Interview with Helaina Matza, US Department of State | Fast Forward podcast episode 1 transcript

You can read the full transcript of our interview between Andrea Hotter and Helaina Matza for Fast Forward podcast below. Or, listen to Fast Forward podcast on Spotify, Apple Podcasts, Amazon Music or wherever you get your podcasts.

Full episode transcript

Andrea Hotter [AH]: Welcome to Fast Forward, a new podcast by Fastmarkets. I’m Andrea Hotter, special correspondent at Fastmarkets, and over the next several months, my colleagues and I are going to take you on a journey through some of the main issues impacting the critical minerals that are powering the world’s energy transition.

Now for our inaugural episode, we decided to take a look at the regulatory backdrop. I know, I know regulation, it does sound quite boring, but before the word regulation makes you all switch off, I promise you this won’t be a dull conversation. Today, we’re going to be discussing a number of things, including what exactly minerals-focused development looks like, who’s working with whom, what’s going on in Indonesia, what’s the approach to China, and what you should be paying attention to that you might not be aware of.

So, to bring us up to speed on the state of play with the energy transition. I’m here with Helaina Matza of the U. S. Department of State. Helaina is the Special Coordinator for the Partnership on Global Infrastructure and Investment. Helaina, it’s really good to see you again. How are you?

Helaina Matza [HM]: I’m doing great and it’s so great to see you as well. Really happy to join you today.

AH: Well, big thank you from my side. I know you’ve been really struggling with your voice this week, so I appreciate you doing this podcast while you’re feeling sick and I hope it doesn’t contribute to you getting laryngitis or something.

HM: I think we’ll be okay, but you know, we’ll definitely work on my voice a bit.

AH: All right. Well, so to kick off, I think it would be really useful for you to talk about the United States where we’re having this conversation from and give me a kind of a sense of what it’s like to be in the U S market right now. Can you, can you kind of lay the land out for us?

HM: Sure, happy to do so. And so, in the case of the United States. There’s been so much energy and action over the last several years since the Biden administration started. We had historic legislation passed from the bipartisan infrastructure law to the Inflation Reduction Act as well.

And that’s done so much to change the tone in the U S market. We are seeing that the IRA alone will help us cut emissions 40% by 2030, which is about 80 percent towards the implementation of our N. D. C. That’s not just the climate goal. That’s also informed by an extreme amount of incentives and growth within our own economy. So even though we’re seeing a bit of a dip in the trend that we anticipated for US EV deployment and sales, we still are anticipating to have a 20 percent increase this year, with that increase continuing over the next several years at the same rate, if not larger. We have 30 gigafactories planned or under construction, and we are working diligently to implement the different opportunities that came out of both BIL and the IRA through the DOE grant program and several other incentives that go directly to consumers, but also to the manufacturers of battery packs and EVs themselves, as well as some of the processing technology along the way.

These incentives also go over to solar manufacturing as well. But for the purpose of this conversation, we see so much energy in the space around the EV revolution.

AH: You mentioned the IRA there, and I think probably unless you’ve been living under a rock for the past 18 months you’ve probably heard of the Inflation Reduction Act, right? So it’s certainly the area where I’m getting the most questions and I know you’ll be able to answer them far more eloquently than I probably could ever. So let’s take it to the basics, perhaps: what exactly does the IRA have to offer and for whom?

HM: Absolutely. So the IRA is a really historic piece of legislation. This is the deployment of over $369 billion of incentives to create new, clean and green jobs all across that supply chain with different opportunities for every group that participates, whether that’s the private sector, consumers or workers themselves. So in the case of the private sector, we have several new clean energy tax credits, and more than $200 billion in new clean energy investment from the private sector really has taken off since the IRA passed and since the president has taken office.

And the bipartisan infrastructure law is deploying $97 billion from DOE in clean energy incentives vis a vis loans and different grants. For workers, this offers approximately five times the incentives to companies to pay their workers a prevailing wage and register and use registered apprenticeships.

So being able to pass that down vis-a-vis incentives to improving worker rights. And already we’re seeing clean energy projects since the IRA created more than 210, 000 jobs. And so, so much of the thinking is, how do we use the energy within our own economy, no pun intended, to help not only create jobs, to demonstrate there’s other ways to participate in our economy that helps us decarbonize as we go, but push those opportunities to the rest of the world, which is really what I spend most of my day doing.

AH: So that’s obviously a lot of money and a very big laundry list. Okay. So, I guess getting down to the nitty gritty: exactly how is the US looking at doing this, at actually implementing the IRA?

HM: Sure. So as I mentioned, there’s a handful of different tax credits and incentives that go directly to battery producers, as well as those who apply and are winning grants for different critical mineral processing technologies and capabilities.

AH: Yeah, it’s massive. So that’s what the US is actually aiming for, but it’s going to take more than just the US, right. So how are the US’ international partners actually responding to this and how are those conversations evolving?

HM: I think the IRA was an incredibly impactful piece of legislation that certainly took some time for our partners to unpack and understand. And we spent, as I can say, as someone who takes care of some of our diplomatic relationships, we spent a good deal of time with our partners, one, explaining how the IRA would be implemented, what that means for incentives across many clean energy technologies, including clean hydrogen, which was a major question and concern to our partners, just as much as what we’re here to talk about today, which is the EV battery supply chain.

And I think from a moment of concern that we maybe would be affecting global competition in a challenging way, we’ve seen our partners really respond to us laying down the gauntlet with the IRA and developing their own incentive packages. So, whether it’s Australia, Canada, or the EU, they’re building in new clean energy incentives into their legislation and budgets to be implemented this year and next. This is exactly what the IRA is intended to do. Take the action that demonstrates we can create jobs at home and translate that to other economies that we work closely with. So, they choose to design their version of an IRA that benefits their economy. And so, I think that we’re in a really different place today.

AH: And you know, just as you were saying that I was thinking this is obviously a massive task. So presumably it doesn’t allow the US to just use the same playbook as it has in the past. If you are modernizing your approach to foreign economic policy as a department, what does that look like?

HM: It’s an excellent question. And this is really a place where my team gets to sit and be a big part of the journey of our evolution of economic policy. And so you know, taking care of the global infrastructure portfolio here at the State Department, we are running the US implementation of something called the Partnership for Global Infrastructure and Investment.

This is a G7 initiative where we have collectively deployed or committed to deploy $600 billion to close or start closing the infrastructure gap in emerging economies by 2027. This is a huge number. It’s a multi-sectoral approach. So it’s not just focused on clean energy, although clean energy and clean energy supply chains are a big piece of this, but we’re supporting the development of infrastructure projects in ag, digital access, health, and then critical physical infrastructure, like ports and rail.

And the reason why I raised this program, not only because I run it, I’m very excited about it, but because it’s demonstrating an evolution in our economic policy, how we’re thinking about the ecosystem of investments, of how we interact, with the global south in a way that they’re asking us to – showing up that’s in a way that’s expansive beyond the relationship that they’re used to with us where I think our partners feel that they can rely on us often in times of crisis and often in areas around health and other places that we’ve proven ourselves in some emerging markets around the world, but expanding that to what they want, which is a way to effectively advance their economic development, be part of a new clean energy story in a meaningful way, in a way that adds value to their country and to their people, and doesn’t require them to take on the same debt that they have in the past.

And that is no easy challenge. We’re in early days of our work and doing that. That’s why it’s not just the United States. We’re doing that with the G7. We’re doing that with other likeminded partners outside of that group as well.

AH: Yeah, no wonder you’ve lost your voice. You’re doing a lot of work! So I often get confused with all the different departments I’m dealing with and you’ve just kind of laid out what you’re doing from the way you’re describing it, the department that you’re working for the partnership on global infrastructure investment that unit seems to manage the international version of the US’ global infrastructure work. Is that the right way of looking at it?

HM: I think that’s absolutely the right way of looking at that and look, you know, we work very closely with the White House, our leadership there who covers our international global energy and investment engagement. This is an important pillar, an important part of that overall picture. And so together we coordinate our interagency in not only aggregating the good work we’re doing already and trying to get more out of it, but to think through what we could do proactively in new markets.

AH: I can see where the similarities are with this to the work that’s taking place. What’s the difference between the kind of work that’s taking place in the US and the goals abroad? And how are you making them align? How do you connect the two?

