President Biden has aggressive clean energy targets. But where are the minerals for the batteries, solar panels, and windmills?

Critical Materials diagram of risk vs importance by the Department of Energy.

Please consider the May 2023 Department of Energy Critical Materials Assessment

According to the analysis, there are six critical materials in the short term, which include cobalt, dysprosium, gallium, natural graphite, iridium, and neodymium. The uses for these critical materials are spread across rare earth magnets, batteries, LEDs, and hydrogen electrolyzers. There are nine near-critical materials, which include electrical steel, fluorine, lithium, magnesium, nickel, platinum, praseodymium, silicon carbide (SiC), and uranium. Finally, there are seven noncritical materials including aluminum, copper, manganese, phosphorous, silicon, tellurium, and titanium. 

The vast majority of EVs being produced today also rely on neodymium iron boron (NdFeB) magnets. While Tesla has announced plans to move away from NdFeB magnets in its next-generation motors (Adamas Intelligence, 2023), the top-selling EV brands all currently use NdFeB magnet motors. With the rapid growth in EV demand, production of this magnet has become one of the largest users of the key rare earth metals neodymium, praseodymium, and dysprosium. Other materials used in these magnets include gallium, cobalt, boron, and iron. 

Critical Materials Weight Factors

Critical Materials Weight Factors by Department of Energy

Dysprosium Production and Prices

Dysprosium is a rare earth metal that is used in the production of powerful NdFeB magnets, which are used in applications such as electric vehicle motors, wind turbine generators, consumer electronics, industrial motors, and in other non-drivetrain uses in vehicles. In addition, Dy oxide is used in terfenol-D and other alloys. Importance to Energy: Short term: 4, medium term: 3 Electric vehicles and wind turbines are both key drivers of dysprosium demand, with vehicles being the more important source of growth, especially in the medium term and beyond. Dysprosium is very important to clean energy in the short term, where its high share of use is driven by key clean energy applications; while in the medium term, the potential for more substitution away from dysprosium reduces its importance slightly. 

China produces about 70% of the supply, judging from the chart. From the article: "About 90% of metal refining currently occurs in China."

From the article: Demand for Dy is projected to exceed current capacity by 2025 in three of the four trajectories. 

Iridium Production

Iridium is the least-abundant platinum group metal, accounting for <2% of mined content. The chemical, electrochemical, and electronics industries currently account for the majority of iridium demand.

Iridium is one of the rarest elements in the earth’s crust. A particular challenge to the supply of iridium in coming years is the expected decline in demand for co-products palladium and rhodium used in internal combustion vehicles’ catalytic converters and palladium used in diesel engine vehicles’ catalytic converters. The majority of iridium is produced from mines and refiners in South Africa and Zimbabwe where mine operations have been affected by environmental, operational, safety, and labor issues. 

About two-thirds of the metal comes from South Africa with most of the rest from Zimbabwe, judging from the chart.

The iridium demand exceeds 2020 capacity. By 2025, 3% to 12% more iridium capacity would be required to meet anticipated demands in the scenarios. In 2035, iridium capacity would need to triple to meet projected demands in the scenarios. 

Neodymium Production and Prices

Neodymium is a rare earth metal that is used in the production of powerful NdFeB magnets, which are used in applications such as electric vehicle motors, wind turbine generators, consumer electronics, industrial motors, and non-drivetrain uses in vehicles. In addition, Nd oxide is used in ceramics and glasses, in catalysts, and in some alloys.

Tesla has announced plans to switch away from NdFeB magnets, likely to use ferrite magnets instead, suggesting some increase in substitutability in the medium term. 

China produces over 70 Percent of the metal judging from the chart. From the article: "About 90% of metal refining currently occurs in China."

Nickel 

Nickel used in Li-ion batteries for electric vehicles is expected to be a key driver of future nickel demand. Rapid growth in demand is also expected for nickel used in batteries for stationary storage, as well as for solid oxide electrolyzers and fuel cells, is also expected to grow rapidly, but will contribute a smaller share to total demand. Nickel is found to be important to clean energy in the short term and especially in the medium term largely because of its importance in Li-ion batteries. It would be possible to substitute away from its use but at the cost of some loss in performance. 

All trajectories exceed current production capacity by 2025 — although just barely for the lowest trajectory. 

Praseodymium production and Prices

Praseodymium is a rare-earth metal that is used in the production of powerful NdFeB magnets, which are used in applications such as electric vehicle motors, wind turbine generators, consumer electronics, industrial motors, and non-drivetrain uses in vehicles. In addition, Nd oxide is used in ceramics and glasses, in catalysts, and in some alloys. Importance t 

China produces about two-thirds of the Praseodymium judging from the chart.

Critical Weight Factors Mish Alternate Chart

Critical Materials Weight Factors by Department of Energy, plus Mish Calculation.

To create the above chart, I took the short-term importance and supply risk factors from the Department of Energy and multiplied them together. 

Using this alternate method, the top five risks are Dysprosium, Cobalt, Gallium, Neodymium, and Lithium. 

Trajectories 

• Iridium: The iridium demand exceeds 2020 capacity. By 2025, 3% to 12% more iridium capacity would be required to meet anticipated demands in the scenarios. In 2035, iridium capacity would need to triple to meet projected demands in the scenarios. 
• Silicon Carbide: According to our conversation with a prominent U.S.-based SiC manufacturer, and the information from Power SiC 2022 Market and Technology Report, the manufacturing capacity cannot meet the fast-growing demand for SiC. Therefore, all SiC manufacturers are aggressively expanding their capacity, and it is expected that the “announced” wafer manufacturing capacity could exceed the demand.
• Tellurium: Tellurium supply risk is expected in the short and medium terms largely due to its strong codependence with copper production markets, low producer diversity with the majority of the refined Te coming from China, and potential for demand to exceed supply unless tellurium production increases.

It remains to be seen if production can keep up with projected needs. Even if so, at what cost? 

The US is still heavily dependent on China. And few have bothered to factor in extractions costs, supply, and battery storage needed to make this work. 

This is my brief synopsis of a 144-page document. 

The inflation Reduction Act is guaranteed to do the opposite. 

For a look at the competing forces please see Worst of Both Worlds, Stagflation Right Now, But What's Ahead?

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