On January 23, 2015, molten nickel was poured in the Nadezhda metallurgical plant of Norilsk Nickel Company in the Arctic city of Norilsk. REUTERS/Polina Devitt/File Photo

London, November 15 (Reuters)-Nickel and zinc are now considered key minerals in the United States.

The United States Geological Survey (USGS) proposes to include both metals in the redrafted list of key minerals. Since the last iteration in 2018, the list has increased from 35 to 50, but this largely reflects the separation of rare earth elements and noble metals into separate entities.

Four minerals—helium, potassium, rhenium, and strontium—have been discarded. The United States is the world's leading producer and net exporter of helium, while the import dependence of the other three countries has been eased due to "low interruption potential". Uranium was also cancelled after it was reclassified as "fossil fuel".

Nickel and zinc are the only two new additives, each reflecting the evolution of the methods used to determine whether a mineral is critical to the well-being of the US economy.

According to the U.S. Geological Survey, about half of the U.S. annual consumption depends on imports of refined nickel.

The top three suppliers last year were Canada (42%), Norway (10%) and Finland (9%)-they are all considered "friendly" countries.

In the past, this relatively benign supply situation kept nickel out of the list of key minerals.

But it is included for two reasons.

First, the U.S. Geological Survey has expanded its key criteria, shifting its focus from trade dependence to domestic supply, especially its so-called "single point of failure."

Currently there is only one domestically operating nickel mine in the United States — Eagle Mine in Michigan — that exports concentrates for overseas refining.

There is a nickel sulfate producer, but only as a by-product of precious metal production.

The Biden government's 100-day review of the critical supply chain also highlighted this limited domestic nickel production base. The review recommended that the government should give priority to investing in new nickel refineries.

The second reason is that the use of nickel has changed from the alloy in the production of stainless steel to the chemical composition in the battery of electric vehicles.

The U.S. Geological Survey pointed out that the combination of limited, single-point-of-failure domestic supply and battery manufacturers’ anticipated growth in demand makes the inclusion of nickel on the list of key minerals "a compelling reason."

Or, as the supply chain review said, not having enough battery-grade nickel "will bring supply chain risks to global battery manufacturing, not just in the United States."

The domestic zinc supply chain in the United States is not so fragile.

The country has 14 operating mines and 3 smelters, one primary and two secondary, one of which will resume operations in 2020 after being idle for several years.

However, the country is highly dependent on imports of refined zinc. According to the US Geological Survey, 710,000 tons were imported last year, accounting for 83% of domestic consumption.

Global supply trends make this a problem.

The U.S. Geological Survey stated: "As far as zinc is concerned, the concentration of global mines and smelters has increased significantly in the past few decades, and this change is mainly driven by the increase in China's production."

Part of the idea behind the latest list of key minerals is to shift the analysis from simple import dependence to broader global supply trends.

The more concentrated the supply is in a country, the higher the potential risk factors, especially if the country is designated as a mineral competitor, such as China.

The zinc supply risk is now above the 0.40 threshold used by the US Geological Survey to help determine the 0.48 threshold.

At the top of the supply risk table are gallium, niobium and cobalt, followed by several rare earth elements.

Due to the concentration of smelting in China, aluminum ranks eighth with a score of 0.60, and tin is also in the supply risk range with a score of 0.50.

Continuity of supply risk

The US Geological Survey emphasized that falling below the 0.40 cut-off point does not mean that there is no supply risk.

"Indicators developed with (new) methods are best viewed as a continuum of supply risk" and are constantly changing with the development of the global supply chain for each commodity, it said.

Among the major industrial metals traded on the London Metal Exchange, there are now only two that are not considered key minerals by the United States.

Due to the large scale of the domestic mining, smelting and recycling industries, the risk of copper supply is relatively low.

More interestingly, as global mining and smelting capabilities are increasingly concentrated in China, lead scored on the USGS supply risk table of 0.39, slightly below the cut-off point.

None of these industrial metals appear on the EU's list of key minerals.

To a certain extent, this reflects Europe's domestic production base at the mining and smelting level.

But part of the reason may be that the US Geological Survey is ahead of its European counterparts in analyzing global supply patterns and the resulting potential threats to the supply of key minerals.

When most people think of key minerals, they may not think of nickel and zinc, but as far as the United States is concerned, they are both.

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