HM: So obviously the top priorities at home are investing in expanding our own economy, creating new jobs, decarbonizing those jobs, and so much of that is going to not only come from policy and regulation, it comes from innovation, innovation that our incentive packages are helping to push forward, but that already to some extent have been born and conceptualized within our own labs. This is where the US always shines. And then our challenge occasionally is how do you scale that, right? And so that’s what so much of the incentives at home are designed to do. However, we don’t live in a vacuum. This is a global economy. Our foreign partners are incredibly important to us. Obviously, we want to ensure that we are taking advantage and investing in our relationships around the world, not only with our key likeminded partners that you see in the G7, but also in the global south in response to the demand that we’re seeing from them, to diversify investment, to diversify those that are working in those sectors. And frankly, that serves us as well. These supply chains are incredibly complicated. They’re, very concentrated. And in turn, coming out of Covid, we saw the constraints that happened. In over-concentrated supply chains, whether that’s in the semi-con industry or the critical minerals that fuel the EV future, but really the whole clean energy future. And so, the idea of working in that type of partnership is really in service of all those goals.

AH: What I would like to know is just give me some examples for instance, I know we’ve from our conversations, you’ve been to Indonesia. You’ve been out into the continent of Africa. Can you give me some examples of the work so we can kind of get into the nitty gritty of what the department’s doing?

HM: Maybe the best example to start with is the work that we’ve been doing on the Lobito corridor, which is a really exciting partnership between the government of Angola, the government of Zambia and the government of DRC that they created to work in more close coordination with each other. The U. S. came in and then we brought additional G7 partners with the Europeans joining us and said, how do we support the connectivity agenda of these three countries in a way that we can utilize our tools to de-risk bringing the private sector in a bit more?

And so we made several investments first in Angola, supporting the refurbishment of the Benguela rail line through a loan that we are putting forward to help support that consortium. In turn, because we require and we all agree that those should be open access rails that many other customers could utilize – that’s how you really incentivize trade – that opened the port concession as well, which we understand was just awarded very recently to a European firm. And so, we use that initial investment to help connect Angola more efficiently to DRC up to Kolwezi, which is really the beginning center of the copper-cobalt belt.

We have also worked with the Europeans to invest in a new greenfield rail, 800 kilometers of rail. Seriously, the first major investment the US has made in such a type of project in over a generation. And this is to connect Zambia in the southern part of the Copper Cobalt Belt once again to the Benguela line, so they’re able to trade with the West more easily.

So, you’re doing something, taking advantage of commodities that need to move already. You’re making a huge investment in that critical backbone and what it enables is incredible. We’ve been able to invest in the US largest investment on the continent and new solar deployment in Angola. We’ve been working with the US telco provider and moving out their services from Rwanda to the rest of the corridor. And they, in turn, are working with a very large agricultural producer in Angola to work with US aid on a mobile money program so they can actually connect farmers to each other and create a network of subsistent farmers that can aggregate their product to utilize the rail.

AH: So, the goal is to facilitate work that’s already happening there, industries that are already there. The cobalt, the copper, et cetera, presumably that’s part of the focus for the future growth, right? Facilitating transportation, logistics and development in those areas. And those are minerals that the U. S. and the rest of the world is looking to produce.

HM: Absolutely. And in a way that’s aligned with our ethos of how Western companies, how the U. S. does business. That creates more openness, more transparency and a really concerted effort to make this a platform for two-way trade, to include agriculture, to think through ways that we can not only provide connectivity to the West, but also connectivity within the continent.

And this is a partnership that is designed just as much from our African partners as it is from us. And so that partnership is really, really key to making this work successful.

AH: Yeah, and I, I was going to ask you, is the U. S. doing this as the U. S. alone or working with partners? But I’ve heard the word partnership quite a lot from you, so I know you’re definitely filling the dance card. I guess that it kind of leads to the next question: there’s a lot of money at stake here. How on earth is all this work being financed? You know, I hear constantly that it’s tough to secure financing at the moment for many different projects and so on. I’m just curious. What’s competition for finance like, talk me through the various financial tools that you’re using to enable projects like this to happen.

HM: We’re seeing this shift as more money and capital are going to energy projects as we’re starting to work on infrastructure needs. But that’s all going to markets that are OECD that are easier to work in. And so, to shift that, to expand that fold, to attract investment in what we’re calling emerging markets takes time.

