It’s an overlooked problem, and it’s a big one.
Minerals are essential to manufacturing components for everything from electric vehicles, smartphones, medical screening to weapons systems used by the military.
But the United States remains heavily dependent on foreign sources for many of its critical minerals. About 91 percent of the rare earth element needed to make night-vision goggles for the military, for example, is imported from China.
In 2017, President Trump issued an executive order to address these vulnerabilities, tasking the Interior Department with developing a list of critical minerals and the Commerce Department with devising a strategy — including action plans, goals, and recommendations — to secure vital supply chains here in the United States.
The Interior Department released its report in 2018, finding that 31 of the 35 minerals designated as “critical” are import-reliant. The U.S. doesn’t have any domestic production and relies completely on imports for 14 critical minerals, the Interior Department found.
Commerce followed up with its action plan in June 2019. Twenty-four goals and 61 specific recommendations were issued, including implementing better mineral recycling programs; developing technological alternatives to minerals; source diversification; improving processes for mineral extraction; building robust manufacturing capabilities; and enhancing minerals trade with America’s allies.
But of course, doing all this is easier said than done — and in the meantime, the United States remains dependent on countries like China and Russia for its critical minerals.
A new paper from Indiana University’s Manufacturing Policy Initiative makes this clear, as it examines the U.S. Defense Department’s reliance on China for the supply and processing of rare earth elements.
China began scaling up mining capabilities of rare earth elements in the 1980s, resulting in their “near-monopoly on both the mining of rare earth minerals and the processing of the resultant rare earth oxides into manufactured products.” Authors Raeanna L. Carrell and Keith B. Belton attribute China’s domination to “low-labor costs, low environmental standards, and investments in state-owned enterprises.”
China’s market power over rare earths now poses a national defense threat. “China can quickly create a supply shock; their global market can respond by reducing demand and developing their own mining and processing capacities,” Carrell and Belton write.
And there’s no doubt that the U.S. reliant on China. Between 2014 and 2017, 80 percent of rare earth element imports came from China, while the remaining 20 percent was originally processed in China.
Indeed, China has implicitly threatened to use rare earths as a weapon in the ongoing trade conflict between the U.S. and China — and it’s done so before. In 2010, China embargoed a specific type of rare earth element to Japan because of a maritime dispute. That had spillover effects in the United States, which relies on Japan for the importation of the element that was embargoed.
The whole thing only lasted two months, but it had such an impact that Japan developed a method for recycling rare earth elements from used electronics. In the United States, the Mountain Pass Mine in California resumed operation in response to the embargo, and manufacturers started substituting other materials for rare earths in their products.
Eventually, the World Trade Organization ruled that China’s rare earths export quotas violate international trade rules and outlawed the practice.
The response to the 2010 embargo is evidence that the United States does have the ability to become less dependent on China for its rare earth elements, the authors write. Strategies could include developing better domestic supplies, partnering with strategic allies, and innovating, including through recycling.
What Do We Do?
Given that China has essentially monopolized the processing of rare earth element products, the U.S. government recently acted to employ the Defense Department to analyze critical rare earth applications to create our own capabilities to transform rare earth oxides to vital manufacturing components.
But as the Commerce Department report makes clear, it is going to take a lot of work to reduce America’s dependence on not just rare earths, but all critical minerals.
“What we are doing now, with our eyes wide open, we are putting ourselves in that same vulnerable position when it comes to these necessary minerals, these rare-earths, these things we need for everything,” said Sen. Lisa Murkowski (R-Alaska). “The U.S. imports 50 percent of 48 minerals.”
Murkowski was among the experts who recently gathered at a Real Clear Politics event in Washington, D.C. to discuss all things minerals. The senator expressed deep concern about America’s import reliance and vulnerabilities, noting that our goals should be to secure our national security and environmental stewardship.
China’s efforts to take command of the critical supply chain are an economic and national security issue, but the problem is wider than the military: It also impacts things like the electric vehicle market.
“Whether that is to benefit the Chinese economy and jobs there, the U.S. needs to be paying attention to this,” Murkowski said, adding that it’s not just China, either — any country could dominate and the United States would still be behind in EV technology.
Murkowski is among those who have advocated for more mineral extraction to shore up our supply chains. She pointed out that states like Nevada and Alaska “have more material than we are producing,” including resources like graphite and lithium.
“Like oil and natural gas, we have the resources. But we must be allowed to extract it and be allowed to process it,” Murkowski said.
The current regulatory process to open a mine can take a decade or longer. Compared to countries such as Canada and Australia, with processes lasting two to three years, investors aren’t looking to back domestic mineral production, the Senator argued.
There are environmental concerns about mineral extraction, however, and those aren’t likely to go away. Even for those who support expanded mining, it’s clear the United States cannot depend on it alone to shore up its minerals supply chain.
But there is a bipartisan opportunity to create a foundation for mineral markets, speakers argued.
Dan McGroarty from the Carmot Strategy Group called for a whole government approach to the issue, “taking an all above strategy in energy in order to increase American energy effectiveness and independence.” This involves work in the oil, natural gas, coal, solar, and nuclear energy sectors, McGroarty said.
One thing to remember is that “this isn’t a trade war for dominance,” McGroarty said. The United States can’t beat state-owned companies that are able to stay active with backing of their state (read: China) so instead the United States must invest in innovation, he added.
David Livingston from Atlantic Council noted that developing the right workforce is also a vital part of this process. Now that the administration has identified what needs to be done, now the government must invest in training and building a solid knowledge base to tackle the problem.
“We can’t borrow from a labor pool. We need the best of the best,” he said.
Several officials from the Trump administration also took part in the event.
Melissa Simpson from the State Department emphasized the lack of transparency in where minerals are located around the world. The U.S. needs to work with our allies to find where the minerals are, work with the private sector, share best practices, and educate the public, she said.
Casey Hammond from the Interior Department echoed others in emphasizing the importance of creating and streamlining processes in the United States.
Hammond raised these questions: “What minerals are we reliant on? Who are our partners? Who are those nations that we are importing from and who are their buddies? To what extent can they disrupt our supply chain?”
There was consensus among the speakers that our mineral important reliance is a national security and economic issue. Investing in creating the critical supply chain will help create good jobs, protect national security, and help America become resource independent. There’s no time to waste.
“China has overwhelming position as they have established capacity. They can cut off our supply and discourage competition to arise. This is a supply chain issue,” said Steven Fortier from the Executive Office of the President. “We’ve reached a tipping point.”