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State offers incentives, infrastructure for minerals

industry

growth

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China dominates critical minerals and has banned some

exports

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State's challenges include education system, lack of

mineral

deposits

By Ernest Scheyder

LAWTON, Oklahoma, June 18 (Reuters) - Nestled beneath

Oklahoma's Wichita Mountains sits a two-story warehouse

containing the only machine in the United States capable of

refining nickel, a crucial energy transition metal now dominated

by China.

The facility, owned by startup Westwin Elements, aims to

help Oklahoma become the epicenter for U.S. critical minerals

processing, a sector the country largely abandoned decades ago.

The state will have to overcome several obstacles to get

there, including a lack of major critical mineral deposits, a

weak education system and its location at the center of the

United States - far from international shipping lanes.

Yet Oklahoma's push into minerals processing marks an unexpected

twist in the country's efforts to wean itself off Chinese rivals

who have blocked exports.

President Donald Trump has said he wants to boost U.S.

production of minerals used across the economy. In Oklahoma, the

country's only nickel refinery, its largest lithium refinery,

two lithium-ion battery recycling plants, a rare earths magnet

facility, and several electronic waste collection facilities are

under construction or in operation - more than in any other

state.

They join a Umicore site that produces germanium

crystals for solar panels. An aluminum smelter - the country's

first since 1980 - is set to break ground next year at a site

bordering an Arkansas River tributary.

"I've strategically made a conscious effort to go after some

of these new industries that I think are going to be critical,"

Governor Kevin Stitt, a Republican, told Reuters. "There's money

flying into critical minerals from the investment side, so it

might as well be located in Oklahoma."

Investors and corporate executives say the state's location,

lack of mineral deposits, and other detracting factors are

outweighed by a string of positives: Oklahoma has railways and

highways bisecting the state en route to the three U.S. coasts,

a workforce with deep energy experience, state rebates and other

financial incentives, a large inland port with access to the

Mississippi River watershed, and accommodating regulators.

Officials boast on social media that Oklahoma is a "one

phone call state," a description meant to evoke what they see as

a streamlined regulatory process.

Australia-based MLB Industrial, a startup that supplies

lithium-ion batteries to the locomotive industry, expanded its

business to Oklahoma earlier this year for that very reason.

"Other states were looking for a large, established company

to invest, rather than a company with a growth profile," said

Nathan Leech, MLB's CEO, who moved his family to Oklahoma. "We

intend to grow in Oklahoma."

A nickel refinery, in particular, has been sought by Washington

for years but Chinese market dumping had scared away would-be

entrants, said a source familiar with the Trump administration's

minerals policy.

KaLeigh Long founded Westwin and named it after her desire for

the U.S. to shake off Chinese minerals dependence - as she puts

it, "The West will win." The firm has built a demonstration

facility 85 miles (137 km) south of the state capital that it

says can refine 200 metric tons of nickel annually and will

expand to produce 34,000 metric tons per year by 2030.

If successful, the Westwin facility would refine 10% of

America's annual nickel needs, demand projections from Benchmark

Mineral Intelligence show, drawing on rock taken from Turkish

and Indonesian mines, as well as recycled U.S. batteries.

Even as Oklahoma promises state tax rebates and other

incentives, Westwin is lobbying Washington not to eliminate a

federal production tax credit heavily opposed by Republicans

along with other green energy subsidies enacted by former

President Joe Biden, as Reuters reported earlier this month.

Westwin is in negotiations with the Pentagon for a nickel

supply deal that would keep metal inside the United States to

make batteries for military drones and other equipment,

according to a source familiar with the deliberations.

SUSTAINABLE POWER

Roughly 220 miles (354 km) northeast, a lithium refinery under

construction from Stardust Power ( SDST ) aims to produce 50,000

metric tons of the battery metal per year, about a fifth of what

the U.S. is expected to need by 2030. Japan's Sumitomo ( SSUMF )

signed a preliminary agreement in February to buy up to half of

the facility's output.

Stardust aims for the plant to filter lithium from brines -

something that has yet to happen at commercial scale - and will

have roughly the same capacity as Tesla's refinery

under construction in Texas. It will be powered in part by

renewable energy; nearly half of the state's electricity is

generated by wind turbines.

"That was a huge draw," said Roshan Pujari, Stardust's CEO. The

company is pushing forward even after rival Albemarle

paused plans to build a large U.S. refinery, citing weak lithium

prices.

