Reuters World News - The ‘dirty’ debate over mining for clean energy in America

Episode Date: February 4, 2024

Ernest Scheyder, Reuters senior correspondent and author of the new book THE WAR BELOW, joins the podcast to examine the many challenges that lie ahead for mining for clean energy in the US. Environmental risks, policy differences, national security concerns and backlash from communities where minerals are located are shaping the debate over America’s reliance on new types of power. Visit the Thomson Reuters Privacy Statement for information on our privacy and data protection practices. You may also visit megaphone.fm/adchoices to opt out of targeted advertising. Learn more about your ad choices. Visit megaphone.fm/adchoices

Lithium, copper, nickel, cobalt, and other minerals are crucial to powering the promise of a green energy future. But getting those minerals out of the ground and into our devices and electric vehicles can be a dirty job. And where it's done is increasingly controversial. On today's special episode, we dive into the efforts to secure future supplies of these crucial elements here on U.S. soil. I'm your host, Christopher Waljasper, in Chicago. Ernest Scheider is in Houston, Texas. He's been covering mining and critical minerals for Reuters since 2018. He's also the author of a new book, The War Below, Lithium, Copper, and the Global Battle to Power Our Lives. Ernest, thanks for joining me today. Great to be with you, Christopher.

Reading through your book, what struck me was just how long and complex. The root was that these metals and minerals take today. Walk me through that journey. Sure. So when you think about a lithium ion battery, and that's the powerhouse from most of the electronic devices that anchor our everyday lives, including electric vehicles, cell phones, laptop batteries, the metal in there is lithium, as the name implies. It also has some copper, and depending on the design, you'll have nickel or cobalt or other metals and minerals. And let's just take lithium. Right now, Northern Chile is one of the largest lithium-producing regions in the world.

That's at these giant solid flats. And the two companies there are Albemarle and SQM. And they basically pump brine out of the ground and put it in giant evaporation ponds and let the sun basically evaporate away the water. And then through a series of chemical processing steps, they get lithium. But that lithium needs to be further refined and processed into a form that can be put into lithium ion batteries. That's sort of, let's call it sort of mid-processed lithium is trucked to the coast of Chile and then sent across the Pacific Ocean to Asia, maybe China,

maybe elsewhere, where it's further processed into specialized types of lithium that can be put into a lithium ion batteries cathode and then put into a battery itself and then maybe a battery pack before being then shipped back across the Pacific Ocean to say maybe Tesla's gigafactory in Nevada, and then put into a Tesla before it's sent to say, Florida, where it's delivered to a customer. Now, that's sort of a hypothetical example there, but it shows you that circuitous route and confusingly long route. And so if the goal is to reduce carbon emissions, if the goal is to have energy independence, that really long supply chain is probably going to be subject to disruptions in the future, whether that's from weather or

conflict. Does this long and complicated supply chain present a national security risk as well? Yes, I would point out that critical minerals can be used as an economic weapon by whoever produces those. Whoever controls lithium and copper and nickel and cobalt supplies will control the 21st century economy the way that crude oil production really helps sway the 20th century economy. And already we're seeing certain countries use this control as an economic weapon. In 2010, China blocked the export of rare earths to Japan after a diplomatic spat involved efficient vessel. Japan, huge manufacturing economy. And obviously that signal was received loud and clear, not only in Tokyo, but also in Washington, which started to say that it was worried that China

could block exports of these rare earths to the United States if there were a diplomatic spat. And rare earths are used to make magnets that turn power and emotion, but they're also used in weapons like fighter jets. They're used in laser guided missiles. They're used in night vision goggles. So you can imagine that if these rare earth exports were blocked from China to the United States, what a huge effect that would have not only on consumer electronics, but also on the U.S. military. And so there is a growing effort to mine and process more of these raw materials domestically. Where are companies trying to mine these metals in the U.S.? So the United States is replete with a lot of these sources of copper and lithium and nickel and

cobalt, and there's a huge tension point in the country and really the world about whether and how they should be developed. And there's several flashpoints in the United States, one, especially in Arizona, the Resolution Copper Project that Rio Tinto and BHP hope to develop. This is a copper deposit that lies about a mile, a mile, and a half, under the surface of the earth in the town of Superior, roughly an hour east of Phoenix. It's surrounded by this beautiful Western scenery. You've got cragid rocks everywhere. You've got sort of this beautiful desert playa that's all around. The town itself butts up against what's known as Apache Leap, this giant rock face that's almost a mile high. And it's part of that rock face that contains much of the

copper that Rio Tinto and B.HP would like to extract and sell for use in the green energy transition. But if that copper is extracted, it would cause a crater more than a mile wide that would destroy this quiet, ethereal, beautiful religious site that Native Americans have held sacred for centuries. I've got to hear too here because you'll hear the Watan lot to come. Rio Tinto and B.HP. are trying to get permission to actually develop this mine. The only permission they have right now, though, was to dig what has essentially become the deepest mine shaft on the North American continent. So I had a chance to visit this mine shaft. You board a four-person elevator, and it was just a crazy ride down this 50,000.

