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I've read this bit about the US Inflation Reduction Act EV car incentives:

to get the full $7,500 credit, the car has to:

  • Have final assembly in North America; and
  • 40% of the critical minerals in the battery must be sourced from the United States, or one of the 20 countries with whom we have an FTA. This 40% increases to 50% in 2024, 60% in 2025, 70% in 2026 and 80% in 2027.

The EU and South Korea have raised some concerns about the latter provision.

So, how many of the (just 20?) countries that have an FTA (free trade agreement) with the US also have operational mines of "critical minerals" for EV batteries?

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    AFAIK the vast majority of the critical minerals are currently mined in China. So I think the practically relevant question is whether China has an FTA. I suspect the answer is no, which raises a lot of questions on how this is supposed to be implemented.
    – quarague
    Aug 25, 2022 at 7:59
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    Here trade.gov/us-free-trade-agreement-partner-countries is a list of the FTA countries. As expected it does not include China, it also doesn't contain any European countries, South Korea on the other hand is on the list.
    – quarague
    Aug 25, 2022 at 8:11
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    If you want to do some research, the critical minerals for batteries seem to be lithium, nickel, cobalt, manganese and graphite. Wikipedia has lists of production of metals such as lithium with more detailed references. Statista is also a good source, as in this list of graphite production. Add that to the list of FTA countries.
    – Stuart F
    Aug 25, 2022 at 13:58
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    @StuartF: thanks. I see both Australia and Chile are large lithium producers (surprisingly, more than China), and both have FTA with the USA, so I guess the list isn't that small if one gets to the other stuff. OTOH, the EU complained that [their?] cobalt mostly comes from DR Congo, but indeed there don't seem to be many alternatives for that besides Australia & Canada that have FTA with USA. en.wikipedia.org/wiki/Cobalt#Production Nickel situation seems about the same en.wikipedia.org/wiki/List_of_countries_by_nickel_production sans a dominating producer though.
    – Fizz
    Aug 25, 2022 at 19:04

1 Answer 1

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+400

Based on the most recent annual Mineral Commodity Summaries issued by the United States Geological Survey, nine of the twenty countries with which the US has an FTA mine (or otherwise extract) at least one of the 'applicable critical minerals' as defined by the Inflation Reduction Act of 2022.

Firstly, the critical minerals requirement is as follows:

(A) In general -

The requirement described in this subparagraph with respect to a vehicle is that, with respect to the battery from which the electric motor of such vehicle draws electricity, the percentage of the value of the applicable critical minerals (as defined in section 45X(c)(6)) contained in such battery that were—

  • (i) extracted or processed—

    • (I) in the United States, or
    • (II) in any country with which the United States has a free trade agreement in effect, or
  • (ii) recycled in North America,

is equal to or greater than the applicable percentage (as certified by the qualified manufacturer, in such form or manner as prescribed by the Secretary).

So it's not necessarily required that the critical minerals actually be extracted in the FTA country - they may also be processed from a raw material, for example, a country could import bauxite and process it into aluminium, and this would fulfil the requirement.

Secondly, the list of applicable critical minerals is pretty long - there are 50 minerals on the list - found here. Australia is the only country with which the US has a FTA which has significant mines for rare-earth metals - the lanthanides plus scandium and yttrium - but most of the other minerals on the list are also mined by FTA countries. I've not included country reserves or as-yet-untapped sources, but focused on active mine production or extraction for the following list.

Country Minerals
Australia Aluminium/Bauxite, Antimony, Cesium, Cobalt, Hafnium, Lithium, Manganese, Nickel, Rare-Earth Metals, Tantalum, Titanium, Tin, Zinc, Zirconium
Bahrain Aluminium/Bauxite
Canada Aluminium/Bauxite, Antimony, Cesium, Cobalt, Fluorspar, Germanium, Graphite, Indium, Nickel, Niobium, Platinum-Group Metals, Tellurium, Titanium, Zinc
Chile Lithium
Israel Magnesium
Mexico Antimony, Barite, Fluorspar, Graphite, Manganese, Zinc
Morocco Arsenic, Barite, Cobalt, Fluorspar
Peru Indium, Tin, Zinc
South Korea Bismuth, Gallium, Indium

Of the fifty minerals on the list, four are not mined or extracted in FTA countries, based on the USGS reports; Beryllium, Chromium, Tungsten and Vanadium.

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  • Interesting. Off the top of my head, I'd have assumed that fewer things qualified as "critical". BTW "By weight percentage (g material/g battery), a typical lithium-ion battery comprises about: 7% Co, 7% Li (expressed as lithium carbonate equivalent, 1 g of lithium = 5.17 g LCE), 4% Ni, 5% Mn, 10% Cu, 15% Al, 16% graphite, and 36% other materials" sciencedirect.com/science/article/pii/S2405844019347012
    – Fizz
    Aug 30, 2022 at 16:37

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