U.S. reliance on foreign supplies of anything is not an easy fact to take in; however, all one has to do is remember the Oil Embargo in the 1970s. At that time, the U.S. economy was greatly dependent on foreign oil. Oil prices quadrupled and lines of cars waiting to gas up were commonplace due to a shortage of gasoline.
Today, the only difference: Our dependence is not on OPEC but rather other countries, particularly China, for “critical minerals.” This dependence seems to have descended on us while we were looking the other way: After all, it should have happened to someone else, not us.
The Department of Defense uses 750,000 tons of minerals each year and growing amounts are coming from overseas. China accounts for the largest share of our imported minerals, including about 95% of rare earth elements (REEs) which are used in a variety of items, including but not limited to night-vision goggles, armored vehicles, laser-guidance systems for weapons, jet fighter engines, anti-missile defense systems, smart bombs, medical contrast for magnetic resonance imaging, cell phones, phosphors for TVs and fluorescent lights, fuel cells, batteries, electronics, glasses and magnets.
This is ominous because China has used its position as strategic mineral supplier for political advantage. A decade ago, China imposed quotas on the amount of REEs it would export. As a result, their costs soared. After the U.S. and other countries protested China’s action at the World Trade Association, China dropped its quotas but has since tightened its control. It now owns 96% of the market. Moreover, the problem isn’t limited to REEs produced in China. Chinese companies control the production of other critical minerals in nearly every part of the world.
Consider the growing demand for critical minerals used in manufacturing, consumer products such as lithium for use in batteries for electric vehicles, tantalum and hafnium in computer drives, cobalt and graphite in cell phones, and tin and fluoride in flat-screen televisions, to name a few. Production would be limited and demand could go unmet if the global market for critical minerals tightens, considering that U.S. dependence has doubled in the past two decades and likely to double in the next.
So let’s just say it plainly: The U.S. needs to ramp up domestic minerals production now.
What’s preventing greater domestic mining?
A lack of U.S. mineral resources is not the problem. There are domestic mineral reserves with an estimated value of $6.2 trillion. The problem is bottlenecks in the permitting process. Without the ability to get a permit within two to three years, as is routine in other countries with comparable environmental safeguards, there is simply no incentive to invest in new mines. Changes in the process are needed that would spur greater capital investment in domestic mining and ensure a steady supply of critical minerals to manufacturers. The mission is to connect buyers and sellers seeking the best deal.
However, environmental organizations are pressuring Congress to approve legislation that would prevent any improvement in the permitting process, while imposing more federal royalties on mining. Not only would those changes hurt national security, they would add significantly to the already high costs of mining. In fact, royalties would be higher than those in other countries. Simply put: what environmental groups are calling for is not in our nation’s best interest. It ignores the need for minerals, particularly critical minerals, coming from domestic mines.
Domestic mining will reduce dependence on imported minerals, whereas increased royalties would have the opposite effect. Domestic mining would strengthen our nation’s economy, create new jobs not only in mining but also in processing and manufacturing. “Made in the USA” would matter. And there would be substantial benefits for our national security. So let’s just say it plainly again: The U.S. needs to ramp up domestic minerals production now.