By Sandra Wirtz, American Resources Policy Network
“Everything is different.” It’s the constant refrain in these COVID times. But the comment cuts both ways — not just how we cope with differences imposed on us, but differences we embrace, to make ourselves and our society more resilient in the face of sudden shocks, or the return of COVID 2.0.
The current coronavirus pandemic has exposed significant supply chain challenges associated with our over-reliance on foreign (and especially Chinese) raw materials. PPE has become the poster child, but whether it’s smart phone technology, solar panels, electric vehicles, or fighter jets — critical minerals are integrated into all aspects of U.S. supply chains. And, in spite of the fact that the United States is rich in mineral resources, we have maneuvered ourselves into a situation where we often find ourselves at the mercy of China.
We didn’t get here over night: it took several decades of shifting (or should we say “misguided”?) resource policy priorities and depletion of strategic material stockpiles. In 1954, the U.S. was 100% net import reliant for eight metals and minerals tracked by the U.S. Geological Survey (USGS). This total import reliance increased to eleven non-fuel minerals in 1984, and currently stands at 17. And as the list of minerals has grown, so too has U.S. dependence on China, which in 2020 is one of the major import sources of 25 metals and minerals for which U.S. net import reliance is 50% or greater. That’s roughly one-quarter of the entire Periodic Table of Elements.
Not surprisingly, factory shutdowns in China in the early weeks of the coronavirus pandemic effectively decimated global supply chains, causing mineral resource supply shortages and significant financial losses.
While some U.S. policymakers like Senator Lisa Murkowski (R-Alaska) recognized America’s reliance on foreign nations for metals and minerals as our “Achilles heel” and “an acute risk that we need to take seriously and reverse” well before the pandemic hit, the “coronavirus has [largely] caught the West with its contingency pants down,” as one critical mineral expert aptly put it.
In the past, the main focus has been on rare earths, a group of 17 elements on the Periodic Table that are essential components of everything ranging from smartphones to smart bombs. Today, it has become increasingly evident that our supply chain vulnerabilities stretch far beyond.
Cue the World Bank, which in a new report entitled “The Mineral Intensity of the Clean Energy Transition,” published just a few weeks ago in the context of the global lender’s “Climate-Smart Mining” initiative, estimates that production of certain metals and minerals like lithium, cobalt and graphite will have to increase by nearly 500 percent by 2050 to meet global demand for renewable energy technology. To achieve the transition to a below 2°C pathway as outlined by the Paris Agreement, the deployment of wind, solar and geothermal power, as well as energy storage will require more than three billion tons of minerals and metals.
On the renewables front, where EV Battery tech is key, China once more is the elephant in the room, dominating not just the front end, but all segments of the supply chain. Meanwhile, the United States, according to managing director of Benchmark Mineral Intelligence Simon Moores, has “fallen further behind in the global battery arms race.”
The message is resonating with U.S. policymakers on Capitol Hill, in the Cabinet Departments and at the White House. The new urgency is exemplified by new legislation introduced by Sen. Ted Cruz (R-Texas): The Onshoring Rare Earths Act of 2020, or ORE Act, seeks to reduce U.S. reliance on China for critical minerals. Defined as the 17 rare earths, plus four key minerals underpinning battery technology (lithium, cobalt, graphite and manganese), the “Cruz Criticals” are key to establishing a domestic supply chain. The bill proposes a series of measures aimed at encouraging domestic mineral production, and strengthens existing federal statutes prohibiting rare earth magnet sourcing from China, Russia, Iran and North Korea. Recognizing that mineral production can take many forms, from traditional mining to recycling, reclamation from legacy mines, coal waste and even fracking water, it also sets up a federally-funded pilot program for traditional mining of critical minerals as well as what Cruz terms “secondary recovery projects.” The strength of the Cruz bill — the comprehensiveness it achieves in just seven pages — may also be its vulnerability: With tax reforms, defense authorization revisions and a pilot program, the bill may require multiple Congressional committee approvals at a time when Congress, due to COVID, is not operating under the rules of regular order.
Meanwhile, the Department of Energy (DOE) is broadening its target list to include the above-referenced building blocks of battery tech. In a list close in composition to the Cruz Criticals, DOE is asking for project proposals to develop, in cooperation with its technology hubs, next generation technologies to extract, separate and process “key critical materials”: five rare earths — neodymium, praesodymium, dysprosium, terbium, and samarium — as well as cobalt, lithium, manganese, and natural graphite.
At the White House, two new Executive Orders take aim at strategic materials and critical mineral development. One Order, directing an executive branch review to reduce the regulatory burdens under NEPA — the longstanding National Environmental Policy Act — in order to speed infrastructure, energy and mining projects, has triggered threats of legal action that, if successful, could stop the regulatory review even before it begins. While receiving far less media attention, the second Executive Order, delegating Defense Production Act (DPA) Title III emergency authorities to the U.S. Development Finance Corporation, including the authority to underwrite loans to support strategic material production, could prove more meaningful. And unlike a standard-issue Executive Order, which can be undone by a successor president with the stroke of a pen, the DPA allows any president to delegate authorities by law — without requiring Congressional approval.
All of which is to say that, after long period of inaction, the U.S. Government seems to be viewing strategic materials and critical minerals issues with a new seriousness. That’s a welcome development. COVID, with its sudden disruption of supply chains, should be the last warning the U.S. needs to bolster our mineral resource security going forward.
Sandra Wirtz serves as director of research at the non-partisan American Resources Policy Network, a non-profit think tank and experts organization dedicated to informing the public on the importance of developing U.S. mineral and metals resources. As a public affairs consultant, Wirtz has extensive experience working with U.S. policy makers at all levels of government, as well as academics, think tanks and grassroots organizations across the United States on a broad range of issues.