Biden Invokes Korean War-Era Law for 'Battery Mineral Production Increase'... Resource War Intensifies

President Joe Biden of the United States [Photo by AP]

[Asia Economy Reporter Jeong Hyunjin] As the global raw material prices continue to rise due to Russia's invasion of Ukraine, U.S. President Joe Biden has decided to invoke the Defense Production Act (DPA), established during the Korean War, to increase the production of essential minerals such as nickel and lithium needed for electric vehicle battery manufacturing. It appears to be the opening act of a war over critical resources.

On the 30th (local time), Bloomberg News, citing sources, reported that President Biden is expected to add lithium, nickel, graphite, cobalt, manganese, and other minerals essential for battery production to the list of DPA-covered materials as early as the 31st. The U.S. imported 100% of its graphite, manganese, and rare earth elements last year, and relied on foreign sources for 76% of cobalt and 50% of lithium. These minerals are materials necessary for electric vehicle batteries and large-capacity batteries, and their prices have surged recently due to increased electric vehicle demand, supply chain disruptions, and the Ukraine war.

The DPA, enacted in 1950 to support the Korean War, grants the U.S. president broad authority to promote and expand the production of key goods by private companies for national security purposes. The U.S. government has previously used this law to secure rare earth elements, masks, and vaccines.

The invocation of the DPA by the U.S. is noteworthy as it comes amid heightened importance of energy and resource security triggered by the Ukraine war. Resource acquisition battles among countries responding to geopolitical crises, led by the U.S., are expected to intensify. Rich Nolan, former president of the National Mining Association (NMA), said that while the Biden administration’s order may be limited in scope, it will send a strong message to the global market, adding, "If we do not act first, we risk being consumed by geopolitical competitors’ dominance over minerals." Bloomberg described it as "an attempt to use Cold War-era power to expand battery mineral production."

Sources revealed that the Biden administration plans to use the DPA to provide $750 million (approximately 910 billion KRW) in support to U.S. companies producing the targeted minerals. They also mentioned plans to enable recycling of battery raw materials. Bloomberg reported that instead of lending to these companies or directly purchasing minerals, the government will support funding for existing facilities to upgrade productivity and safety. Funding is also expected for feasibility studies of new projects to secure nickel and other minerals. This approach is interpreted as addressing concerns over shortages of raw materials for electric vehicle batteries needed by the U.S. automotive industry, a key sector, by supporting related industries rather than stockpiling minerals directly.

Since taking office, President Biden has focused heavily on expanding electric vehicles as an alternative to fossil fuel-powered cars to combat climate change, reducing dependence on China for rare earth elements, and increasing domestic procurement. In December last year, he allocated $6 billion to improve the electric vehicle supply chain and reduce the automotive industry's reliance on China, a leader in lithium-ion batteries. The White House reported in July last year that the number of minerals for which the U.S. depends on imports for more than a quarter of demand, excluding fuel, increased from 21 in 1954 to 58. A source said, "We must secure raw materials to build a clean energy-based economy without relying on unsustainable foreign supply chains, while maintaining strong environmental and labor standards."

Meanwhile, in 2019, former President Donald Trump signed an executive order using the DPA to initiate early development of critical minerals such as rare earth elements to prevent China from weaponizing them and to protect advanced core industries. After the COVID-19 outbreak, the DPA was also used to alleviate shortages of medical supplies in the U.S. President Biden also invoked the law to increase vaccine supply by urging pharmaceutical companies to boost production. The U.S. government considered invoking the DPA last year to address the semiconductor shortage but did not implement it.

This content was produced with the assistance of AI translation services.