. "Nothing is more important than securing a sustainable supply of critical minerals, especially now that zinc as well as zinc production by-product minerals, geranium, gallium and indium have been identified as critical minerals by the U.S. government."

For clean energy companies dependent on the critical minerals now eligible for DPA support, the memorandum is a helpful change that aligns with policy measures like the Inflation Reduction Act that have gone into effect since Biden initially invoked the DPA for clean energy technologies.

"We have seen more policy come along since then that I think bolsters this industry as well," said Harrison Godfrey, managing director at Advanced Energy United, a clean energy industry group. Godfrey said the DPA would have had a larger impact had the Inflation Reduction Act not passed.

Biden's budget for the next fiscal year, which will be sent to Congress on March 9, could contain recommendations for DPA appropriations, Steinberg said.

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