Securing the Critical Minerals Supply Chain

From the military to the technology sector, various American institutions and industries play a role in maintaining U.S. economic and national security. While the finished products associated with defense and technology, like aircraft engines and LED TVs, capture the public eye, the supply chains for the materials needed to produce these goods often garner little attention. A set of minerals, known as critical minerals, constitutes a key part of the supply chains for these important sectors. In recent years, however, U.S. competitors such as China have come to control supply chains for the critical minerals themselves—raising questions about the effects of critical mineral supply chain insecurity on U.S. national security.

Critical minerals are key in the manufacture of all kinds of important items, like armored vehicles, precision-guided weapons, batteries and night-vision goggles for the U.S. military. An inability to develop these minerals domestically creates a reliance on foreign nations that can hamstring a country in a pinch. In the early 2010s, for example, China placed export quotas on a subset of critical minerals known as rare earth elements, which sharply increased prices and disrupted global supply chains for various minerals. The U.S. responded by bringing a World Trade Organization dispute resolution case against China about the issue, ultimately winning before the global arbitrator.

In recent months, critical shortages during the coronavirus pandemic have prompted lawmakers to reconsider the strength of the U.S. medical supply chain—but the robustness of the supply chain for critical minerals has also come into question. In September, Senate Republicans included critical minerals-related provisions in their coronavirus relief bill proposal. These provisions were adopted from the bipartisan American Mineral Security Act, introduced in 2019 by Sens. Lisa Murkowski, Joe Manchin and others; the bill would have promoted mining of critical minerals in the U.S. Meanwhile, the Trump administration has worked to address the vulnerabilities in U.S. critical minerals supply chains.

Background

After China imposed export quotas on rare earth elements in the early 2010s, Congress’s interest in securing mineral supply chains grew. In 2013, the House of Representatives passed legislation related to critical minerals and the Senate considered a similar bill. The Senate bill, also introduced by Murkowski, would have directed a comprehensive executive branch approach on everything from assessing U.S. critical mineral resources to promoting international cooperation on supply chain issues with American allies. The House bill, by contrast, aimed to streamline the permitting process for domestic mining of critical minerals. While the Senate bill attracted bipartisan support, votes for the House bill broke down along more partisan lines, with Republicans supporting and Democrats opposed. The Obama administration opposed the legislation on the grounds that it would undermine environmental safeguards, stating, “The Administration strongly supports the development of rare earth elements and other critical minerals, but rejects the notion that their development is incompatible with environmental protection and public involvement in agency decision-making.”

That same year, the U.S. Geological Survey (USGS)—a bureau of the U.S. Department of the Interior—began work on updating its critical minerals analysis for the first time since 1973, when the USGS published a report assessing mineral resources in the United States “to examine the geologic availability of resources that will be needed in future generations.” The USGS released its updated report in December 2017, covering 23 minerals—out of the 65 originally cited in the 1973 report—that are “critical” to American economic and national security. The report stated that America was entirely reliant on foreign nations for 20 of those 23 minerals. In particular, the paper noted China’s control of supply chains for various minerals—a fact that, the USGS argued, raised concern about an increased “risk for supply disruption owing to political, social, or other factors.”

Shortly after the release of the USGS paper, President Trump signed an executive order requiring two agency actions related to critical minerals. First, the president directed then-Secretary of the Interior Ryan Zinke to publish—within 60 days of the executive order’s issuance—an official U.S. government list of minerals that the secretary deemed “to be (i) a non-fuel mineral or mineral material essential to the economic and national security of the United States, (ii) the supply chain of which is vulnerable to disruption, and (iii) that serves an essential function in the manufacturing of a product, the absence of which would have significant consequences for our economy or our national security.” Zinke was to consult with the secretary of defense and the heads of other relevant agencies in carrying out this task. (Disclosure: From July 2017 to March 2019, I worked at the Department of the Interior as speechwriter to the secretary. During that time, I drafted and edited secretarial remarks and departmental communications on the subject of critical minerals.) Second, the president directed Secretary of Commerce Wilbur Ross to work with the secretaries of defense, the interior, agriculture and energy, along with the U.S. trade representative to submit a report—within 180 days of the publication of the critical minerals list—outlining a national strategy on critical minerals. This executive order followed Executive Order 13807, a directive that ordered the streamlining of the federal environmental permitting process for infrastructure projects—which, as described below, establishes a framework for streamlining the approval of U.S.-based critical minerals mining projects.

To compile the official critical minerals list at Zinke’s direction, the USGS teamed up with the Bureau of Land Management, also within the Department of the Interior. The department released a draft list of 35 minerals on Feb. 16, 2018, and then finalized the same list of 35 after a public comment period. That list of minerals (which included nearly all the minerals discussed in the 2017 USGS report), with the department’s brief descriptions of the minerals’ uses, is reproduced here in full:

• Aluminum (bauxite), used in almost all sectors of the economy
• Antimony, used in batteries and flame retardants
• Arsenic, used in lumber preservatives, pesticides and semiconductors
• Barite, used in cement and petroleum industries
• Beryllium, used as an alloying agent in aerospace and defense industries
• Bismuth, used in medical and atomic research
• Cesium, used in research and development
• Chromium, used primarily in stainless steel and other alloys
• Cobalt, used in rechargeable batteries and superalloys
• Fluorspar, used in the manufacture of aluminum, gasoline and uranium fuel
• Gallium, used for integrated circuits and optical devices such as LEDs
• Germanium, used for fiber optics and night vision applications
• Graphite (natural), used for lubricants, batteries and fuel cells
• Hafnium, used for nuclear control rods, alloys and high-temperature ceramics
• Helium, used for MRIs, as a lifting agent and in research
• Indium, used mostly in LCD screens
• Lithium, used primarily for batteries
• Magnesium, used in furnace linings for manufacturing steel and ceramics
• Manganese, used in steelmaking
• Niobium, used mostly in steel alloys
• Platinum group metals, used for catalytic agents
• Potash, used primarily as a fertilizer
• Rare earth elements group, used primarily in batteries and electronics
• Rhenium, used for lead-free gasoline and superalloys
• Rubidium, used for research and development in electronics
• Scandium, used for alloys and fuel cells
• Strontium, used for pyrotechnics and ceramic magnets
• Tantalum, used in electronic components, mostly capacitors
• Tellurium, used in steelmaking and solar cells
• Tin, used as protective coatings and alloys for steel
• Titanium, used overwhelmingly as a white pigment or metal alloys
• Tungsten, used primarily to make wear-resistant metals
• Uranium, used mostly for nuclear fuel
• Vanadium, used primarily for titanium alloys
• Zirconium, used in the high-temperature ceramics industries

Although the executive order called for a report within 180 days, the Commerce Department did not release its recommendations to the public until June 2019. The department found that the United States was “import-reliant”—meaning that imports represent more than 50 percent of annual U.S. consumption of the mineral—for 31 of the 35 minerals on the Interior Department’s list. Notably, Trump’s executive order did not mention specific countries by name. But the Interior Department’s press release announcing the order included a quote from the president citing both Russia and China as “foreign competitors” on which the U.S. was “reliant,” along with language from Zinke echoing the president’s concerns. The Commerce Department report used similar rhetoric, stating, “If China or Russia were to stop exports to the United States and its allies for a prolonged period—similar to China’s rare earths embargo in 2010—an extended supply disruption could cause significant shocks throughout U.S. and foreign critical mineral supply chains.”

The Commerce Department report contained six critical minerals-related calls to action, suggesting that the U.S. government (1) improve research and development, (2) strengthen America’s production capacity, (3) enhance international trade and cooperation, (4) work to better understand domestic resources, (5) open up federal lands for development and streamline the permitting process, and (6) bolster the American critical minerals workforce. From a foreign relations perspective, perhaps the most significant aspect of the Commerce Department report was its recommendation that the U.S. should “[c]ontinue and expand cooperation and collaboration with interested partners—particularly Canada, Australia, the European Union, Japan, and South Korea” for the sourcing of critical minerals. At the same time, many of the report’s recommendations on the fifth call to action—improving access to critical mineral resources in the United States—focused on domestic policies, from speeding up the time needed to obtain mining permits to harmonizing a patchwork of land-use regulations across federal, tribal, state and other lands.

In September 2020, Trump signed another executive order, this time declaring a national emergency under the International Emergency Economic Powers Act and the National Emergencies Act with respect to critical minerals. The action opens the door to import adjustments (such as tariffs) on Chinese critical mineral imports, government financing of domestic critical minerals projects, and reinterpretation of environmental laws. As an initial matter, it requires agency heads to compile a series of reports on the issue.

Within 30 days, the heads of various federal agencies will need to survey relevant legal authorities and appropriations that their agencies can use to carry out the order’s policy goals. And within 45 days, the secretary of state will need to compile a report detailing existing and planned efforts (and policy options) to effectuate various objectives of the directive. But the first major internal milestone will be 60 days from the signing of the executive order, when multiple reports are due to the White House.

First, Interior Secretary David Bernhardt must provide the president with a report after an investigation into America’s dependence on foreign adversaries for critical minerals, recommending executive actions. In addition, relevant agencies are each directed to submit their own strategies to the White House for using their identified legal authorities and appropriations in carrying out this executive order. Moreover, the director of the Office of Science and Technology Policy will send in a report detailing American research and development efforts, needs, and opportunities in this space. From there, the secretary of the interior will update the president every 180 days on the status of “the threat posed by our Nation’s reliance on critical minerals.” The order also authorizes the submission of recurring and final reports to Congress on the national emergency.

Finally, the order also directs the promulgation of certain interpretive regulations and consideration of a grant program to finance domestic mining of critical minerals, along with acceleration of permitting for critical minerals projects.

Administrative Execution of the Commerce Department Recommendations

Before the Commerce Department released its report, Assistant Secretary of the Interior for Land and Minerals Management Joe Balash noted that the Interior Department was preparing to expand mapping of the resources in the United States in response to the executive order. In the year since the report’s publication, the Trump administration has taken steps responsive to the Commerce Department’s recommendations. In August 2020, the Department of Energy announced $20 million in grants for critical minerals research, supporting projects that aim to “improv[e] the efficiency of both the use of the elements and their extraction from geological and recycled sources ... and reduce the reliance on rare earth elements by discovering substitute materials with similar or even enhanced properties.” The Pentagon is making a deliberate effort to reorient critical minerals supply chains in the United States, with a focus on creating facilities in Texas and California that process rare earth elements. The administration has also negotiated agreements with nations such as Canada and Australia to cooperate on securing relevant supply chains through financing arrangements and other production-increasing measures.

The national security justification for developing critical minerals in America has been a boon to domestic mining, particularly against the backdrop of the permitting executive order that predated the critical minerals directive. One example is the recent fast-tracking of a vanadium mine in Nevada, which, if approved, would be the first vanadium mine in the United States. This administrative action is generally congruent with the Commerce Department’s recommendations to improve the permitting process for mineral projects and bring them within the definition of infrastructure projects whose approval the permitting-focused executive order sought to expedite.

Members of Congress are also paying attention. In June, a group of congressional Republicans sent a letter to Secretary Bernhardt and Agriculture Secretary Sonny Perdue advocating for the finalization of regulations that would promote mining of critical minerals, arguing that this would be “consistent with the spirit” of the December 2017 executive order on critical minerals. That same month, the Senate Committee on Energy and Natural Resources held a hearing on the impact of the coronavirus on mineral supply chains. And most recently, Senate Republicans included Murkowski and Manchin’s American Mineral Security Act in their coronavirus relief bill. The bill, however, did not pass. Senate Democrats have recently reiterated the concerns raised by the Obama administration in 2013 about circumventing environmental safeguards on mining.

It is difficult to say how the upcoming presidential election might impact U.S. policy on critical minerals. As part of his clean energy plan, Democratic presidential nominee Joe Biden stated that he intends to “[a]ccelerate innovation in supply-chain resilience by investing in research to bolster and build critical clean energy supply chains in the United States, addressing issues like reliance on rare earth minerals.” But the plan contains little detail, and it is not clear how a Biden administration would source the minerals. If Biden prevails in the election and Democrats gain a majority in both houses of Congress, finalized pro-mining regulations from Interior and Agriculture could be vulnerable to rescission under the Congressional Review Act, given Biden’s interest in reversing the environmental deregulation undertaken by the Trump administration. Meanwhile, the Commerce Department report would likely form the basis of second-term critical mineral policy if Trump were to win reelection. Either way, the effectuation of some of the calls to action without a clear political valence—such as bolstered research funding and increased diplomatic cooperation with allies on supply chains—could continue regardless of which political party controls the White House after Jan. 20, 2021.