Some of the markets we’re working in do have deep capital markets and are just focused on scale. But in the case of the Africa example, I was sharing they, there takes a lot of work to, to make that attractive to, to investors. And so, the structure I mentioned of how we’re investing, particularly in the Greenfield rail is designed to try to help with that.

It’s saying, hey, we have some concessional capital on the front end. The United States, the European Union, we’re here to help you risk that investment in a meaningful way, but we’re also using a private sector partner. We’re not just financing a feasibility study that’s handed over to the government and then the government has to go figure out what to do.

We’re doing it with a partner who’s ultimately going to figure out how to implement that project, meaning they’re going to do the fundraising for the rest of that commercial capital. Everything we do to de-risk that project is to bring down the cost of that capital, which is quite high in those markets. That’s how you begin, right? That’s how you start changing the narrative. That’s how you start building trust in the financial community that working in these markets, especially on these high value projects really is within their interest, but it takes time. And that’s why we’re doing this really strong focus on these handful of corridors to demonstrate that that it can be done.

AH: So, okay, we’re talking here about what you’d like to see and what you’re starting to see happen. I’d like to also know where isn’t it working yet, and where can it get better? What are the areas that need to see some improvement? Where are we lacking? What would you like to achieve, but you haven’t been able to get there yet?

HM: It’s a great question. I am very optimistic, as you probably can hear from my enthusiasm for the work that I’m lucky enough to take part in. But the challenge is really in scale. And so, the work that we’re doing on the continent of Africa is certainly not indicative of all the need on the continent.

There’s many other corridors and areas that require additional investment, some that maybe are lucky enough to have critical minerals that help make that investment a bit easier, but many that do not. So, how do you scale this theory of economic development deployment in a way that we can cover more markets more broadly, I think it’s going to be a bit of a trip.

And of course, a piece of that is not just everything that we do, but having willing partners on the other side to continue to improve the regulatory environment to create more transparency and frankly, to require the same level that we’re offering of service from anyone entering their economy. And it takes time, not every partner is in the position to do that, and if we could scale faster, if we had more resources – of course, that’s always something we wish for – I think that we would be in a much better position. So those would be the things I would say if I had my wish list. I would certainly lean on those to do this in more places and demonstrate that this model can work.

AH: We’ve talked a little bit about critical minerals. I’d like to dive into that a little bit more. You know, we touched on copper and cobalt. Obviously, we’re not seeing the US produce cobalt. You have to go to other parts of the world to get that. So I’m curious to know which parts of the supply chain you’re seeing the most interest in. Firstly, from the perspective of the government, whereabouts in the critical mineral supply chain, is it looking to do this work? And secondly, I guess, from the perspective of the market coming to you and saying, hey, we’d like to get involved in the work that you’re doing. I’d love to know if these two align, basically.

HM: You know, they really do. I think those lists would actually look quite similar, maybe with a couple different caveats. But what’s motivating our thinking on what is needed for the global EV supply chain will continue to shift. We’re very well aware that chemistries are evolving. Even in our own economy, as we’re investing in developing new types of battery chemistries, but there are some truths that will remain no matter what.

Copper is going to be required for many uses beyond our needs, but also in just transmission and the ability to deploy clean energy as a whole. Obviously, so many of the materials that maybe you and I aren’t as focused on as those that are thinking about the clean energy future. You apply to defense applications, apply to our cell phones and everything else that we need.

The national security imperative is there to care about ensuring not only that there’s access to those materials, but that those supply chains are diversified and healthy, including the parts of it that are at home and the parts of it that need to be in other jurisdictions. In the case of what we care about, there’s a couple of factors that come into it.

One is geology, right? And you touched on that. Where are these materials actually available? The other is how saturated is that market already? Or concentrated, I should say, that market is already? With one entity that is really managing both the production and frankly, also the processing and you see, especially on the processing side, those numbers for certain materials like graphite hit 90 percent. The other factor that’s quite important is how others are managing that supply chain. In cases where China has put export controls on a handful of materials, whether that’s germanium or gallium or graphite, that is a signal, that there could be challenges in that market as immediately or in the medium term. And so, when we think through that graphite goes to the top of the list, rare earths go to the top of that list. We’re obviously concerned about, cobalt as well.

