Brian Goldner, chief exploration officer for Talon Metals Corp., an exploration and mining company, lifts one of the recently drilled rock cylinders from hundreds of feet below the earth’s surface and tilts it so the nickel captures light. “Over nine percent,” he says of the unusually high metal content. “It’s crazy.”
In 2020, Tesla’s Elon Musk asked miners to “please extract more nickel” and offered a “giant contract” to anyone who could make it sustainable. The problem is acute. Nickel is a key component in batteries for electric vehicles. Thanks to the growing demand for electric cars, geopolitics and the lack of new supplies, the high-quality nickel needed to manufacture batteries for electric vehicles is becoming scarce.
According to Goldman Sachs, the world was facing a high-quality nickel deficit in 2021, which will grow by 2022 and quadruple to over 800,000 tonnes by 2030. That shortfall has an impact: In March, Tesla raised the price of vehicles with nickel-based batteries by $ 1,000 to take account of rising raw material costs.
Recycling and waste recycling are important means of obtaining some of it. But if the world is truly committed to achieving a net carbon-free future, new mining must play the key role over the next decade. Tesla’s commitment to Talon is in part a bid for Talon to do so.
If successful, the benefits will be more than just financial. It will be a roadmap for mining the critical materials needed to compete in a net zero future.
Desperate demand for American nickel
Late on a bright weekday afternoon, I step out of a Talon Metals company car, a Tesla Model 3, and into a large clearing with pine trees in Tamarack, located 80 miles west of Duluth. I am accompanied by representatives of Talon, which – together with its partner, Rio Tinto PLC subsidiary Kennecott Exploration Co. continues to explore an ore body spanning 11 miles and 31,000 acres of state and private land.
Here, four rigs drill cores, what the company’s representatives characterize as the “only high-quality nickel project in the development stage in the United States.” The company hopes to begin mining in 2026, a year after the country’s only operating nickel mine, in Michigan, is scheduled to cease operations.
The timing is excellent, especially for policy makers and battery makers who are desperate for American-produced, sustainable nickel. According to the White House, global demand for nickel sulfate, the high-quality metal-containing ore that is clean enough for batteries, will grow from 200,000 to 3 million tons per year by 2040.
So far, high-quality nickel production is not nearly enough to keep pace with a global population of electric cars that will grow from around 13 million today to 677 million by 2040.
And the existing production will not necessarily be available to US car and battery manufacturers. For example, Russia accounts for about 20% of the world’s Class 1 nickel supply. So far, it has not cut off supplies to customers, but that may change.
The Joe Biden administration was concerned about the limitations of the supply chain long before the war in Ukraine. Recent events have only sharpened the White House’s thinking and highlight – among other deficits – that the United States accounts for only 0.64% of all global nickel production.
As a result, in late March, it invoked the Defense Production Act to increase domestic production of critical materials used in electric vehicles. Among the funds to be used include “environmentally responsible domestic mining and processing.”
That phrase alarms environmentalists, and with good reason. When nickel is extracted from sulphide-containing ores such as those in Tamarack, tailings are typically exposed to air and often water. The resulting chemical reaction produces sulfuric acid and toxic metals that can seep into the water and harm plants, animals and humans.
A 2012 review of 14 copper sulfide mines, representing 89% of U.S. copper production, showed that 13 failed to control contaminated seepage. The damage can be catastrophic: Acid mine waste accumulated over decades transformed parts of Butte, Montana, into one of America’s largest Superfund sites.
In Butte and many other former mining sites, clean-up costs that can run into the billions are often borne by taxpayers. Paula Maccabee, advocacy director and advisor to Water Legacy, a nonprofit organization founded to oppose sulfide mining in northern Minnesota, claims that little experience has been gained from these failures at the regulatory level. “Minnesota and federal regulators have shown that they are ill-equipped to control the environmental impact of sulfide mining,” she says.
The White House’s interest in mining has also aroused concern among Native American tribes. Mining companies have a long history of harming the environment in or near tribal areas, typically with little or no consent from the tribes. The transition to electric vehicles could potentially promote this devastating legacy.
An analysis from 2021 by MSCI Inc. showed that the majority of U.S. reserves of energy transition metals are located within 35 miles of Native American reserves. In the case of nickel, it is 97%. It includes Tamarack, which is within a watershed affecting two federally recognized tribes that, among other activities, grow wild rice in federally protected waters.
Can a sulfide mine be sustainable?
At Tamarack, the question of how to mine sustainably is particularly big. As we head towards one of the drilling rigs, Todd Malan, Talon’s head of external affairs and head of climate strategy, points out several water monitoring wells.
