Senate bill seeks to shrink U.S. reliance on China for critical minerals

WASHINGTON — U.S. Sen. Gary Peters has introduced legislation to reduce the nation's dependence on China and other foreign adversaries for critical minerals used in electric vehicle batteries and other technology.

The bipartisan bill — called the Intergovernmental Critical Minerals Task Force Act — would require the Office of Management and Budget to create a task force and appoint representatives from federal agencies to consult with state, local and tribal governments.

The group would be tasked with determining "how to address national security risks associated with America's critical mineral supply chains and identify new domestic opportunities for mining, processing, refinement, reuse and recycling of critical minerals," according to a press release issued Friday.

The bill also would require the task force to publish a report to Congress on its findings.

"Our manufacturing sector and our global economic competitiveness depend on reliable access to critical minerals," Peters, a Michigan Democrat who chairs the Homeland Security and Governmental Affairs Committee, said in a statement.

He continued: "Our nation's dependence on adversarial nations like China for critical minerals poses serious national security and economic threats. This bill will strengthen our domestic critical minerals supply chain, create good-paying jobs, and ensure our advanced manufacturing sector can continue to compete on the global stage."

It was not immediately clear how many Republicans support the bill.

Globally, China controls most of the market for processing and refining key EV battery materials such as cobalt and lithium.

Access to battery materials has been a growing concern for automakers and their suppliers, especially under the Inflation Reduction Act's strict battery sourcing rules tied to consumer incentives for EV purchases.

The tax credit for new EVs — known as 30D — offers $3,750 for EVs that have at least 40 percent of the value of the battery's critical minerals extracted or processed in the U.S. or in a country where the U.S. has a free-trade agreement, or from materials that were recycled in North America. Another $3,750 is available if at least half of the value of the EV's battery components are made or assembled in North America.

Those percentages ramp up over time, maxing out at 80 percent in 2027 for minerals and 100 percent in 2029 for battery components.

Starting in 2024, vehicles are ineligible if they contain any battery components manufactured by a "foreign entity of concern," which could include companies controlled by China. That exclusion starts in 2025 for critical minerals. Treasury still needs to release guidance on how strictly it will enforce the provision.

At an event held here Friday, Rivian CEO RJ Scaringe said the sourcing of battery materials is "one of the practical challenges" the industry is facing as it develops a domestic supply chain and scales up EV production.

"A lot of materials that are needed to produce [battery] cells at scale don't exist in the U.S. and don't exist in countries which we have free trade agreements with," Scaringe said. "So the reality is, we're going to have to get pretty creative on sourcing a lot of those materials."

The U.S. is never going to have an infinite supply of nickel, cobalt or lithium, and policymakers need to understand the complexity of the supply chain, he explained.

"Just because we wish that we had all these raw materials in our backyard, that doesn't mean it's going to happen," he said.