Lithium with prices dropping so much and we’re seeing projects get slowed is of concern and then nickel, seeing the huge dip in price because of the very large amount of supply challenges projects in other parts of the world that were on their way to getting started. All of these things are a concern. And if you talk to different parts of our government, they may add a handful of other minerals and metals to that list.

AH: So basically internationally, you’re having to bridge the gap where you can’t fill it with the upstream domestically because the geology is not there. The projects aren’t there. And then you are able to focus more on the mid-tier manufacturing segments in the US more domestically.

The U.S. doesn’t have its own nickel production; again, that’s another one that it struggles with, it’s on the critical minerals list, do you think that’s going to drive battery chemistries? Do you expect Western companies to focus on lithium-ion phosphate batteries because that’s way easier than nickel in terms of availability. Or do you think that there’s an alternative solution. I guess that’s what you’re trying to create,

HM: I think it totally matters, Andrea, what timeline you’re talking about. It’s 2024 right now. So many of our targets are aligned with a 2030 timeframe, both on policy and on climate ambition and you name it. 2030 is right around the corner. We realistically have to assume if we’re going to support the growth in that time frame, the way that we anticipate and hope, even if it’s half of that growth, that there is going to be a reliance on a version of the chemistries of lithium-ion batteries as we know them today.

I don’t think we’re able to shift. I mean, there has been disruptions like that, and a lot of them have come out of innovation from the US over the years. But realistically, I think lithium-ion batteries will have a place in the market in the near term. I think LFP batteries, as you mentioned, are quite attractive in many different ways, and we’re seeing other parts of the world really invest in them heavily. In the United States it’s really going to just matter if they’re able to ultimately demonstrate that they can get the density capacity that’s required to go those longer ranges, in the United States, maybe more so than anywhere else. We drive a lot more and so range anxiety is a real thing. And I’ve experienced it myself driving at different points, trying to make it from DC to New York. There’s also a lot of city driving.

For what could be next, you’re probably tracking the same potential opportunities, whether they’re sodium ion or flow batteries, they each have their different pros and cons. And I do think we’ll see a disruption at some point that is going to put us in a different situation on how and what we’re worried about on supply chains. But, that’s not today. My job is to operate in the challenges of today while looking out for the future.

AH: I do want to also turn to China now. A lot of what we’ve been talking about today is designed to reduce a reliance on China, which is obviously the producer of a vast number of critical minerals. It dominates the mid-tier and downstream processing segment and it’s doing incredibly well at driving electric vehicles containing domestically produced batteries off the forecourt.

So, you know, that’s all very well and good, but I guess if the West was to describe its relationship with China on social media, I think it’s complicated would be the best fit.

Is there collaboration with China in all of this? Because I can think of a number of projects and partnerships that exist obviously today and look like they’re going nowhere. So, you know, what is that relationship? What does it look like?

HM: So, it’s complicated. I’m thinking about the Facebook status is probably a very, very fair point. We are in a competitive posture right now with our Chinese partners. That doesn’t mean that diplomacy is out the door. There are many areas that we are working on trying to evolve that relationship.

But when it comes to economic policy, we are still concerned, not just because it is China, but because there is a concentration in any one country to the extent that there is around supply chains that are really important for the whole world. Creating that diversity, whether it’s all at home or in other parts of the Indo-Pacific with our European partners is in interest of the global market.

It helps us let these commodities operate in more normal market conditions, which is really challenging, and we should take a step back and say, you know, I wouldn’t even necessarily call these materials commodities quite yet. We’re talking about some very nascent minerals and metals and then some that, you know, have been trading for a long time. And so as much as we can invest in diversity and resilience, to help support the normalization of this market to the extent we can. We think that’s our goal and objective. And that’s a big piece of how we’re approaching this issue.

AH: Let’s take an example. I know we talked about nickel. The reason I wanted to talk about it is because you know, we’ve talked about the dominance of China in some parts of the supply chain. In Indonesia, the biggest nickel producing country in the world, the majority of the nickel projects there have a Chinese shareholder at the smelting stage. But you’ve got a part of the world where 60%, coming up 70 percent by the end of the decade of the world’s nickel is being produced there, which means there is a reliance on working and operating and taking the minerals from companies that are Chinese.