"During these down cycles is the best time to be developing,

because why do we want prices to be high when we have nothing to

sell?" Pujari said.

USA Rare Earth ( USAR ), which went public earlier this year,

chose Oklahoma over Texas for its rare earths magnet facility

given what it felt was the personalized support from Stitt and

other officials, said CEO Josh Ballard. Magnets made from rare

earths turn electricity into motion for EVs; the U.S. stopped

making them in the 1990s.

Ballard says the facility is slated to open early next year and

initially produce 1,200 metric tons annually, enough magnets to

build more than 400,000 EVs. That supply is already highly

sought after in the United States since China placed export

restrictions on rare earths in April.

Ballard said he has been fielding "a lot of phone calls"

since April from prospective customers. The company on Tuesday

signed a preliminary supply agreement with Moog ( MOG/A ) for

magnets used in AI data centers.

"We can do this quickly. It's just a matter of how do we do

it, and can the government help be a catalyst?" said Ballard.

The company could get a boost from legislation introduced

earlier this month by three U.S. senators - including Oklahoma's

Markwayne Mullin - that would provide a tax credit for roughly

30% of the cost to manufacture a magnet made from rare earths.

Elsewhere, two Oklahoma battery processing facilities - from

Green Li-ion and Blue Whale Materials - will break down

lithium-ion batteries into copper and other building blocks for

new batteries. Natural Evolution, in Tulsa, is spearheading a

push to expand electronic waste recycling.

Green Li-ion, which has a recycling facility in Atoka -

Country music star Reba McEntire's hometown - has held talks

with Glencore ( GLCNF ) as well as Westwin about buying a

recycled version of battery scrap known as MHP, or mixed

hydroxide precipitate, that can be used to make nickel products,

according to two sources familiar with the negotiations.

Glencore ( GLCNF ) declined to comment.

Most of the country's recycled batteries are exported now to

China in the form of black mass, essentially shredded battery

parts. Green Li-ion, which is headquartered in Singapore, moved

its U.S. operations to Oklahoma given the state's history with

oil and gas extraction, skills it sees as complementary to black

mass processing.

"This state has a lot of chemical engineers," said Kevin

Hobbie, the company's senior vice president of operations.

'SWINGING FOR THE FENCES'

Oklahoma's foray into the energy transition hasn't been all

smooth sailing.

Tesla supplier Panasonic ( PCRFF ) in 2022 chose Kansas over

Oklahoma for a battery plant after the Sunflower State wooed it

with $1 billion in incentives.

In January, EV startup Canoo ( GOEWQ ) filed for bankruptcy

despite a $1 million state grant and Stitt's commitment for his

administration to buy 1,000 of the company's vehicles. Canoo ( GOEWQ ),

which had several production facilities in Oklahoma, blamed

uncertain demand for its cargo vans. State officials say they

are trying to recoup the funds.

Stitt said he is not bothered by the bankruptcy. "We're

going to keep swinging for the fences," he said.

The state's education system has also generated negative

headlines, due in part to a battle over low standards that could

make it difficult to convince high-tech talent and their

families to relocate to Oklahoma. The state's pre-kindergarten

through twelfth grade educational system, for instance, is

ranked 48th out of the 50 U.S. states by U.S. News and World

Report, and many schools have moved to a four-day week to save

money.

Alphabet's Google, which built an Oklahoma data

center in 2011, donated funds to the local school district in

part to attract faculty.

Oklahoma's superintendent of schools is an elected position

over which Stitt has no control. The governor successfully

pushed for a school voucher system that he said should attract

more families.

"If I create competition, and now a public school has to

compete for a student, it's going to make all boats rise and

bring more talent to Oklahoma," Stitt said.

The governor said he is focused on helping the minerals

refiners in his state grow and is lobbying Trump to require

federal contractors to increase the percentage of minerals they

buy that are processed in the country.

That's a key desire also for Long, the Westwin founder, who

spent her youth herding cattle, an experience she said inspired

her interest in refining and a reticence for mining.

"After seeing the beef and meat industry, I learned that the

packer is the one that seems to take the least amount of risk

and yet makes the most amount of money," she said. "When I saw

mining, I was like, 'The miner is the rancher and the refiner is

the packer.' So I decided I want to be the packer."