rare earths

***Posted by Daniel McGroarty***

“The current coronavirus pandemic has exposed significant supply chain challenges associated with our over-reliance on foreign (and especially Chinese) raw materials,” — writes ARPN’s Sandra Wirtz in a new piece for The Economic Standard:  

“PPE has become the poster child, but whether it’s smart phone technology, solar panels, electric vehicles, or fighter jets — critical minerals are integrated into all aspects of U.S. supply chains. And, in spite of the fact that the United States is rich in mineral resources, we have maneuvered ourselves into a situation where we often find ourselves at the mercy of China.”

Outlining the genesis and extent of our over-reliance on largely Chinese-sourced mineral resources, Wirtz argues that while the main focus has been on rare earths, our supply chain vulnerabilities stretch far beyond, as evidenced most recently by the findings of the new World Bank report on “The Mineral Intensity of the Clean Energy Transition.”

With COVID as the catalyst, that message is resonating with U.S. policymakers, in the Cabinet Departments and at the White House. Wirtz outlines several current policy initiatives aimed at alleviating our supply chain vulnerabilities:

• U.S. Sen. Ted Cruz’s Onshoring Rare Earths Act of 2020, or ORE Act, which defines ‘critical minerals’ as the 17 Rare earths plus four key minerals underpinning battery tech;  
• the expansion of the Department of Energy’s “target list” for project proposals to develop next gen extraction, separation and processing technologies for five rare earths plus cobalt, lithium, manganese and natural graphite; and

• two new Executive Orders which would promote domestic mineral resource development. 

She closes:

“All of which is to say that, after long period of inaction, the U.S. Government seems to be viewing strategic materials and critical minerals issues with a new seriousness.  That’s a welcome development.  COVID, with its sudden disruption of supply chains, should be the last warning the U.S. needs to bolster our mineral resource security going forward.”

Read the full piece here.

In a new piece for The Economic Standard, ARPN’s Daniel McGroarty argues that while the “intellectual shrug” of “who could have seen this coming” tends to be a common reaction to our new normal of sheltering in place and social distancing, there were warning signs for a coming crisis we failed to recognize for what they were, and act accordingly.

McGroarty tells the story of what he calls a “Red Swan” based on COVID-19’s point of origin in Wuhan, China — a leaked classified cable sent by the U.S. State Department in 2010 revealing “Critical Infrastructure/Key Resources” outside of the U.S. “whose loss could critically impact the public health, economic, and/or national and homeland security of the United States.” On it, under the heading for China: “Polypropylene Filter Material for N-95 Masks” — which, as McGroarty points out, are “[p]recisely the ones the federal government and states are scrambling to source right now. […] The U.S. Government knew in 2009 that N-95 masks were critical, came from China… And did nothing about it.”

However, and this is where followers of ARPN may perk up, this is not all.  

As McGroarty writes, the classified list in the cable also included a series of mines in China that were deemed critical, developing critical materials ranging from fluorspar and germanium over graphite to Rare Earths, tin and tungsten — for all of which the United States is greatly import-dependent, with degrees of reliance ranging from 63% for tungsten to 100% for fluorspar, graphite and rare earths. 

Writes McGroarty:

“As a warning unheeded, the cable makes for interesting reading in light of today’s COVID pandemic – and as U.S. policymakers embark on a rolling series of multi-trillion dollar spending bills, the next of which will include infrastructure projects. 

At issue is not just one but three layers of risk:  Maybe the metals and minerals produced by the Chinese mines will be withheld in time of conflict, as Beijing seeks to leverage access for American concessions. Maybe the metals and minerals will soon be prioritized for internal Chinese consumption, under its Made in China 2025 program to drive Chinese technology dominance, with little left for export to the U.S. or elsewhere. 

Or maybe – as the leaked cable presciently notes – the Chinese mines will be disrupted by a pandemic, slamming on the supply chain brakes for a U.S. economy dependent on critical materials that go from arriving “just in time” to “not at all.”

In any case, the warning could hardly be more clear. The U.S. has a choice:  It can take immediate steps to reduce its dangerous dependency on a Chinese supply chain for critical technology metals. Or we can hope COVID 2.0 will not disrupt supply in a second global shut-down – or that Beijing won’t one day decide to curtail access to these critical materials in time of crisis.

But here’s one thing we can no longer do:  If an act of nature or of man cuts off U.S. access to vital technology materials, we can’t claim to be surprised by the appearance of a Red Swan. We’ve seen it coming.”

In a new piece for RealClear Politics, ARPN’s Daniel McGroarty argues that while the current focus on ending the dangerous dependence on critical medicines needed to combat COVID-19 is more than warranted, Congress and the administration “may want to broaden their focus from critical medicines to critical minerals.” Read his full piece here: Getting Critical [...]

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After years of missed opportunities to prioritize mineral resource policy, the U.S. government is stepping up its efforts to secure critical mineral resource supply chains.   The latest case in point is the drafting of a “joint action plan” with our neighbors to the North to reduce reliance on Chinese supplies of Rare Earth Elements (REEs) — which, [...]

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