There is a foreign entity of concern definition which says that for the purposes of the Inflation Reduction Act, a company that has more than 25 percent ownership or control by a nation like China, and that can be board seats, voting rights or equity, they’re not eligible for IRA tax credits.

What’s the impact of that definition? How strict is it going to be, really? How are you going to know that the nickel that’s coming into the country is meeting those requirements? I’m trying to work out how we ever going to really, really know. You know, over to you.

HM: I know it’s, it’s incredibly complicated and look, a lot of the foreign entities of concern implementation and rollout, it’s still being sorted out and the treasury department and the department of energy are trying to get guidance out as quickly as they can, as we start closing some definitions along the way, but they engender more questions than they should.

That’s why we do this in a staged approach so we can hear from the automotive industry, so we can hear from battery producers, so we can hear from critical mineral producers and understand how we’re helping in the long term. But any policy creates some sort of constraint in the near term and how you balance that out is complicated.

And it’s partially subjective. It’s not all math, unfortunately, it’d be great if it’s all just worked out perfectly on an Excel sheet. This is another opportunity to try to level the market and increase and support investment in other jurisdictions that will bring that resilience I mentioned before.

But it’s going to take time, and the way that the foreign entities of concern definition is designed does have some ambiguity on what effective control means, even though it’s defined, there are other elements that will make that evaluation a little bit different upon the review, I can’t speak on the behalf of those agencies, but maybe would involve that definition evolving over time.

A lot of this will be dealt with through review of taxes and really, a lot of that put on the end-consumer to prove that their supply chain came from where they said it would. And so, it does put some of that burden on the ultimate producer, whether that’s a car company or a battery company. And that is part of how this will work. But this push, this desire for more transparency of supply chains, this isn’t a new thing. I remember, you know, 15 years ago when I entered this world, having a very similar conversation on solar. We took a different approach on solar in the end, and it’s kind of ebbed and flowed.

But at the end of the day, understanding where these materials come from isn’t just an economic issue. It is a forced labor issue. It’s an environmental issue. We are doing ourselves no service if these materials are processed and produced in extremely dirty ways, in ways that are not healthy for the environment.

Mining is a dirty business. I don’t mean that in any aggressive way. It’s just never going to be perfect, but there’s ways for it to be better. And we’ve seen some amazing operations in our visits around the world and here at home. And you want to stand it up. You want to create a race to the top. And that’s a really challenging thing to do. And I think these are some of the ways that we get there.

AH: Yeah, it is complicated, but it’s fascinating as well. Helaina, I could talk to you all day about this. I’m curious to know what you think are the key things we should be looking out for very short term over the next couple of months. Is there anything coming up we need to keep an eye on.

HM: Look, I think when it comes to the market, we’re all going to be watching to see how the nickel market levels out, what happens with the near term oversupply in cobalt, what happens if lithium works out.

And then there’s a handful of mining projects and processing projects that are really on hold as the market is responding. On the diplomacy side, I think you’re going to see a continuing set of partnerships designed to invest and support everything we’ve been talking about today. I think you’re going to see a lot of positivity and expansion of not just the work that I’m doing, but the works that others are doing as well.

AH: And also we can’t ignore the big thing happening this year. It’s 2024. Lots of big elections around the world, including in the United States in November. We know that President Joe Biden will be running against former President Donald Trump. I’m not asking you to predict the winner, but I would like to know what happens with the kind of the bigger conversations if that administration changes.

HM: Yeah, look, it’s a good question, and frankly, a question that every one of our partners have, whether it’s industry or our diplomats on the other side of the table. And it’s a fair question to ask. And as a career public servant myself, I’ve taken great pleasure of being a continuing face on my side of the table. And I think that means a lot.

This administration was very, very smart in choosing what to fight for and what we legislated, right? IRA has benefits very much in red states, if not even more so in red states than blue states, there’s a lot of reasons to feel confident that these big legislation packages will remain intact.

But I can’t predict the future. And this is part of the hill just as much as it is who wins our presidency. I will say from an international perspective, if we take the lessons we gathered from the previous Trump administration, which could certainly look different if there was a second term for him – the idea of strategic competition and the idea of supporting America and our supply chain security, it’s a pretty bipartisan issue.

