President Joe Biden said the Inflation Reduction Act (IRA) “contains the most valuable resource for combating the deadly problem of climate change.”
The federal government will invest about $369 billion in climate change and energy security to increase the nation’s production of wind turbines, solar panels and electric vehicles.
The current subsidy for electric vehicles, which can go up to $7,500, is increased and expanded by the IRA, although the tax credit is subject to proof of the battery’s mineral content.
At least 40% of the battery’s essential metals, such as cobalt, lithium, manganese and nickel, must come from the United States or a Free Trade Agreement (FTA) partner.
Automakers strongly opposed the merger, arguing that China is still in a strong position and that the U.S. is lagging behind in supplying battery metals.
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The relationship between subsidies and mining inputs is set to accelerate this process to break China’s position and expand local, or at least compatible, core mining capacity.
According to Benchmark Mineral Intelligence, China currently produces 81% of the world’s battery cathodes, refines 75% of the world’s cobalt and processes 59% of the world’s lithium.
The combined production of the United States and Canada refines only 3.0% and 3.5% of the world’s lithium and cobalt, respectively, and has low battery cathode capacity.
However, missing from the list are Argentina, which is seeing a boom in lithium investment, and Indonesia, which is emerging as a battery metal center due to its vast nickel reserves.
Given the long-term construction of new mines, especially in the United States, automakers still struggle to qualify for subsidies.
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