The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Critical Minerals Alliances 2024 - September 16, 2024
Fire-resistant combat gear, night vision goggles, communications equipment, and ammunition are among the military gear that requires critical minerals.
China is the leading producer of 30 of the minerals critical to the United States, including the ones highlighted in this infographic.
The U.S. Department of Homeland Security views mining as critical to America's economy and security.
Perpetua Resources' Stibnite gold-antimony project in Idaho is home to a historic critical minerals mine credited with saving the lives of 1 million American soldiers during World War II.
America's heavy reliance on China and others for the minerals and metals critical to the nation's economic competitiveness, military strength, and clean energy future is high on the list of strategic concerns for top brass at the U.S. departments of Defense and Homeland Security.
While much of this concern is rooted in the fact that the United States' ability to defend its strategic interests at home and abroad would be severely crippled if China decides to cut supplies of the mined materials critical to a prolonged and high-tech war, the departments charged with America's security understand that there are much more fundamental reasons to become more self-reliant when it comes to the minerals that are the first link to nearly every American supply chain.
"Economic competitiveness is a national security issue," Tim Moughon, director of field intelligence at the U.S. Department of Homeland Security, said during a presentation at the American Exploration & Mining Association conference last December.
The raw materials foundation of America's economic competitiveness, however, eroded with a globalization strategy that favored inexpensive imports over supporting domestic supply chains. China, which can mine and manufacture goods much cheaper due to lower labor costs and environmental standards, has been happy to be the low-cost supplier of these goods and, at the same time, gain dominance in many of the world's supply chains.
"Over three decades the People's Republic of China became the global industrial powerhouse in many key areas – from shipbuilding to critical minerals to microelectronics – that vastly exceeds the capacity of not just the United States, but the combined output of our key European and Asian allies as well," the U.S. Department of Defense penned in its inaugural National Defense Industrial Strategy published in January.
The U.S. Department of Homeland Security views mining as critical to America's economy and security.
Homeland Security and the Pentagon both see the erosion of American supply chains and the mining industry that supports them as a major national security concern.
"Our ability to maintain our way of life, our ability to maintain our position in the world, our ability to fund our physical security – all of these things are dependent on a strong and robust economy," Moughon informed mining leaders gathered in Reno last December. "The mining sector is critically important in this respect."
Moughon's message was reinforced by an article penned by Joe Buccino, a retired U.S. Army colonel who served as the communications director for U.S. Central Command from 2021 to 2023, in a column published by RealClear Defense shortly after the Department of Homeland Security's presentation at the annual mining event.
"Establishing a fully domestic mineral supply chain, stretching from mining operations to the final market, is essential for ensuring security for long-term competition with China," Buccino wrote.
The 2024 edition of U.S. Geological Survey's annual Mineral Commodity Summaries underscores the extent that America has traded its critically important mining sector in exchange for cheap goods from China and others.
According to the report published in January, the U.S. relies on imports for more than half its supply of 49 minerals that serve as foundational inputs to nearly every sector of the American economy and is 100% dependent on imports for 15 of them.
"Our mineral import dependence continues to be a gaping hole in our economic and national security and we're clearly not moving fast enough to course correct," National Mining Association President and CEO Rich Nolan said upon the release of USGS Mineral Commodity Summaries 2024.
This gaping hole includes being net-import reliant for 29 out of the 50 minerals that have been deemed critical to America's economy and security, including 100% dependent on other countries for 12 of them.
The USGS estimates that China is the world's top supplier of 30 out of the 50 minerals critical to the U.S. This list includes the 14 rare earth elements that are needed across an increasingly wide array of consumer, industrial, and military goods.
China's rise to dominance came during a time when American consumers and manufacturers embraced globalization, and the U.S. military took a "procurement holiday," a term given to a period of decreased DOD budgets and spending following the end of the Cold War.
"Before the 1980s, the United States was the global leader in the rare earths market. Since then, increasing environmental regulations and high labor costs moved much of the production abroad," Buccino wrote.
By the early 2000s, China had established a near complete global monopoly over the group of 14 tech metals known as rare earths. While some capacity has been outside of China, the communist nation still controls roughly 65% of rare earths mining and nearly 90% of separation and processing.
"China's foresight here is as clear as the United States' myopia," Buccino wrote. "Should China, in the leadup to an invasion of Taiwan, block exports of rare earths or processing technology, this would cripple the U.S.'s ability to produce the kinds of ammo required to sustain a long-term high-tech war."
While rare earths are a prime example, they are not the only critical minerals for which America's shortsightedness has resulted in a heavy dependence on China for its supply.
The list of critical minerals for which China is a top supplier includes:
• Gallium, the U.S. relies on imports for 100% of its supply of this semiconductor used in next-generation smartphones, telecommunication networks, and solar technologies.
• Graphite, the U.S. relies on imports for 100% of its supply of this mined material that is currently the single largest ingredient in lithium-ion batteries for electric vehicles.
• Manganese, the U.S. relies on imports for 100% of its supply of this mined material needed for steelmaking and in the cathodes of lithium-ion batteries.
