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Commerce Department Urges ‘Unprecedented Action’ to Secure Critical Mineral Supplies

July 31, 2019

The United States must embark on an effort to expand and secure its sources of critical minerals outside of its current supply chain, the U.S. Department of Commerce says in new report.

The United States must embark on an effort to expand and secure its sources of critical minerals outside of its current supply chain, the U.S. Department of Commerce (DOC) states.

The DOC’s June 4 report says the nation’s dependence on foreign minerals, including rare earths, has created “strategic vulnerabilities” in the U.S. economy and national security. The United States relies on imports for 31 of the 36 critical minerals and is completely dependent on imports for 14 of these minerals, the report states.

U.S. imports of “critical minerals commodities” exceed 50 percent of the nation’s annual consumption, including 17 rare earth elements critical to the production of numerous products such as aircraft, computers, GPS navigation systems, missiles, satellites, semiconductor chips, smart phones, and wind turbines, the report states.

“These critical minerals are often overlooked, but modern life would be impossible without them,” said Commerce Secretary Wilbur Ross in a statement. “Through the recommendations detailed in this report, the Federal government will take unprecedented action to ensure that the United States will not be cut off from these valuable minerals.”

Rare Earth Politics

China is by far the world’s biggest producer of rare earth minerals, accounting for 78 percent of global production in 2018.

“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 report states.

China slapped an embargo on the export of rare earths to Japan in 2010 after Japan seized a Chinese fishing boat that had collided with two Japanese Coast Guard vessels in the East China Sea.

The EU, Japan, and the United States filed a complaint with the World Trade Organization (WTO), which ruled against China in 2014. Before the ruling came down, Japan made concessions to China over the incident.

Although China lost at the WTO, it delivered a strong message about its willingness to use its near-monopoly on rare earths to disrupt competitors’ economies and extort political concessions.

Dangers of Dependence

Thanks to favorable geology, the United States is home to many critical minerals, including rare earths. America is at a competitive disadvantage in this crucial sector because, the report notes, the nation lacks any domestic production for 14 of the minerals and has almost no facilities to refine or process critical minerals we do produce.

The report’s release comes amid an ongoing trade conflict between the Trump administration and China. Just hours before the report was issued, China’s National Development and Reform Commission (NDRC) announced it was studying proposals to impose export controls on rare earths to retaliate against U.S. tariffs and moves against Chinese telecom giant Huawei.

Dependence on other countries for crucial minerals endangers the U.S. national security, says David Wojick, Ph.D., a senior policy analyst with the Committee for a Constructive Tomorrow (CFACT).

“Under no circumstances should our national security be solely dependent on supplies of critical minerals from other countries,” said Wojick.

‘Break China’s Stranglehold’

The report says the United States should expand trade in critical minerals with Australia, Canada, the European Union, Japan, and South Korea.

Other recommendations include streamlining the approval of new mine projects on U.S. federal lands, removing regulatory obstacles to critical minerals development, stockpiling critical minerals, and reestablishing domestic processing and manufacturing facilities.

Federal regulations will have to change to allow domestic development of critical minerals, says Jay Lehr, Ph.D., a senior policy analyst with the International Climate Science Coalition.

“The Trump administration is right to direct the Interior Department to move quickly to develop our abundant rare earth resources, but we will be unable to significantly exploit domestic supplies unless the U.S. Environmental Protection Agency (EPA) rescinds many regulations which have made the mining of these minerals economically unfeasible,” Lehr said. “EPA’s regulations have done nothing to protect the environment, but they have put the United States at the mercy of China.

“American miners know how to operate safe mines without endangering the environment, and it’s time to let them do so and break China’s stranglehold over us,” said Lehr.

Bonner R. Cohen, Ph.D. (bcohen@nationalcenter.org) is a senior fellow at the National Center for Public Policy Research and a senior policy analyst at CFACT.

INTERNET INFO:

U.S. Department of Commerce, “A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals,” June 4, 2019: https://www.heartland.org/publications-resources/publications/a-federal-strategy-to-ensure-secure-and-reliable-supplies-of-critical-minerals

Author
Bonner R. Cohen is a senior fellow with the National Center for Public Policy Research, a position he has held since 2002.
bcohen@nationalcenter.org