The urgency of the transition to clean energy has created an incentive for the federal government to rush forward risky mineral processing projects.
On October 19, the Biden administration awarded $2.8 billion in funding from the Infrastructure Investment and Jobs Act to build facilities to process the minerals needed for electric vehicle batteries. The American Battery Minerals Initiative, overseen by the Department of Energy (DOE), has selected 20 projects to receive funds.
We must avoid recreating the injustices of the fossil fuel era, a goal laid out in President Biden’s climate and justice commitments. One important step is for DOE to require all awardees perform due diligence along their supply chains. This could start by standardizing these commitments in rule changes from DOE’s Loan Program Office. In the meantime, some of the projects in line for a grant through this new funding stream are raising serious red flags.
For example, DOE may award $114,846,344 to a mineral processing project, Talon Nickel’s Double Play, in North Dakota. This facility would process nickel ore from Talon’s proposed Tamarack Nickel-Copper-Cobalt mine, in Minnesota, opposed by the Mille Lacs Band of Ojibwe, the Sandy Lake Band of Mississippi Chippewa, and viewed as an “assault on Indigenous rights.” The mine has not earned their consent, nor submitted a mine plan, nor received all related mining authorizations.
Announcing a large award to a facility primarily intended to process minerals from a nonexistent, controversial mine is wrong and poses many risks. DOE is undoubtedly aware of these risks; and a proper due diligence review could help reduce them. Due diligence obligations are not limited to a specific time nor single project. Rather, due diligence must be ongoing and apply to the award recipient’s entire supply chain. Otherwise, DOE awards may lead to unjust results, inflate taxpayer risk, and undermine the President’s whole-of-government supply chain approach.
Supply Chain Due Diligence Mechanisms for DOE Mineral Processing Loans
DOE funded projects should earn community consent, including from those potentially impacted by mines sourcing mineral processing facilities. DOE must provide meaningful opportunities for stakeholder engagement, public participation, and feedback throughout the lifecycle of a project. DOE, the Environmental Protection Agency (EPA), and other agencies should conduct essential research and put in place protections limiting direct, indirect, and cumulative harms that may result from such projects. Finally, DOE’s award terms should ensure that these communities, especially underserved communities, earn benefits from these projects, including via royalties, taxes, jobs, clean air and water, and direct investment.
Where applicable, DOE’s loan guarantees should incorporate internationally-recognized Human Rights and Environmental Due Diligence (HREDD) standards. Standards from the World Bank, the United Nations, and the Organization on Economic Cooperation and Development require extractive industries to earn the Free, Prior, and Informed Consent (FPIC) from potentially-affected Indigenous communities. These standards also reduce the potential for conflict and corruption too often found in extractive project supply chains.
The rush to source materials for the energy transition has pushed the US Government, especially DOE, toward guaranteeing loans for potentially risky mineral processing projects. DOE can help reduce these risks with a Loan Program Office rule requiring awardees perform ongoing supply chain due diligence. Congress should oversee these investments and put substantially more resources into developing a circular economy, reducing overall mineral demand, and sourcing from reused, substituted, and recycled minerals. Promoting circularity and due diligence together will help us achieve more just, equitable, and fair outcomes.