Following this latest information, a company will be regarded as an FEOC if at least 25% interest is held directly or indirectly by a covered nation, which includes China. After 2024, an EV will not qualify for up to US$7,500 in IRA tax credits if it contains any critical minerals that are extracted, processed, or recycled by a disqualified foreign entity.
These restrictions on FEOCs provide an opportunity for Free Trade Agreement (FTA) countries and Allied Nations (United States, Japan, South Korea, Canada, European Union, and Australia) to supply critical minerals into the US market. Australian and US Governments remain in discussions over the bi lateral agreement (‘Climate, Critical Minerals and Clean Energy Transformation Compact’) signed earlier this year, which opens doors to equity and debt funding by US Government agencies in Australia. This would include US$6bn of US Department of Energy funding to support domestic battery material processing, manufacturing and recycling.
CEO of Cobalt Blue, Joe Kaderavek commented on the recent US FEOC announcement:
“The recent clarification concerning Foreign Entities of Concern justifies COB’s long-standing strategy and investment to enter critical minerals processing. Over the past five years, our commercial negotiations - and discussions at all levels of government - have demonstrated the market is eager to diversify sources of mined and refined products.”