Critical minerals are non-fuel minerals or mineral materials that are indispensable to U.S. security and are vulnerable to supply chain disruption. These natural resources are found in household appliances, consumer electronics, and national security systems. They are also essential for decarbonizing transportation.
Due to the rise of clean energy technologies, the demand for critical minerals is projected to increase drastically. The market has been bolstered by supportive federal policies, such as the Infrastructure Investment and Jobs Act, commonly referred to as the Bipartisan Infrastructure Law (BIL), and the Inflation Reduction Act (IRA), that are funding clean energy technology, EV manufacturing, and other advanced manufacturing projects across the United States. BloombergNEF expects a 20% jump in U.S. electric vehicle (EV) adoption from pre-IRA estimates, predicting that there will be 3.2 million EVs on American roads by 2028. Similarly, the White House has stated it expects clean energy mineral demand to increase by 400% to 600% by 2040.
New domestic minerals production has lagged behind that of peer countries over the last two decades—a period during which dramatic growth in mineral-intensive products like batteries and renewable energy equipment occurred overseas. Attention to the U.S.-allied value chain for critical minerals is a strategic imperative. Still, U.S. industry is well-positioned to establish a new global standard that ensures the materials supporting our energy transition are sourced sustainably. Producing critical minerals—including lithium, nickel, cobalt, copper, manganese, graphite, and rare earth minerals—in the United States is also key to addressing the growing demand for electric vehicles.
The U.S. mineral endowment has been a major target for developers seeking to supply the energy transition with much-needed resources. As documented, the U.S. Geological Survey (USGS) notes that demand-driven exploration has led to a 2,700% increase in known U.S. lithium reserves between 2019 and 2023. The U.S. now has the largest recognized lithium endowment globally. Although DOE and Argonne National Laboratory have identified 24 lithium production projects, new projects have been inhibited by lengthy and uncertain permitting and litigation timelines, volatile market prices, and outsourcing of downstream manufacturing capacity overseas.
Existing domestic minerals projects have also been in decline. The number of metal mines in the U.S. dropped significantly over the last decade, from 351 active mines in 2012 to 270 mines in 2021. This decline partly comes from regulatory and financial barriers that discourage new mines—specifically, the lengthy and uncertain permitting process and high capital cost requirements. In addition to upholding high environmental and social standards, the United States must seek to shorten timelines for permitting new mines.
Accordingly, the Biden-Harris Administration has taken steps to onshore critical mineral production. These include billions of dollars in funds through the BIL, the IRA, and the Defense Production Act to fund projects related to mineral production, processing, refining, and recycling. Stringent sourcing requirements in the IRA’s Clean Vehicles Credit have pushed automotive manufacturers to shift their supply chains towards North American minerals and battery production.
The next horizon for the Biden-Harris Administration and Congress is accelerating critical mineral production on federal lands. The current timeline to apply for and open a new operation stands at 7-10 years, but the U.S. must be able to permit and build critical mineral operations more quickly over the next decade.
Collaboration between the U.S. and its allies is also critical for cultivating a reliable supply chain for critical minerals and battery components. A strategy referred to as “friendshoring” has shaped U.S. foreign policy. Friendshoring is the intentional reorganization and diversification of the battery supply chain into states and economies aligned with the U.S. on social, ethical, environmental, and democratic values and practices.
A recent study aggregating the mineral resource capacity in all democratic countries and U.S. free trade agreement countries found that global democracies have a surplus of minerals needed to achieve 2030 climate goals (with the exception of tellurium). Still, it noted that scaling production will require “nothing less than a highly coordinated joint industrial strategy” of unprecedented speed and scale.
To help scale production, the U.S. is engaging with partners to strengthen and diversify the minerals industry around the world through several multilateral strategies, including the Mineral Security Partnership and the Partnership for Global Infrastructure Investment. The U.S. has sought to position itself as an optimal business partner to states and entities abroad and has also engaged in several bilateral trade agreements with key governments to supply critical minerals.
Unlike gas-powered cars, the energy resources that power EVs are continuously recyclable. After their useful life, the critical minerals can be removed and repurposed without losing their value. However, as more EVs are manufactured and reach the end of their useful life, the amount of critical minerals available for reuse will grow in tandem. This cycle of use creates a circular supply chain, which repurposes essential materials instead of relying on disposable, consumable, single-use alternatives.
The Biden-Harris Administration continues to champion clean energy technologies and support the American industrial base. To remain competitive globally ZETA has identified several areas where federal leadership must build momentum to support reliable supply chains.
Policymakers must continue modernizing the permitting process to make additional and necessary improvements to domestic production, processing, and recycling operations. Federal leadership is needed to enable the domestic supply chain to scale quickly or we risk falling further behind global competitors and foreign adversaries. Failure to act swiftly and aggressively to improve our domestic capacity to scale and promote sound mining practices abroad means sacrificing energy dominance and putting supply chains at risk.