What have you seen in your time advising the U.S. government in terms of energy policy, and where do you see things moving as the global focus on the energy transition?
Policy discussions across Republican or Democratic administrations are often not that different. They all want investment, job growth, and better outcomes for citizens. There are upsides and downsides to every type of mining investment. It was public towards the end of 2020 that the Republicans were torn on the Pebble mine in Alaska, similarly like the Democrats now.
Historically, there’s preferred industries. Oil and gas is much more in the mind of Republican politicians and clean energy technologies are much more in the mind of Democratic officials. So, it’s not a complete overlap.
But if you think about upstream mining, everybody understands that there are concerns about permitting new assets etc., but there’s still places where the Republicans and the Democrats don’t agree, right? So, we might see things like in the NEPA reform where the Trump administration made changes, the Biden administration rescinded those changes, and then there was a call in the senate to reject what the Biden administration had changed. It’s (rescinding the Biden Administration’s NEPA reforms) not going to go anywhere because the House is not going to follow the Senate there, which makes things difficult.
You mentioned permitting issues in the U.S. What’s happening on that front? What does it mean for the future growth of the industry?
So, the big news in the last six months, is about a deal that Manchin was able to put together with Schumer and Pelosi, stating that if he supports parts of the Inflation Reduction Act, there’ll be a vote on permitting reform sometime in the fall. I guess one can argue whether that was a good deal for centrist Democrats or centrist Republicans who want permitting reform. We can see already there’s a bit of a lobbying effort to ensure that this permitting reform keeps moving forward. Obviously, it was not in the Inflation Reduction Act and one could call it kind of like a poison pill where EV tax credits are restricted to firms who aren’t getting upstream battery materials domestically or in areas where we have free trade agreements.
If things don’t change with the permitting, what is the impact of that?
Well, it’s hard to see how we alter the current dynamics. There are very few new mines that get permitted or that open in the U.S, and the ones that are in the process, are for a long time. So, it’s hard to see a dramatic change in how the system of producing minerals being used in the energy transition are to be made in the U.S. So, you’re relying on friend-shoring from Canada and Australia, places like that, maybe also using our apparatus within the federal government to promote projects in less developed countries as another means to get more minerals into the market.
Yet, if you look at many different examples of mines that have some sort of federal nexus, they either give up or remain in a perpetual environmental impact statement, trying to figure out how to progress.
This idea of domestic or more regionalized supply chains has been a growing theme that we’ve seen, especially since the start of the pandemic. What are some of the lasting impacts that you’re seeing of this new idea/theme within the industry and what are the future impacts?
As we take a step back from globalization and focus more on domestic or friendly nation production, if you have a permanent asset in an OECD country, there’s a lot more potential interest in your products. 10 years ago, the overarching sentiment was, well, it’s either cheaper or we can expand production in a place like China, whereas now that’s less exciting for many firms.
Regarding battery metals, and the growth we’re seeing within the U.S., alongside the idea of involving the upstream within this sector. How is it all coming together?
Well, there’s a lot more happening downstream and midstream in the battery space in the U.S., and that was really a focus of the Biden administration when they came in. They wanted to win electric vehicles. You also have these sort of legacy car producers in Michigan, Ohio, and West Virginia, that are politically important, so that’s where we’ve seen the most news or most discussion investment.
There are also issues like the Department of Defense (DoD) signing loan guarantees or signing agreements with producers to help them build the processing facilities, and you would assume that with DoD participation, citing and permitting becomes a little easier. We need to use this and the current federal land/infrastructure to do things more easily. For example, transmission lines for electricity, there’s hope to try to use highways or places where there’s already some sort of federal authority to override other political concerns or strategic competition amongst firms.
Can you expand about the impact that you think the new infrastructure plan and permitting is going to have on future exploration or development?
It’s easy for congress to allocate money towards R&D, demonstration, or something that’s not actually building the product. There’s been many discussions over the last 10 years regarding minerals for the clean energy transition, and they mostly revolve around training workforce or things that are easy. In the early 2020s we spawned a whole bunch of new technologies and developments, whether it was processing or recycling, or just getting new materials out of the ground through waste products.
Recently, there’s talk of trying to get rare earths from coal ash waste, there’s a lot of coal ash waste ponds. They are often in areas that are politically important, like Michigan and Ohio. After 2008, DoD put a bunch of money on projects and loan guarantees for new firms. Out of that we had Tesla and we had Solara. Tesla’s obviously a clear example of a win, and Solara is a very clear example of something that didn’t help move things forward.
The question is what’s the ratio of Tesla’s to Solyndra’s we’re going to get out of the 2020 spending bills that encourage a lot of demonstration projects, or workforce training.
Looking forward in terms of U.S. energy policy direction and investment, what do you see happening in the short term and where do you see things moving?
Well, The Inflation Reduction Act is a whole bunch of carrots. There’s very little sticks, i.e. fees, taxes, or restrictions on oil and gas or fossil fuel development, and it’s the same for renewable or clean energy technologies. At some point you need some sticks, most of them are currently coming from the states, who are mandating or requiring their energy or their electricity system to move to carbon zero or move to all clean energy.
One important part is how many more states are going to try to take advantage of all of the carrots that are in the federal bills, how quickly we start moving things along in installation of these new energy technologies, and whether that’s CCS or hydrogen, wind and solar, batteries on the grid, or EVs, all of those technologies have the potential to be a game-changer in how the electricity and transportation landscape looks.