• Niobium, the U.S. relies on imports for 100% of its supply of this metal essential to heat-resistant superalloys for hypersonic missiles and the broader aerospace sector.
• Titanium, the U.S. relies on imports for 95% of its supply of this light yet strong metal used in aerospace alloys, sports equipment, and now the Apple iPhone 15 Pro.
• Platinum, the U.S. relies on imports for 83% of its supply of this precious metal used as a catalyst to scrub pollutants from industrial and automotive emissions.
• Antimony, the U.S. relies on imports for 83% of its supply of this metalloid with a wide variety of civilian and defense applications and a top concern of the U.S. military.
Department of Homeland Security says China's dominance in the global supply of these and several other critical minerals can be used as an economic and geopolitical tool.
"With this monopoly power comes tremendous ability to target adversaries and to use this economic position to shape the behavior of other governments," Moughon said.
China's ability and willingness to leverage its critical minerals dominance as a geopolitical tool and trade war weapon is not hypothetical.
Back in 2010, the communist country severely restricted rare earth exports as a means of punishing Japan during a dispute over the sovereignty of islands in the South China Sea.
As a result, the prices for these elements skyrocketed, and a global rush to discover and develop deposits outside of China erupted. At the height of this frenzy, China flooded the markets with rare earths it had been stockpiling during the embargo – driving many hopeful rare earth companies out of business and providing the communist nation an excellent opportunity to buy distressed rare earth assets around the globe at a discount.
In recent years, China has further solidified its control of critical mineral assets beyond its borders through the Belts and Road Initiative, a strategy to build up infrastructure in developing nations in exchange for ownership of mining projects.
"It is a great example of the Chinese government's efforts to go out and buy up critical minerals, critical resources. China has become the largest bidirectional lender in Africa in recent years," said Moughon.
The US-China Economic and Security Review Commission estimates that China has loaned 15 African nations a combined $140.6 billion under what some are calling the Chinese debt trap.
"China is also very involved with many of these enterprises – essentially, state-owned monopolies that can invest in the space, but invest in the space at a discount," the commission wrote.
The control over so many mining assets within and without its borders, coupled with state-owned mining companies that can forego healthy profits from mining in favor of the value-added products, strengthens China's monopolization of global critical mineral supplies along with the high-tech, clean energy, and other sectors they support.
With control of the upper end of the supply chain, China bolsters its economy and national security by upgrading critical minerals into higher-value products used in electric vehicles, high-tech electronics, military hardware, and an enormous array of consumer goods.
"The government of China has a critical position now in the critical minerals space, they dominate the market for processing critical minerals, from ore to refined products," said Moughon. "They use these products in both intermediate goods and then in finished goods."
In 2023, the communist government again leveraged its dominance by placing state-controlled restrictions on the exports of gallium, germanium, and graphite. All three of these mined materials are critical to the clean energy and tech sectors and, by extension, national security.
Hitting even closer to home when it comes to minerals critical to national security, China has placed similar restrictions on exports of antimony, a metalloid that is vital to manufacturing military communication equipment, night vision goggles, and ammunition.
China's Ministry of Commerce said the government controls on antimony exports, which went into effect on Sept. 15, are required "to safeguard national security and interests, and fulfill international obligations such as non-proliferation."
"So, these aren't hypotheticals," said Moughon. "We see adversaries use monopolistic power very intentionally to advance their own national interests."
The enormous quantities of minerals required to build a green energy future in the U.S. add another layer of urgency to the need to develop domestic critical mineral supplies.
In a report published earlier this year, the International Energy Agency (IEA) estimated that an additional $800 billion needs to be invested in mining by 2040 to achieve net-zero emissions goals by mid-century.
"The world's appetite for technologies such as solar panels, electric cars and batteries is growing fast – but we cannot satisfy it without reliable and expanding supplies of critical minerals," said International Energy Agency Executive Director Fatih Birol.
In addition to expanding the volume of energy transition minerals entering global supply chains, IEA emphasized the need to diversify where that supply is coming from in order to curb the supply and geopolitical risks associated with the current overreliance on a handful of producing countries.
"Between now and 2030, some 70-75% of projected supply growth for refined lithium, nickel, cobalt, and rare earth elements comes from today's top three producers," the agency penned in its new report.
China is among the top three producing countries of the mined materials needed for EV supply chains:
China is the leading producer of 30 of the minerals critical to the United States, including the ones highlighted in this infographic.
• 85% of the world's refined lithium is produced in China (57%), Chile (15%), and Argentina (13%).
• 71% of the world's refined nickel is produced in Indonesia (44%), China (21%), and Japan (6%).
• 84% of the world's refined cobalt is produced in China (74%), Finland (6%), and Japan (4%).
• 92% of the world's rare earths are produced in China (77%), Malaysia (12%), and Australia (3%).
• 99% of the world's natural graphite anode materials are produced in China (79%), South Korea (13%), and Japan (8%).