And so, while the efforts we have now are incredibly comprehensive, and they look at a broader development agenda, I think the crux of a lot of the work, at least in my space, will continue to persevere on. Also, I just always love to remind folks that so much of what we are deciding today locks us into a multi-year trajectory.

We’re talking about three budget cycles today. We’re talking about out years quite, quite far out. So, I hope that offers some assurances that the enthusiasm you’re seeing around this issue set, a version of it will hopefully stay no matter what. But we feel very, very confident in the work that we’re doing today under this administration.

AH: Okay. Now, look, we’ve been talking about many of the key issues and addressing some of the questions that people have been asking, but what’s the thing that people are underestimating? What should we be paying attention to that we’re probably not really looking at right now?

HM: Yeah, I mean, I don’t think it’s one thing, right, because this path has multiple eventualities, depending on whether or not we have a massive innovation in the supply chains whether it’s a battery chemistry, or someone of these new really exciting processing technologies taking scale. One of the challenges that we’re maybe underestimating is even under those conditions, how important it is to really care about these supply chains and what our relationships overseas mean to keeping them healthy.

There’s so much enthusiasm for the work we’re doing at home, and it’s all well deserved. And I think that our partners around the world are thinking through their own ways to implement as well. But the nature of our connectivity may shift, but it’s never going to go away.

And so, I say that I can’t help it. I’m a foreign policy person. I always think about as you said earlier, partnership, which like maybe for the bingo card of this conversation, I’ve said, you know, over a dozen times. Even as we’re solving along the way, and we are solving and we’re making a lot of progress, that we can’t take our foot off the gas even if we’re having success and it doesn’t feel like there’s immediate pressure. So that’s what I try to watch out for every day, and I think others are starting to as well.

AH: Covid was the best example for a big wake up call for many to understand how supply chains work. So, definitely one to keep an eye on. And then if we had to fast forward a decade, what do you expect the global picture to look out? Get your crystal ball out and tell me where you see the world.

HM: Yeah. I mean, I know where I hope to see the world. I’m optimistic of the picture. I think that we will be on our way to hitting our climate goals. Are we going to be exactly where we want to be? Time will tell, right? And there may have to be more aggressive policymaking to ultimately get us there.

I hope that we’re in a healthier supply chain situation, but while improved, I think there will certainly be some challenges and competition. And so maybe going from a 1-grade higher situation than we are now, but I think we’ll still be in it in a decade to come. And that’s okay. As long as we keep working on really creating the future here at home and in the world that we want to see.

AH: And now, let’s take a quick break from the interview to hear from one of our in-house experts hear at Fastmarkets.

William Adams [WA]: Well, thanks, Andrea. For those of you who don’t know me, I’m William Adams, and I work at Fastmarkets on the research team, looking at the battery raw materials and base metals as well. I think what Helena said was really interesting.

While we tend to think about US regulations in terms of the amount of gigafactories and EVs and energy storage systems, that’s just what we see on the surface. I think we need to realize that that’s just the tip of the iceberg.

Underneath all that, is a myriad of actions, developments, decisions, partnerships that are all focused on building a secure supply chain for the US green transition. And that will create a lot of well -paid jobs in the US. It will provide opportunities for the free trade partners as well. And it will also cut the US’s carbon footprint, which at the end of the day is what we’re all looking to do to.

I think it’s important that we step back and realize that many of these policies need to be given time for them to take effect. There are so many pieces of this jigsaw that need to fit together before the whole US supply chain can diverge away from the foreign entities of concern, FEOC. And much of this is complicated to deliver, especially when measures include investing in ports in Africa, in railway lines to secure these corridors that Helena mentioned, which are needed to help extract the raw materials from these landlocked countries such as the DRC and Zambia.

One of the problems is that we’ve got used to how fast we expect this EV evolution to unfold. We’ve seen that the amount of EVs in the US that qualify for tax credits this year has fallen to 19 compared with 43 last year. So, on the surface, you could argue that the policy isn’t working. But it’s important to understand that yes, even though the number of qualifying vehicles has fallen, it’s actually now pushing the OEMs who last year, their vehicle might have qualified and this year, it doesn’t qualify, they now need to really change their supply chain to make sure that those cars can once again qualify for the tax credits. The drop in a number of qualifying EVs might suggest the policy is broken. But I think it’s applying pressure to the US manufacturers to act.

