The convention balloons have been deflated and the confetti swept away. Both parties have spent millions of dollars differentiating themselves from their political opponents. But if you listened closely to the convention speeches, there was in fact plenty of agreement, and on a critical issue.
From South Carolina Gov. Nikki Haley to President Barack Obama, both parties stressed the need to rebuild the American economy by creating more manufacturing jobs. Republicans and Democrats both called for more products with a “Made in America” sticker. And both parties pushed for greater energy independence.
If we could create sensible policies that increase access to American metal and mineral resources, we could make progress on all of these fronts.
There is a deep relationship between mining and manufacturing. The cost of raw materials affects a project’s viability — from the cost of labor, to design and functionality, to profit realized on the market. If a company has to pay more for the metals and minerals it needs to produce its goods, it will have to offset those costs with cuts elsewhere in its business — and more often than not, that means cutting jobs.
Workforce cuts loom
This isn’t just Econ 101; it’s our economic reality:. Philips Electronics is planning to cut 2,200 jobs in its health care and lighting divisions as it wrestles with raw materials costs and worsening economic conditions. Revlon recently announced that it will cut 5 percent of its workforce, citing increasing raw-material costs.
The vast majority of minerals and metals that feed America’s manufacturing sector are mined on foreign shores. That means our manufacturing costs — and the jobs behind them — depend on supply chains established and prices set by foreign suppliers, from allies like Canada to fierce competitors like China.
Just look at China’s stranglehold on the Rare Earth elements, a group of 17 magnetic metals used in missile defense systems, smartphones and wind turbines. Today, China controls 97 percent of the world’s supply. Its restrictive export policies have pushed the World Trade Organization to launch a formal investigation.
Now consider that the United States has 15 percent of global supply of Rare Earths under its soil but right now contributes just a bit over 1 percent of global supply. So China effectively dictates prices, using metals access as a magnet to pull manufacturing jobs to China.
My organization, the American Resources Policy Network, has found that most of our strategic minerals and metals dependences are in fact self-inflicted — and the U.S. economy is the biggest loser.
In June, we studied metals and minerals that our government deems critical to the economy and national security. We found that the United States is at least 50 percent dependent for 43 (out of 46) critical metals and minerals. Yet, we have known domestic reserves for 40 of them.
Access to metals lacking
A new report we published last week examines the value of some “gateway metals” — common metals like zinc, aluminum and copper that double as sources for rare and high-tech metals. For example, copper, used extensively in electronics and industrial machinery, is also a primary source of valuable high-tech metals such as rhenium, used in semiconductors, and selenium, a component of certain solar power cells.
Which brings us back to energy independence — something both political parties agree we should strive for. It’s no secret that businesses have struggled to make alternative energy innovations profitable. However, less well understood is the fact that our lack of access to critical metals and minerals can prohibitively increase manufacturing costs, just as it has for Phillips and Revlon. The average wind turbine needs more than 3 tons of copper. And CIGS solar panels, which made Time magazine’s 50 Best Inventions of 2011, are solar cells made from copper, along with indium, gallium and selenium — all three of which are derived from the “gateway metals.”
We have significant domestic resources of all of these metals and minerals — either directly or through the “gateway metals” — but we are not effectively developing them. Due to excessive red tape and an activist Environmental Protection Agency, it takes up to 10 years on average to get a new mine running in America. These policies increase the costs of manufacturing, making it harder for business to create jobs and bring energy innovations to market.
Both parties agreed that we need to create more manufacturing jobs and work toward greater energy independence. By increasing access to U.S. metal and mineral resources, we can do both.
Daniel McGroarty is the president of American Resources Policy Network, a nonpartisan education and public policy research organization in Washington, D.C.