Defense Production Act – What Does it Mean for Minerals?

Author: Rich Nolan
Defense production act

Minerals are critical to energy – the building blocks for a range of advanced energy technologies – but they are also critical to national security.  

In an effort to reduce the United States’ reliance on China and other adversarial nations for battery materials, President Biden invoked the Defense Production Act (DPA) Title III on March 31, 2022. The invocation of the DPA on minerals sent a clear signal to markets and the world that the U.S. recognizes the urgency of the minerals challenge. 

With supply chain shocks upending the supply of a range of essential goods, there’s growing awareness that the emerging supply chain vulnerabilities of today will be crises tomorrow. Our mineral import overreliance – exacerbated by our alarming reliance on geopolitical rivals – for the materials essential to our economy, energy security and national security is a vulnerability decades in the making now reaching a boiling point. 

Surging demand for battery metals and their importance to the electric vehicle (EV) revolution and a range of defense applications has underscored the need to address the challenge head on. While the U.S. has fallen far behind our rivals in building a 21st century materials industrial base, we have the resources and growing political will to build the secure, reliable supply chains we know we need. 

What is the Defense Production Act and how is being used today?

The DPA was initially passed in 1950 during the Korean War under President Harry S. Truman and provides the president the authority to order domestic companies to produce services and goods that support national security. The DPA has been used to address a range of challenges in the past and recently we saw the DPA employed to jumpstart production of personal protective equipment, ventilators and vaccines during the toughest months of the pandemic. 

President Biden’s invocation of the DPA for strategic materials gives the Department of Defense (DOD) funding to support the supply chain for batteries for EVs and a broad range of military applications. While the order specifically cites lithium, nickel, cobalt, graphite and manganese as examples of strategic and critical materials, the DOD plans to apply funding to broadly assist in materials production with activities that include feasibility studies, value added processing, as well as by-product and coproduct production at existing mine sites and waste streams. 

Regulatory barriers need urgent action 

The invocation of the DPA is an important step forward but addressing the full breadth and urgency of the minerals challenge will require a whole-of-government approach that embraces mining’s place at the intersection of the nation’s jobs, energy and national security agendas. We must build on this action to not only continue to encourage domestic mineral production but recognize and remove self-imposed barriers to reshoring the mineral supply chains our industrial base needs. 

A critical next step is to decisively address the duplication and delays in our nation’s mine permitting process. Without unnecessary regulatory delays, mining is already a time and capital-intensive process ill-suited to match the surging demand we are now seeing from the energy and automotive sectors. 

We need a commitment to nimbleness and competitiveness, and that begins with addressing mine permitting. It now takes a decade, and often longer, to permit new mines in the U.S. Our allies in Canada and Australia, with similarly high environmental and labor standards, are permitting mines in just two to three years. We can do better and must. Across government and in industry there is wide acknowledgement of the seriousness of our minerals challenge and a new willingness to address it. The use of the DPA to jumpstart domestic materials supply chains should be a turning point in moving from acknowledgement to action.