Talon Metals Corp. (TSX:TLO), the majority owner and operator of the Tamarack Nickel project in central Minnesota, hailed the Biden Administration’s expected electric vehicle (EV) tax credit guidance on the battery component and critical mineral sourcing requirements of the Inflation Reduction Act.
The Inflation Reduction Act includes a provision that limits the $7,500 EV tax credit to vehicles that are assembled in North America. Beyond that, a certain percentage of each car’s battery components need to be built in North America, and critical minerals like nickel, lithium, copper, or phosphate need to be sourced from the US or a US free trade country, with these percentages increasing every year.
In a statement, Talon Metals CEO Henri van Rooyen said: "This is a balanced approach to two urgent objectives: securing strategic supply chains while also advancing America's ability to get more EVs on the road.”
“Addressing climate change through the energy transition and building a strong domestic battery manufacturing capability from mining to recycling are vital goals."
The North America-assembled provision went into effect immediately in August when the bill was signed, but the battery sourcing provisions were left up to the US Treasury to decide. It was originally supposed to announce those specifics by December but pushed back the deadline until Friday.
Todd Malan, who is the head of climate strategy at Talon, noted that the US Congress put a “premium” on minerals sourced domestically or from its free trade allies.
“These rules are faithful to this preference. We hope that additional clarification of the Foreign Entity of Concern provisions, including audit and claw-back mechanisms, will ensure that minerals processed in Russia, China, or sourced by Chinese-owned companies in countries like Indonesia do not end up in qualifying vehicles through opaque supply chains or ‘mineral laundering’, added Malan.
“With enforcement measures in place, minerals sourced from mines and recycling facilities in the US and free trade allies will be the easiest way to meet the requirements and support the development of the domestic supply chain."
US has high-grade nickel deposits
Previously, vehicles like the Chevy Bolt and some Tesla models qualified for the full $7,500 credit. Both General Motors and Tesla have previously stated that they don’t expect to qualify for the full purchase credit when the new battery rules go into effect.
Meanwhile, Talon boss van Rooyen noted that the US has “significant” high-grade nickel deposits. In 1997, the Department of Interior and US Geological Survey predicted that there were high-grade nickel mineralization zones in the US that are similar to zones in Canada and Russia. They focused on the US Mid-Continental Rift (MCR), which extends from Kansas up through Michigan.
Talon is singularly focused on exploring for these high-grade nickel deposits in the US.
“The IRA, the Bipartisan Infrastructure Law, and the expanded authority of the Defense Production Act Title III Program all provide the private sector with strong incentives to responsibly explore and develop battery resources like nickel in the US,” said van Rooyen.
“The scale of mineral demand for the energy transition will require new responsible mining and recycling. There is not enough nickel, lithium, copper, and cobalt in circulation today to achieve the energy transition through recycling alone. That said, the nickel we extract today is infinitely recyclable and will support generations of batteries in a future circular battery supply chain."
Talon is a base metals company in a joint venture (JV) with Rio Tinto on the high-grade Tamarack Nickel-Copper-Cobalt project in central Minnesota.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive