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Biden eyes Cold War-era defense law to boost mining sector

Commodities Mar 30, 2022 06:15PM ET
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© Reuters. FILE PHOTO: U.S. President Joe Biden arrives aboard Marine One following spending the weekend in Rehoboth Beach, Delaware, on the South Lawn of the White House, in Washington, U.S., March 20, 2022. REUTERS/Al Drago/File Photo
 
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By Trevor Hunnicutt and Ernest Scheyder

WASHINGTON (Reuters) -U.S. President Joe Biden could invoke a Cold War-era defense law as soon as this week to encourage domestic production of minerals needed to make electric vehicle batteries, according to two sources familiar with the matter.

Such an order under the Defense Production Act is expected to help companies access government funding for feasibility studies for new projects that extract lithium, nickel and other EV metals, or to make existing facilities more productive.

The funds would not be used to dig new mines or buy minerals for government stockpiles, nor would invoking DPA let the mining industry bypass regulatory or permitting standards. It was not immediately clear how much funding could be allocated.

Biden's economic program has prioritized fighting climate change and stimulating domestic manufacturing using electric vehicles. Administration officials have said national security has been harmed by dependence on fossil fuels from other countries, including Russia, which is also a major nickel producer.

Last month, Biden voiced support for new U.S. mines, but said they must benefit host communities and not damage the environment. The president also said the Pentagon would boost its reserves of certain EV metals, a plan likely to require sourcing from overseas mines due to low U.S. production.

"We must ensure that we secure the materials necessary for the clean energy economy in a way that holds to our strong environmental, labor, Tribal engagement standards and does not leave us reliant on unreliable and unsustainable foreign supply chains," one of the sources said.

Securing enough raw materials to make electric vehicle batteries has been a major obstacle, with domestic mines facing extensive regulatory hurdles and environmental opposition. Biden blocked a proposed Minnesota copper mine earlier this year, and his administration is heightening scrutiny on other proposed mines.

The DPA gives the Pentagon wide berth to procure equipment necessary for national defense. Invoking it would essentially be a declaration that relying on rival nations for EV battery building blocks would constitute a national security threat.

Biden's predecessor, Donald Trump, invoked the DPA in 2019 to build up a stockpile of rare earths, the specialized minerals used to make magnets found in weaponry and EVs.

Biden's use of the DPA would show the United States "will support responsible domestic mining, processing and recycling of battery materials as a matter of national importance," said Todd Malan of Talon Metals Corp, which has a deal to supply Tesla (NASDAQ:TSLA) Inc from a Minnesota nickel mine it is developing.

The National Mining Association, an industry trade group, said the expected order from Biden may be limited in scope, but would send a strong signal to global markets.

"Unless we continue to build on this action ... we risk feeding the minerals dominance of geopolitical rivals," said Rich Nolan, the NMA's president.

Several industry executives said the decision shows Biden is taking the looming supply shortage seriously and they were eager for details on how Biden would use DPA to boost domestic EV metals production.

"This is a good signal, and we're glad about it," said James Calaway, chairman of ioneer, which is developing a lithium and boron mine in Nevada.

Biden has made broad use of the DPA in his presidency, including using it to stimulate manufacturing of supplies used in the response to COVID-19.

Biden eyes Cold War-era defense law to boost mining sector
 

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Comments (3)
Steven Kilgore
Steven Kilgore Mar 30, 2022 8:18PM ET
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There isn’t a square inch inside the US boarders that isn’t sacrid to some tribe, has a blue spotted nat that is only native to the area, is close to some water sorce, or otherwise wont have 12 differnt environmental groups lining up to sue.
Benjamin USA
Benjamin USA Mar 30, 2022 8:18PM ET
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This is because industrialists refuse to be good stewards out of spite and just make a huge mess. Classic humanity, but sure, you probably “love fracking” and yet incidentally also don’t draw your water from an impacted well. Classic self-absorbtion and ignorance.
Roger Miller
Roger Miller Mar 30, 2022 6:32PM ET
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The Democrats could just have Biden reduce government regulations and red tape, including at the EPA, making it fair for all.  By doing it the way they are, the government is able to pick the winners, eliminating the benefits of the free market, and opening the door to even more crony capitalism and political favoritism.
Kelly Mayer
Kelly Mayer Mar 30, 2022 12:28PM ET
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Why doesnt Biden want to ban Uranium from Russia?
prashant patel
Long69 Mar 30, 2022 12:28PM ET
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he can't ban anything from russia
 
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