It is a big issue time and it’s something that we all need to get very aware of. Regulators need to be mindful that legislation with tight timelines runs the risk of creating more of a headwind than a tailwind in their endeavour to push this green agenda.

The regulators and the supply chain need to get this balance right. The regulators need to listen to stakeholders and change the guidelines accordingly. The drop in qualifying EVs happened as new Treasury guidelines came into effect on January the 1st this year. And it tightened up the battery sourcing requirements that aim to wean the US battery factory off the Chinese supply chain. And this year, the FEOC rules affected battery components. Next year, it will get even tighter. The rules will extend to the critical minerals for batteries. And that’s likely to see even more, even fewer EVs rather qualified for the tax credit.

We do expect the regulators or the Treasury to change those guidelines. And there has been precedence for that. We’ve seen that already. The Treasury exempted some materials for another two years, which showed the powers that were listening to the industry. Had they not then it’s likely that there have been even fewer EVs eligible for tax credits this year

AH: And now, back to the interview. Well, this has been great. Helaina, though, before I let you go, we have gathered some questions from people within the battery raw material sector. And I wanted to pose a couple of those to you now, if you don’t mind. So, putting you in the hot seat.

The first question is something that we’ve actually touched on earlier, but it’s where will the western capital and know how come from and what can be done to lure US or non foreign entity of concern companies into the space? I guess that’s a good question because we keep hearing that the west is way behind on technology and lacking the required capital. So, where’s it going to come from and how are we going to get that there?

HM: Western capital is not going to automatically materialize, or at least not at the cost that we’ll make those projects of commercial basis.

This is a two-part question. One is western countries or western governments doing what we’re doing through the Partnership for Global Infrastructure and Investment and other parts of our economic policy to crowd and finance by providing the tools around these projects to de risk them in a meaningful way.

That’s the loans that we’re providing. It’s the grants that some countries are providing. The political risk insurance tools and the partnership with the MDBs to help make these projects more attractive. But it’s also incumbent of the emerging markets to continue to improve their regulatory environment to think through how to back and support these projects in a way that doesn’t negatively affect their debt balance sheet like has been posed before.

And I think that what we’ll see is as you have a handful of wins, especially in complicated markets, that there is capital out there. It’s on the sidelines. It would love to find a home in places where they can make a good return. If we can demonstrate that what we’ve been saying for years, which was a high risk, high reward can be a medium risk, high reward, then we’ll make progress.

AH: And just one more question and then I’ll let you go. What criteria does the State Department use to determine which countries it wants to work with to develop critical minerals infrastructure? I guess why Zambia and the DRC and not somewhere else?

HM: One piece is geology, although you’re right, we’re not in every geological jurisdiction. And the other piece is the willingness of those partners, and that could be measured in so many ways, from having a democratically-led government, or working on having a more transparent governance structure in country, a desire from that country to invest in what’s really hard for them, which is the enabling environment to attract more FDI. It’s a change in business for those countries as well, and they have to express that willingness. We can’t and we shouldn’t go into markets that aren’t ready to make that evolution. I think that when you layer on those considerations, that world gets a little bit smaller.

And by no means you’ll see that we’re not in every jurisdiction that we hope to be in over time. We’re doing work through the Indo Pacific Economic Forum, through APEP, through other regional areas that will continue to expand. But those initial criteria, I think, really demonstrate where we can be successful and we’re going to go where we think we can be successful.

AH: Great. Well, I’m sure with you at the helm, there will be a lot of success. Helaina, this has been a really great wide-ranging conversation that I’ve really enjoyed. I want to say thank you so much for being so open and so generous with your time as well, particularly when you’re not feeling very well. So, thank you.

HM: Andrea, I appreciate it so much. And I’m just delighted and thrilled to be a part of your inaugural session. And I hope that for a conversation on regulation and government that we did not bore your audience.

AH: I’m sure we did not. Brilliant. Thank you, Helaina.

HM: Thank you.

If you enjoyed this episode, make sure you subscribe on Spotify, Apple Podcasts, Amazon Music or wherever you get your podcasts to get the latest episodes as they are released.