The U.S. Has A Lot Of Catching Up To Do On Critical Energy Minerals

Earlier this week, I wrote about copper and a looming supply shortage of that metal, which of necessity must play a crucial role in the eventual success of the energy transition that governments in North America and much of the rest of the western world are trying to subsidize into existence. Over the last year-and-a-half I’ve written similar pieces detailing the difficulties involved in ramping up production of other key minerals, like antimony, lithium and cobalt.

Today, it’s time to write about another critical mineral resource that has received scant attention thus far, despite the promise it holds for a seeming step-change ahead in battery technology: Vanadium. In a truly remarkable story at NPR earlier this month, writers Laura Sullivan and Courtney Flatt detail the saga of a design developed in a U.S. government lab for a vanadium redox flow battery that appears to hold great promise in dramatically improving battery storage efficiency and longevity.

According to the NPR story, “The batteries were about the size of a refrigerator, held enough energy to power a house, and could be used for decades. The engineers pictured people plunking them down next to their air conditioners, attaching solar panels to them, and everyone living happily ever after off the grid.”

The story quotes one of those engineers, Chris Howard, as saying “It was beyond promise. We were seeing it functioning as designed, as expected.” It seemed as if the proverbial great leap forward in battery technology that has always been just a few years in the future for about the last 30 years was finally within reach, and right here in the United States. But, as a result of a saga of decisions made across the last three U.S. presidential administrations, the vanadium redox flow battery is now being made not in America, but in China.

Howard was an employee of a U.S. company called UniEnergy Technologies, a company formed by the lead scientist on the government project named Gary Yang, who applied for and received a license to manufacture the batteries in the U.S. from the Obama Administration in 2012. But Yang soon ran into an obstruction that has plagued the idea men behind many an energy unicorn over the last century: Money.

“I talked to almost all major investment banks; none of them (wanted to) invest in batteries,” Yang said. The holdup to funding was the same hurdle present in every major investment decision made in the business world, i.e., the banks wanted to turn a profit sooner than the development of the technology would allow for that to happen.

Desperate to find funding for the venture, Yang was soon introduced by a colleague to Chinese businessman named Yanhui Liu and a China-based company called Dalian Rongke Power Co. Ltd. Soon, Rongke Power had become a major investor in the technology, and UniEnergy was manufacturing the batteries in the U.S.

But over time, Dalian Rongke began shifting more and more of the manufacturing efforts to its facilities in China. By 2017, Yang had granted Dalian Rongke a formal sublicense to make the batteries in China, and in 2021, Yang fully transferred the license to the Chinese company.

As NPR points out, U.S. law requires licensees like Yang to “substantially manufacture” their products in the U.S., and to sell a specific percentage of them domestically. Yang admits he did not do that, yet no one at DOE ever raised an objection. The federal government has since revoked Yang’s license after an American company, Forever Energy, raised concerns about the situation in 2021.

DOE is now working on a round of grants to be announced October 1 that could include an award of funds and license related to this battery technology. Joanne Skievaski, the chief financial officer of Forever Energy, is hopeful her company can obtain that license. Forever Energy has developed plans to open a factory based in Louisiana next year to house the manufacture of the batteries. The plan has attracted bipartisan support from both Louisiana Sen. Bill Cassidy (R) and Gov. John Bel Edwards (D).

Awarding the license to a U.S. company with bipartisan support seems like a no-brainer at this point. But, regardless, the government’s ineptitude has already provided China with a big head start with this technology. The Chinese advantage becomes even more pronounced when one realizes that China is also the world’s largest vanadium producer. Other top producing nations include Russia, South Africa and Brazil, all of which are major trading partners with China and, along with India, make up the membership of the increasingly powerful BRICS alliance.

Here we see another key issue impacting the U.S. government in its attempt to play such a major role in mandating and hyper-managing this energy transition via policy actions: Too often, the lack of continuity in administrations leads to lack of continuity in policy and enforcement. Regardless of the prevailing narrative claiming a transition of this magnitude and complexity can be achieved in just a decade or so, the physical resource limitations now coming to light are likely to dictate it will be spread out over many decades to come.

The Chinese government, given its authoritarian, one-party nature, is able to plan and pursue huge national policy objectives over decades and maintain continuity while doing so. America’s democratic republic changes governments and ruling parties with great frequency, and the policy objectives tend to shift with them. This issue becomes especially perplexing and difficult to overcome given that China already enjoys such a dominant position in the production, processing and supply chain management for many of these critical energy minerals.

The U.S. has a lot of catching-up to do if it is to become competitive for the mineral resources that make renewables and electric vehicles go. One good way for that catching-up process to begin would be for the DOE to do a better job of keeping its own house in order.