minute-long journey to the bottom of where the staging is right now. And you actually go through what was an underground lake that Rio Tinto and B.HP had to engineer around. So when you get to the bottom of the shaft, you've got water dripping from everywhere, from the ceilings, from the walls, it just showed you the sheer technical challenges that the company had to overcome in order to even drill this shaft there. Now, they hope to get permission from the U.S. federal government to further develop the mine to basically go out in all directions from that mine shaft. But President Biden has essentially paused development of this while it's going through a federal court process. President Trump had approved it a few days before he left office in 2021. And the

expectation is that if he is reelected this fall, that he could push the project forward. The project is strongly opposed by Native Americans who worry that it would destroy a site of religious significance. And so therein lies the tension. You have indigenous rights coming up against this stark need for copper for the green energy transition. And you also have a town of superior that has strongly supported the mine for socioeconomic reasons. Rio Tinto and B.HP have promised to pay average salaries of $100,000 a year. That's in a town where the average salary right now, is hovering around $20,000 US dollars. So I was fascinated by this tension.

What matters more? Do we value the indigenous rights and the religious rights of these Native American communities more? Or do we value the copper and the jobs that I would produce there? And although these mines are supplying materials for environmentally friendly forms of energy, they're not without their own environmental risks. What are some of the concerns expressed by environmentalists?

Sure, so one of the main conservation fights, at least in the United States right now, involves a project in northern Minnesota called the Twin Metals Project. And this is also an underground deposit of copper as well as nickel and cobalt that is all commingled. The deposit lies underneath a giant watershed that feeds the Great Lakes. And so you've got a company known as Twin Metals, which is controlled by Chile's Antofagasta, and it would love to extract this copper. The problem, though, is that the type of rock that contains that, copper and nickel and cobalt, when exposed to water, actually turns into acid. You can imagine

that if you had an acid seepage into a waterway that feeds the Great Lakes, that feeds out to most of the waterways in the North American continent, that would not be a good thing. And so you have a huge, strong opposition for many conservationists and environmentalists in Minnesota and elsewhere to this Twin Metals project. I should point out that the company that would like to develop the mine, Twin Metals, says that it can do so safely and responsibly. So right now the project has been basically put on hold by the Biden administration, and it may be permanently killed, depending on an act that Congress could take in the near future. This really, really irritates many Republican politicians, especially in Minnesota, because they point out what they consider

the incongruity of relying on places like the Democratic Republic of the Congo for Cobalt. And in the DRC, sometimes there can be young children, sometimes as young as seven, who go into mindsites at night and extracts literally. with hammer and chisel, some of the rock that contains cobalt and then sell it to a middle market that would then sell it onto a processor, and it could end up in any number of electronics in our homes. And sometimes those children are maimed, sometimes killed. Cobalt, when it's grounded to a dust, can get into your lungs and irritate it. And so the pushback from many of these politicians, especially in Minnesota, is why would we allow a supply chain like that to grow

when we can produce cobalt here in the United States? I would just point out the rare earth space, and note that this is an industry that really the U.S. helped develop the modern rare earth industry after World War II, after the Manhattan Project. And rare earths were first extracted out of the Mountain Pass mine here in the United States, which is in southern California, just over the border from Las Vegas. And this grew to be the largest rare earth mine in the world. And it extracted the rare earth that were used all across the economy, from televisions to magnets that the U.S. military helped develop to many, many, many other products. But around the 1980s, 1990s, China began to realize that not only did it have large rare earth deposits in its own borders,

but that it could also use the prowess of that to encourage manufacturers to relocate to China. That is to say, hey, you can have cheaper rare earth prices if you build your products here. So it was using it as part of a plan to grow its entire economy. Now, making rare earth can produce large amounts of radioactive waste, depending on the geological deposit. And so over time, especially after the U.S. EPA was created in the 1970s, it sort of fell out of fashion here in the United States. And the mine that I mentioned in Southern California, the Mountain Pass mine, went through a series of owners that went bankrupt or sold off the asset, partly because of the environmental cost. And so now what we've seen is that this mine is back open in Southern California. It's working to be able to process some of this rare earth materials that it mines out of the ground there.

But it's doing that with some help from its Chinese partners and Chinese investors. So there's an interesting overlay there between two parties that are ostensibly at odds. Now, you mentioned several major car companies that are betting a lot of their strategy on electric vehicles. How do these domestic mines factor into those plans? What we see right now is a mad rush by a lot of automakers to lock down supplies of these critical minerals, including lithium and copper and cobalt and nickel, lithium especially. So we chronicled a Thacker Pass mine in Northern Nevada in the book, and this is a mine that is opposed by some environmentalists and Native American groups,

but is moving forward and actually is under development right now, partly because of a giant investment that General Motors put into the project, because General Motors was able to look down the calendar into its future and recognize that if it wants to go all electric at a certain point in the future, it's going to need lithium. And so that financial lifeline for that project and that company known as Lithium Americas from General Motors was able to really help financially lift up that project there. Ford, Tesla, and many others have made their bets as well. And so you can start to see this big mad dash for lithium out there.

