Saturday 31st October 2020

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Crisis: More studies needed

The U.S. responds to a critical minerals “emergency” with additional reports

by Greg Klein | October 1, 2020

A national emergency normally calls for action. But although the U.S. faces “an unusual and extraordinary threat”—not referring to insurrectionary riots but foreign dependency on critical minerals—the country intends to respond with more studies and reports. Such was the gist of President Donald Trump’s September 30 executive order.

Yet he made his awareness of the problem manifest. Referring to 35 critical minerals the U.S. deems essential for uses including national security, economic well-being, electronics, transportation and infrastructure, Trump cited U.S. Geological Survey data showing his country imports over half its supply of 31 of the 35 minerals. For 14 of the minerals, the U.S. depends completely on foreign sources.

The U.S. responds to a critical minerals “emergency” with more reports

U.S. President Trump arrives in Pennsylvania days ahead of
his declaration of a national emergency on critical minerals
and call for a rejuvenated mining industry.
(Photo: White House/Tia Dufour)

That leaves the country vulnerable “to adverse foreign government action, natural disaster or other supply disruptions. Our national security, foreign policy and economy require a consistent supply of each of these minerals.”

Standing out as the greatest foreign supplier and greatest foreign threat is China. Rare earths provide a stark example. While the U.S. led global production back in the 1980s, China now provides 80% of American supply directly and, indirectly through other countries, some of the remainder too. Since the 2010 Senkaku incident, China’s machinations have included withholding RE exports, then flooding the market to ruin potential non-Chinese suppliers, and forcing RE-dependent manufacturers to relocate to the Middle Kingdom.

Among the critical 35, Trump also emphasized barite (more than 75% of U.S. supply is imported, over half the total from China), gallium (95% of global supply comes from China) and graphite (100% of U.S. supply is imported; China provides over 60% of global supply and almost all high-purity flake graphite).

What Trump actually ordered, however, are further studies and reports—lots of them. Often with overlapping areas of concern and some with recurring updates, federal studies will consider ways to encourage domestic extraction and processing, as well as expand and protect domestic supply chains. Some strategies include import restrictions against China and other countries, and loan guarantees to companies linked to a supply chain.

Our nation’s undue reliance on critical minerals, in processed or unprocessed form, from foreign adversaries constitutes an unusual and extraordinary threat, which has its source in substantial part outside the United States, to the national security, foreign policy and economy of the United States. I hereby declare a national emergency to deal with that threat.—U.S. President Donald Trump

Trump’s concern dates at least to December 2017 with an executive order calling for a “federal strategy to ensure secure and reliable supplies of critical minerals.” The order followed closely on a 900-page USGS report that was the country’s first comprehensive update since 1973.

The 35 list followed in 2018. Later that year the U.S. Department of Defense presented its own report to Trump. In 2019 alone he signed five “presidential determinations finding that domestic production of rare earth elements and materials is essential to the national defence.”

Some more tangible developments this year included undisclosed amounts funded by the U.S. Department of Defense to study the feasibility of two potential rare earths separation facilities, one by California RE miner MP Minerals, and the other by Australian RE miner Lynas Corp with its American JV partner Blue Line Corp, to be located in Texas.

Last month Washington awarded $7.97 million in 2020 funding to the Earth Mapping Resource Initiative for critical geoscientific studies in 21 states.

As one of the 35 essentials, uranium rates strategies of its own. It fuels about 20% of American electricity, not including U.S. Navy nuclear submarines and aircraft carriers. But the country relies on imports for about 90% of supply. Backed by Trump’s 2021 budget, the U.S. Department of Energy formed a working group to encourage domestic uranium mining, support nuclear fuel cycle capabilities and establish emergency uranium reserves.

Another energy-related presidential order aims to safeguard vital infrastructure including electricity substations and water treatment facilities from foreign control.

Some positive steps notwithstanding, China’s dominance remains unchallenged. Trump’s latest round of studies, under the guise of a national emergency, might have more to do with courting job-hungry voters. “In many cases, the aggressive economic practices of certain non-market foreign producers of critical minerals have destroyed vital mining and manufacturing jobs in the United States,” he said.

Over the last several decades, our nation’s mining industry has suffered due to political inaction, a broken permitting process and predatory foreign competition from China.—A White House statement

Yet other mining issues question his ability to support the sector. This is the president who failed to protect the Appalachian coal industry despite 2016 assurances. Alaska’s Pebble saga presents a giant copper-gold-molybdenum deposit backed by Trump but mired in regulatory battles. Just recently scandal joined the imbroglio as now-resigned Pebble Limited Partnership CEO Tom Collier was recorded talking up his company’s relationship with U.S. politicians and officials.

The November election outcome adds more uncertainty to Trump’s stated goals. But bipartisan concern over foreign dependency has emerged in the U.S. House of Representatives. In July both parties came together to form a Critical Minerals Caucus to encourage domestic production. In September a bipartisan bill tabled in the House called for tax incentives for mining, reclaiming and recycling critical minerals.

Of course the U.S. hardly stands alone. This week the EU created the European Raw Materials Alliance to “identify barriers, opportunities and investment cases to build capacity at all stages of the raw materials value chain, from mining to waste recovery. In a first phase, the alliance focuses on the most pressing need, which is to increase EU resilience in the rare earths and permanent magnets value chains, as these are vital to most EU industrial ecosystems.”

The alliance follows a critical raw materials action plan announced earlier last month. But participants need not be European. “Pilot partnerships with Canada, interested countries in Africa and the EU’s neighbourhood will start as of 2021,” the EU stated.

Another transnational proposal would bring the U.S. and Canada together. The two countries announced their Joint Action Plan on Critical Minerals Collaboration in January and, without specifying anything tangible, reaffirmed their intentions in June.

October 16, 2020, update: Canada, Australia and U.S. announce the Critical Minerals Mapping Initiative.


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