China is restricting the world's supply of critical minerals, and experts warn that the situation poses a major risk to U.S. national security unless the government steps up its efforts to compete. .
Control of rare earth metals needed to make everything from the semiconductors that power iPhones to wind turbines, electric car batteries, and military weapons such as tanks and missiles is causing tensions between the U.S. and China and worsening trade relations. This is an important point.
Burdensome regulations and decades of lackluster investment have left the United States dangerously dependent on China. China mines up to 70% of the world's critical minerals, controls about 90% of the processing capacity and regularly uses unfair trade tactics to boost its own advantage, officials say. said. post.
“The fact that we rely on China for defense equipment is completely incomprehensible and unacceptable,” said Pini Althaus, CEO of New York-based Rare Earths. spoke.
If diplomatic relations deteriorate or actual conflict breaks out between the two countries, U.S. lawmakers and experts believe that China, led by President Xi Jinping, could completely cut off supplies to the U.S. auto industry, high-tech companies, and the Department of Defense. I am concerned that this could have dire consequences. .
“Frankly, they can turn off the faucet,” Althaus added.
China's decades-long effort to corner the market has been heavily subsidized by the Chinese government. The Chinese government is using supply controls to manipulate prices and enacting ever stricter export controls to solidify its advantage. China has also acquired mineral rights across Africa and other resource-rich regions on very favorable terms as part of its Belt and Road Initiative.
According to Congressman Rob Whitman, when the U.S. and other rivals mine or process certain materials, such as gallium or lithium, China often responds by flooding the market with large amounts of supply, which drives up prices. (R-Va.), who heads the House Select Committee on China's Critical Minerals Policy Working Group, says that the decline in investment in projects is causing a loss of appetite for investment in projects.
“These companies can't even compete because they're releasing so much of these materials onto the market and they're doing it below the cost of production,” Whitman added.
China has already begun to weaponize its control, implementing export bans on mining and processing technology. Last month, China banned exports to the United States of three important minerals: gallium, germanium and antimony, and had previously imposed restrictions on shipments of graphite.
The idea of a total embargo is not so far-fetched. In 2010, China temporarily suspended shipments of rare earth elements to Japan while the two countries were embroiled in a territorial dispute.
According to data from the U.S. Geological Survey, China has an estimated 44 million tons of rare earth reserves, or 34% of the world's total. By comparison, the United States has reserves of about 2.3 million tons.
Despite the disparities, the U.S. “definitely has significant reserves” of important minerals, Whitman said, including sites in Minnesota, Nevada and California, as well as seabed sites with potential claims. points to vast untapped resources.
The United States began withdrawing from rare earth mining in the 1980s, as permitting rules became increasingly strict due to environmental concerns. Mining profits declined and domestic production declined as companies looked overseas for their supply needs.
For now, the permitting process “remains very cumbersome,” said Barbara Arnold, a professor of mining engineering at Pennsylvania State University.
Standards in the United States are much more stringent than in other countries such as Canada and Australia. The process of getting new projects off the ground is expensive and difficult, discouraging companies from exploring new mining locations.
“It can take 20 years to actually find a deposit of something and actually produce it. It can take 10 years to get a permit,” Arnold said. “They are all absolutely necessary, but we need a mechanism to get those permits faster.”
By comparison, China imposes few environmental regulations on mining projects, and a recent report from the Select Committee found that its domestic supply chain is “contaminated with forced labor and environmentally destructive mining and refining practices.” It is said that it is building a
“China will be at the opposite extreme, meaning any tightening will be almost unforgivable,” Althaus said.
Althaus said the U.S. should look to strengthen partnerships with Canada and Australia to strengthen supply chains outside of China. The resource-rich countries of Central Asia and Africa, which have been under Chinese influence, are another option.
On the domestic front, U.S. government support for early stage exploration and local processing capacity for criminal minerals would be of great help, he added.
Canada, for example, offers “flow-through shares” that make investments in so-called junior mining outfits tax-deductible. Smaller companies are responsible for site scouting, assessing whether a particular site is viable, and then requesting funding from larger companies.
Last month, Whitman and his colleagues introduced three bills aimed at strengthening America's critical mineral supply chain and limiting its dependence on China.
This bill authorizes additional funding for cooperation between the United States and friendly nations in critical mineral supply chains. Export restrictions will be imposed on domestic batteries and magnetic materials. and establish “resilient resource reserves” to help protect U.S. producers from Chinese price manipulation.
“We're not going to fight them any other way than by providing alternatives to what China is doing. And I think we can do that, and I think we can do it quickly,” Whitman said.
