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Hochstein frets over low metal prices

Mar 12, 2024
Amos Hochstein

Hochstein in February. Photo: Dwayne Senior/Bloomberg via Getty Images

A top Biden energy adviser, Amos Hochstein, is fretting over battery metal prices.

Why it matters: It feels like only a matter of time before federal policymakers substantially address a growing problem in the minerals arena: China controls the prices.

  • We'll see whether concerns over China will boost policy solutions, including the IRA, as well as the chances of setting up a proposed resource reserve.

Driving the news: At the annual SAFE Summit this morning, Hochstein said the U.S. needs to work with allies to circumvent China's control of prices through its stranglehold on battery metals like lithium and cobalt.

  • "People think about manipulation of price only in the context of increasing price. At this stage of development, you can collapse the price [and then] projects in the United States are delayed," he said. "That's the kind of danger you have."

Catch up quick: U.S. mining projects are being undermined by low prices for battery metals, a trend some have blamed on Chinese producers flooding the market with cheap material (and sagging EV demand projections).

Case in point: Hochstein's comments echo Canada's energy and natural resources minister Jonathan Wilkinson, who said last week that his nation and its allies need "to figure out the mechanism" to address China's pricing power.

Between the lines: Congress has precedent for addressing metal prices. It's unclear whether it can fully fix this situation on its own.

  • To deal with anticompetitive behavior in the U.S. metals space, lawmakers go to the DOJ, as House Republican Ken Buck did in accusing the three largest aluminum producers of price collusion this year.

But global metal prices are different — and a potentially more challenging animal to wrestle with.

  • Every battery metal has its own worldwide trading regime. And prices for lithium, a necessary mineral for batteries, are notoriously opaque.

What we're watching: We'll see whether this year's NDAA includes language on a resource reserve, which was offered in the bipartisan report from the House Select China committee.

  • The committee says a reserve would help blunt prices from falling and get "replenished" when prices are higher.
  • "This would allow more American companies to enter the mining industry by reducing the risk of market volatility," per the report.

We're also watching to see whether fears of Chinese control over resources and supply chains will insulate the IRA from Republican attacks.

  • At a panel on China later that morning, Semafor's Steve Clemons asked Rep. Rob Wittman if he was "pro IRA." His response was not "no."
  • "I think we probably have a few differences of opinion on some of those elements, but there's lots of places where our government can look at policies as far as what I call source-to-production," Wittman said.
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