Council Advisory Board Member and International Trade Policy Committee Chair James Prince, Baker Hughes, discussed risks and opportunities for the energy services sector in the critical minerals arena with Dr. Michelle Foss of Rice University’s Baker Institute on July 29.
Foss opened the conversation with an examination of the term “critical” and “rare earth” minerals and how these categories include metals and soft minerals that are abundant and ordinary but are at the core of everything in modern life – such as copper, aluminum and nickel. These are commonly occurring and used, she said, but accessing new sources can be difficult, which creates international supply chain management concerns.
With the recent publication of the International Energy Agency’s analysis of the Role of Critical Minerals in Clean Energy Transitions, Prince guided the conversation to analysis of what it could mean for energy service and technology companies as they engage in the energy transition. Foss said companies need to think about two key topics: the dilemma of competing uses and demands, and the role of China as the dominant supplier and customer of critical minerals.
Foss said China dominates the supply chain with almost a quarter of global total minerals output in copper, aluminum and steel production. Increasing outbound investments in Australia, Latin America and Africa has led trade flows to China for processing due to efficiencies elsewhere, as well as China’s willingness to refine materials.
With these issues in mind, the public policy conversation has been difficult according to Foss, who said local governments and communities have a difficult time marrying clean energy goals with the more unsavory extraction of minerals critical to those technologies. She said her own recommendation to policymakers is to have a “materials first” mindset in developing alternative energy technologies rather than setting targets before fully understanding capability.
For the energy services sector in particular, Foss said she believes there has always been convergence between the sector and mining equipment service producers both domestically and overseas. Opportunities could also arise domestically depending on the positions governments take on extraction and processing. Energy service companies could also examine how their carbon capture technologies could be applied to these emission intensive industries.
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Maria Suarez, Director Government Affairs, writes about industry-specific policies for the Energy Workforce & Technology Council. Click here to subscribe to the Council’s newsletter, which highlights sector-specific issues, best practices, Council activities and more.