Sullivan: US is working with allies on mineral marketplace amid energy transition

The U.S. is working with allies to build a standardized international marketplace for metals and minerals central to the ongoing energy transition, national security adviser Jake Sullivan said Wednesday.

The marketplace will likely seek to pull some capacity on mineral processing and refinement away from China, which has traditionally been dominant in the field and has adapted much of its overall production strategy to alternative energy technologies.

Details on market structure have yet to emerge, but the initiative could also have an effect on supply and value chains, which have come under scrutiny in the aftermath of the pandemic as officials discussed “near-shoring” and “friend-shoring” as an alternative to more established trade routes between the U.S. and Asia.

“We are working with [our partners] to create a high standard, critical mineral marketplace, one that diversifies our supply chains, creates a level playing field for our producers, and promotes strong workers rights and environmental protections,” Sullivan said during an event at the Brookings Institution.

He added that movement on the marketplace initiative could take place in a matter of weeks.

“We're driving towards tangible progress on that idea in just the next few weeks,” Sullivan said.

Calls for a Western-led market infrastructure around minerals have been growing following the announcement of a derivatives trading desk at Ganfeng Lithium, a dominant Chinese firm in the industry.

“By injecting liquidity into a Chinese market infrastructure, the move will likely deepen the country’s already dominant grip in the market and could threaten the US’ attempts to build a resilient supply chain for critical minerals,” Arnab Datta, director of infrastructure policy at the Institute for Progress, a think tank in Washington, wrote for the Council on Foreign Relations over the summer.

At the international level, discussions have been ongoing about opening up the seafloor to mining operations — a move that could have huge environmental consequences.

Research and exploration initiatives from the government and private sector have been turning up some big finds in minerals recently.

Just this week, the U.S. Geological Survey (USGS) announced it had discovered “hidden treasure” in the form of lithium beneath of soils of Arkansas in a vast region known as the Smackover brine.

The discovery could have a major impact on the diversification of energy sources that is expected to take place in coming decades.

“The low-end estimate of 5 million tons of lithium present in Smackover brines is … equivalent to more than nine times the International Energy Agency’s projection of global lithium demand for electric vehicles in 2030,” the USGS said in a Monday release.

The U.S. currently imports around 25 percent of its lithium, an important metal in batteries. The USGS said Smackover reserves could make the U.S. self-sufficient in terms of lithium

“We estimate there is enough dissolved lithium present in that region to replace U.S. imports of lithium and more,” said Katherine Knierim, a USGS hydrologist, in a statement.

“It is important to caution that these estimates are an in-place assessment,” she cautioned. “We have not estimated what is technically recoverable based on newer methods to extract lithium from brines.”