Hmm. So on one hand, we've got a growing movement to source minerals and metals needed for greener forms of energy here in the U.S. But on the other hand, we've got a lot of folks saying, not in my backyard. So how do we balance these two ideas? Yeah, there's no way around it, Christopher. I mean, mining is loud. It's dangerous. it's intrusive. Nobody wants to live next to a giant hole in the ground, but yet mines are essential.

You know, we can't have our modern lives without them. And so a lot of folks, they think through, okay, what is the best way to mine? The country of Chile, world's largest copper producer and one of the largest lithium producers, more than 60% of the water in Chile goes just to the mining industry. And so are there ways to reuse water, to recycle water, to use less water? These have sparked really interesting questions among the environmental community and the conservation community, as well as among regulators and policymakers. And what I explore in the book is an effort known as Irma, or the Initiative for Responsible Mining Assurance. And this is a nonprofit organization that actually was founded by the Tiffany and company jewelry company as well as a few other people. Tiffany, think about it. Like the company with the

iconic blue boxes got together with some environmental groups and said there's got to be a better way to mine, there's got to be a way to say, what are the best standards for mining? And part of this was a response to the knee-jerk reaction among some environmentalists just to say no to everything. But if you're going to actually have a green energy transition, or in Tiffany's case, if you're just going to sell rings, you've got to get gold and silver and other metals from somewhere. So what are the best standards for a mine? And so Irma was formed, and it sought to bring together a lot of environmental and NGO groups, as well as automakers and investors, and yes, mining companies and labor unions. So you put all those people in a room and basically say, okay, argue it out. What are

the best standards for a mine? And so it's slowly gaining popularity among not only the mining industry, but also their customers. BMW, Ford, Microsoft, and others want to slowly move to a position where they're only going to buy metals from mines that are Irma approved. And so this really shines a light on the worst parts of the mining industry, but also the best parts to bring transparency to what has too often been a very opaque supply chain. Regulations are a daunting part of the success or failure of these operations becoming greenlit. How will the winner in November's presidential election impact the future of these mines? Great question, Christopher.

And I think if Donald Trump is the Republican nominee, and we'll find out certainly in a few months, And if he is victorious in November, it will be really interesting to see how he approaches the critical minerals industry and especially the Inflation Reduction Act, which was passed by the U.S. Congress during President Biden's term. President Trump, when he was in his first term, had a very interesting approach to the critical mineral sphere. Broadly and generally, he was supportive of extractive projects, and he did approve two of them just before he left office.

But he also killed a major supply of copper and other. other metals in Alaska, the Pebble Project. Did his policies have any impact on these mines? Right after he took office in 2017, President Trump issued a directive that was then amplified by the Department of the Interior to reduce a lot of red tape for mine permit review. And that directly affected the Thacker Pass mine project in northern Nevada. Federal regulators that were reviewing the mine permit application either sped up or felt they didn't have enough time to look at sort of the minutia of how the proposed mine would affect everything from water table levels to sage grouse. And there are actual federal laws that dictate how sage grouse should be

interacted with. And some of those laws were lost over or not fully followed, in part because of this directive from the Trump administration to streamline a permitting process. And what about President Biden? What's his relationship been with these operations? We have a firm sense as to how President Biden has operated these past three and a half years. Largely, there's been a dual approach that has been confusing for industry as well as conservationists alike to figure out. This really unclear process has stymied not only development of lithium and other critical minerals, but also just made it frustrating for an industry that really, really wants that lithium, namely the manufacturing base, especially given the large electrification

goals that Washington has asked for and in some cases imposed on industry, you can't have the inflation reduction act without more mining. That's just the simple fact of it. And so the request from a lot of folks in industry and elsewhere is for more clarity on regulatory approach. So at the end of the day, this effort to become less reliant on fossil fuels has its own host of complications and conflicting issues. And we really can't ignore that. And we really can't ignore that. Certainly. The entire supply chain obviously is complex and has many, many, many parts right now. What are the choices that we're willing to make if we want an energy transition, if we want to use all these electronics that underpin our everyday lives? And we're not having that discussion

right now about that choice. I think too often we're used to just showing up to a store and buying something and expecting that it'll be there if we need it again when we go back to the store. We're not thinking through what has become the extraordinarily long supply chains. We're not thinking through the low ESG standards for some of the products that we buy. We're not thinking through the people on the other side of the world that produce the building blocks for the products that power our everyday lives. And so this idea of choice is one that I'm really presenting to the reader here with the war below and asking her and him to think through what are the choices they're willing to make and the decisions they're willing to take if we want to have this electronic future that we're all moving towards,

because we can't have that unless we think through the complexities around it. There's no such thing as a free lunch. That's it for this special episode. Special thanks to Ernest Scheider. The Reuters World News podcast is produced by Jonah Green, Tara Oaks, David Spencer, and myself. Kim Vannell is our regular host. Our senior producer is Carmel Crimmons. Laila de Kretzer is our executive.

producer. Engineering and sound design by Josh Summer. To make sure you know what's going on in the world, listen in for 10 minutes every weekday. And don't forget to subscribe on your favorite podcast player or download the Reuters app.