“These give us a basic understanding of underground water currents over many years,” he says. This data will not only be incorporated into any mining proposal currently set to be released in early 2023. “We share this data with regulators and the wider community.”
In central and northern Minnesota, the wider community includes tribes and environmentalists, and they must be content. Over the past decade, Minnesota has hosted two bitter battles over proposed sulfide mines near the federally recognized Boundary Waters Canoe Area Wilderness.
So far, the mining industry has lost, in part due to a perceived lack of transparency on environmental issues. In January, the Biden administration canceled the leases for one of the projects, and the other is tied up in environmental assessments and lawsuits, some of which include tribes.
With that in mind, Talon explicitly positions Tamarack as a sustainable project. First, the mine is not near the boundary water. Although most details about its plan are not yet public, Talon promises that it will have a much smaller surface footprint than other proposed Minnesota sulfide mines. It will also be designed to recycle more of what it extracts, including iron powder that can be used for Tesla’s growing fleet of cars using cheaper lithium iron phosphate batteries.
Perhaps most notably, Talon has received $ 2.2 million from the Department of Energy and $ 4 million from Rio Tinto for research into a large-scale carbon sequestration system in the mining countries using technology already implemented in Iceland. If that happens, Talon – and Tesla – would be able to market the mine’s nickel as a net zero product.
Neither of the two tribal bands that will be directly affected by Tamarack responded to emailed questions about the project. But Talan is not alone in hoping that they will eventually approve of it. The White House in Biden has repeatedly signaled that it expects the mining of critical minerals to take into account, respect and benefit tribal communities.
At a rally at the end of last month on opportunities for indigenous communities to benefit from a net-zero economy (partly sponsored by Rio Tinto and Talon Metals), Energy Minister Jennifer Granholm went even further. She told the nearly 1,300 delegates that “we want to see tribal communities at the forefront of clean energy transition.” These communities seem to be listening: Among the delegates was Kelly Applegate, commissioner of natural resources for the Mille Lacs band in Ojibwe, one of the tribes with lands that the Tamarack mine could influence.
Environmental groups take a similarly cautious approach. Over the past year, several national organizations have expressed cautious support for the Biden administration’s push for mining reform and sustainable critical materials mining.
In Minnesota, Water Legacy’s Maccabee is still skeptical that a mining plan could protect the aquatic environment around Tamarack. That said, she does not rule out the idea of acceptable sulfide mining somewhere. But like many environmentalists, she insists that mining should be the last resort, after trying other ways to obtain critical materials: “Can we look at what we can get out of nickel recycling?”
The White House wants recycling to play a role as well. It offers support and funding for research and funding of advanced recycling infrastructure for critical materials, including those related to batteries. But there is simply not enough high quality nickel to fill the supply hole.
Goldman Sachs recently estimated that batteries available globally for recycling will increase fivefold by 2030 (to 356 gigawatt hours). Even if that estimate is correct, it will still only account for about 7% of the global nickel supply. Expecting it to replace high-quality nickel mining is a bit like asking for recycled railroad tracks to replace the need for iron ore mining – in 1820.
‘A unique opportunity’
Tesla did not respond to a request for comment on the Tamarack project. But that does not mean that the company does not care. In recent years, for example, members of Minnesota tribal nations have been active in protests against oil pipelines, causing delays and damage to their owners. It’s not hard to imagine similar disruptions over a mining plan and a hit to Tesla’s reputation as a “sustainable” company.
Talon, on the other hand, has no interest in seeing any of this happen. When we go back to Talon’s Tesla, Malan tells me that the company “listens to society’s concerns about mining in a watery region.”
If Talon has any hope of achieving its goal of starting mining in 2026, it will have to allay those concerns. “We have a unique opportunity to build a mine that both Joe Biden and Elon Musk can support,” he says as we step into one of the drilling rigs. If Talon succeeds in that quest, the United States will be one step closer to achieving its net zero ambitions.
More from Bloomberg Opinion:
• Miners search the land again while reserves dwindle: David Fickling
• This Chinese miner could kill the battery metals: David Fickling
• Shanghai’s Tesla factory will not be a dormitory for long: Adam Minter
This column does not necessarily reflect the opinion of the editorial staff or Bloomberg LP and its owners.
Adam Minter is a Bloomberg Opinion columnist covering Asia, technology and the environment. He is most recently the author of “Secondhand: Travels in the New Global Garage Sale.”
More stories like this are available at bloomberg.com/opinion