Supply Chain: Upstream and Midstream

The Spirit of ‘FEOCʼ Lives on in Efforts to Build Non-PFE Supply Chains Under new US tax credit rules, use of Chinese critical minerals now faces looser restrictions for battery makers. However, in 2025 US automakers and battery manufacturers continue to de-risk their supply chains with 3 strategic choices: 1. Bypassing geographical China 2. Encouraging dilution of the Chinese ownership share in operations that supply them 3. Shunning Chinese-owned operations altogether They are balancing this against cost pressures, given the general cost gap versus Chinese supply. Despite there being a lack of clarity on whether the MACR rule extends beyond CAM, pCAM producers are preparing for a worst-case scenario and using the Biden-era ownership rules as an assumption. For raw materials, nickel and cobalt are the most critical given the particular dominance of China. The major emerging procurement routes involve Indonesia as a growing vertically integrated supply base, given the availability of MHP. However, DRC Co hydroxide and Chinese Ni/Co sulphate still retain most market share, given extensive capacity and limited incentives beyond indirect US tax credit benefits for Chinese producers to de-risk and diversify away from the status quo.

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