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Proactive Investors - Talon Metals Corp (TSX:TLO) has commended the Biden Administration for new draft rules on the implementation of the "foreign entity of concern” (FEOC) provision governing tax credits under the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law's battery materials processing and battery manufacturing and recycling grants.
The rules are designed to limit the participation of FEOCs within domestic battery supply chains, particularly government-supported programs, and bolster the growth of domestic battery materials processing and manufacturing, as well as the US’s allies.
Section 30D provides an individual tax credit of up to $7,500 for individuals who purchase a qualifying electric vehicle (EV). To qualify for the credit, the EV must be manufactured in North America and use a battery that contains a certain percentage of minerals, such as nickel, that were extracted or processed in the US or certain free trade agreement (FTA) countries.
In November, Talon announced a definitive agreement with the US Department of Energy (DOE) setting the terms, conditions and performance milestones for $114,846,344 in grant funding created by the Bipartisan Infrastructure Law.
"When the IRA was negotiated, Congress and President Biden agreed that building up secure supply chains for clean energy systems was a top goal,” Talon Metals CEO Henri van Rooyen said in a statement.
“These rules are fully consistent with the security of supply goals of the IRA. Strong FEOC rules, with strong enforcement measures, will prevent ‘mineral laundering’ schemes and encourage ‘know your supplier’ systems that can track inputs from mine through to recycling.”
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Talon noted that the draft rules published on December 1, 2023, by the DOE and Department of Treasury, provide guidance on the sourcing of critical minerals and battery components for credit-eligible EV batteries. While minerals sourced from FTA countries are eligible, the law excludes vehicles which include critical minerals or battery components from FEOCs.
"The draft rules from Treasury include enforcement measures. This will help to ensure that minerals, such as nickel, processed in Russia, China, or sourced by Chinese-owned companies in other countries do not end up in qualifying vehicles through opaque supply chains or mineral laundering,” Talon Metals chief external affairs officer & head of climate strategy, Todd Malan added.
“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.”
Talon said it is “singularly focused” on exploring for the significant high-grade nickel deposits in the US to support future generations of EV batteries in a circular supply chain.
“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, all at high standards for environmental protection, labor and human rights, public consultation in permitting and in consultation with tribal sovereign governments,” van Rooyer concluded.
Talon Metals is a TSX-listed base metals company developing the high-grade Tamarack nickel-copper-cobalt project located in central Minnesota.
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