"These high levels of supply concentration represent a risk for the speed of energy transitions, as it makes supply chains and routes more vulnerable to disruption, whether from extreme weather, trade disputes or geopolitics," IEA penned in its Global Critical Mineral Outlook 2024 report.
The Pentagon says the global supply chain disruptions during the COVID pandemic underscore the risks of being overly dependent on global supply chains.
"The events of recent years dramatically exposed serious shortfalls in both domestic manufacturing and international supply chains," DOD penned in its National Defense Industrial Strategy. "The COVID-19 crisis demonstrated America's near wholesale dependency on other nations for many products and materials crucial to modern life."
The nation's heavy reliance on imports for minerals and metals essential to the nation's economy and military is high on the Pentagon's list of supply chain concerns.
Presidents Trump and Biden have both instructed the Pentagon to leverage a Cold War-era tool known as the Defense Production Act (DPA) to combat America's near wholesale dependency on critical mineral imports.
In 2019, President Trump leveraged presidential powers under DPA Title III to authorize the Pentagon to pursue the re-establishment of a mines-to-magnets rare earths supply chain in the U.S.
At the behest of a bipartisan group of lawmakers, Biden also invoked his DPA presidential powers to authorize DOD to invest in domestic battery material supply chains.
"The authorities provided to you as President under the Defense Production Act will help to ensure that America's critical mineral supply chains are strong, responsibly produced, and ethically sourced. Given the stakes, America cannot afford to wait any longer for that day to arrive," Senators Lisa Murkowski, R-Alaska, Joe Manchin, D-W.Va., Jim Risch, R-Idaho, and Bill Cassidy, R-La. penned in a 2022 letter to Biden.
Over the past four years, DOD has invested more than $870 million of DPA Title III funding to bolster North American supply of the minerals and metals critical to America's economy, defense, and energy transition.
Domestic critical minerals projects that have received Pentagon funding include:
• Leidos Holdings Inc. – $276 million to conduct research and development of critical minerals and materials for use in munitions and promote supply chain resiliency.
• Lynas Rare Earths Ltd. – $258 million in funding to establish a rare earths processing facility in Texas.
• Albemarle Corp. – $90 million to support the reopening of the Kings Mountain lithium mine in North Carolina.
• MP Materials Corp. – $44.6 million to commercially separate rare earth elements at its Mountain Pass Mine in California.
• Perpetua Resources Corp. – $59.4 million to reestablish a domestic source of antimony at the Stibnite Gold project in Idaho.
• Graphite One Inc. – $37.5 million to support a domestic graphite supply chain that includes a mine in Alaska and processing facility in Washington.
• Talon Nickel Corp. – $20.6 million to advance exploration and resource definition at the Tamarack project in Minnesota.
• South32 Ltd. – $20 million to jump-start the production of battery-grade manganese at the Hermosa project in Arizona.
• Electra Battery Materials Corp. – $20 million to complete construction and commissioning of the Ontario Cobalt Refinery.
• Jervois Mining Ltd. – $15 million to support the expansion of the Idaho Cobalt Operations.
• Lithium Nevada Corp. – $11.8 million to accelerate the extraction and processing of lithium carbonate at the Thacker Pass mine project in Nevada.
• The Doe Run Resources Corp. – $7 million to help scale up a cobalt and nickel processing plant in Missouri.
• Lomiko Metals Inc. – $8.3 million to advance a graphite mine and processing facility in Quebec.
• Fortune Minerals Ltd. – $6.5 million to advance studies for a cobalt-gold-bismuth-copper mine in Northwest Territories and refinery in Alberta.
Perpetua Resources' Stibnite gold-antimony project in Idaho is home to a historic critical minerals mine credited with saving the lives of 1 million American soldiers during World War II.
DOD's investments in Lomiko and Fortune mark the first time that the U.S. and Canadian governments co-invested in the development of critical mineral projects in North America.
As part of the collaborative effort, Natural Resources Canada invested an additional US$9.2 million in these Canadian critical mineral companies.
"As some of the first awards to Canadian public mining and mineral development companies, these grants exemplify the critical importance of DPA funds, the Department's partnership with Canada, and our shared commitment to strengthening North American material supply chains," said U.S. Assistant Secretary of Defense for Industrial Base Policy Laura Taylor-Kale.
At the same time, these investments help support the Pentagon's mission to mitigate the risks associated with being heavily dependent on China for the minerals and metals critical to North America.
The importance of this mission was underscored by the $276 million grant awarded to Leidos, a Fortune 500 innovation company that provides technical data management and research for DOD and federal government users.
Leidos is applying the Pentagon funding for research and development of critical minerals and materials and to promote energetics (propellants, explosives, and pyrotechnics) supply chain resiliency.
"A resilient energetics supply chain will help ensure our warfighters are ready for any conflict, while reducing our nation's reliance on foreign sources," said Mike Diggins, senior vice president and homeland and force protection business area leader at Leidos. "Our team will help the DOD synthesize and scale-up domestic minerals and materials production."
A mission that is increasingly critical to the Pentagon.
"It is critical that we shore up reliable and sustainable domestic supplies of strategic materials," said Taylor-Kale.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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