resource dependency

In his testimony before the U.S. Senate Committee on Energy and Natural Resources on “the Near-Term Outlook for Energy and Commodities Markets” last week, ARPN Principal Daniel McGroarty argues that while in the long-run, the market is self-corrective, there are certain actions that should be taken while we wait for that long-run to arrive if the U.S. wants to regain its economic strength and manufacturing might.

McGroarty points to the risks associated with our growing – and largely self-inflicted – dependence on foreign-sourced minerals and metals which have “implications for the strength of the American economic recovery, for the revival of U.S. manufacturing might, and for the hoped-for dominance of U.S. ingenuity and enterprise in the advanced technology applications that we know are shaping the world of the 21s Century.”

He argues that if the United States continues down the current path of reducing exploration spending while prolonging the already onerous permitting process for mining projects, resource development, and with that associated manufacturing, will move elsewhere.

Outlining several helpful first steps to mitigate these risks, including Sen. Lisa Murkowski’s (R-Alaska) American Mineral Security Act, he concludes:

“I don’t think there’s another nation in the world that can match American ingenuity.  We can pioneer the ideas behind wind and solar and so much else – but where will the materials that make these new energy sources real – where will they come from?

How we answer that question will determine to a large extent whether the U.S. can regain its manufacturing might…  Whether America will lead the alternative energy revolution…  And whether the U.S. will have the metals and minerals we need to provide the modern military technology we depend on.” 

Click here to read the full written testimony.

For children, it’s the arrival of the first snow each year – for policy wonks, it’s the release of an annual study.  Whereas kids run to check the window multiple times a day once snow has been forecast, policy wonks continuously check for updates on the release of that study when it’s that time of the year again.

While kids on the East Coast saw their wish for snow more than fulfilled, the release of the United States Geological Survey’s annual Mineral Commodity Summaries report this week was certainly less sensational.   A quick glimpse at the summary and one of the key charts reveals that aside from a now three-toned cover page, not too much has changed over last year.

Not surprisingly, with the global commodities market slumping, the estimated value of total non-fuel mineral production in the U.S. decreased by 3% from that of 2014. Meanwhile, in terms of foreign resource dependence, which is something on which ARPN has kept tabs with the report, the number of minerals for which the U.S. is 100% import reliant has remained constant at 19.

However, it is context and perspective that matters, and in that sense, another USGS study that is perhaps even more instructive than this year’s Mineral Commodity Summaries has gone largely unnoticed.   As the recently-released “Comparison of U.S. net import reliance for nonfuel mineral commodities—A 60-year retrospective” shows, 30 years ago, the U.S. was 100% foreign-dependent for 11 metals and minerals.  Today, that number has increased to 19. Meanwhile, we are more than 50% import-dependent for 47 minerals in all – nearly half of the naturally-occurring elements on the Periodic Table.

As our very own Daniel McGroarty has argued in recent testimony before the Senate Committee on Energy and Natural Resources, “(…) the risks are real – with implications for the strength of the American economic recovery, for the revival of U.S. manufacturing might, and for the hoped-for dominance of U.S. ingenuity and enterprise in the advanced technology applications that we know are shaping the world of the 21s Century.” 

The current trend towards reduced exploration spending and increased time required for the mining permitting process is already sending production of key metals and minerals overseas.  Manufacturing tends to follow and set up where the metals are.

McGroarty’s conclusion:

“I don’t think there’s another nation in the world that can match American ingenuity.  We can pioneer the ideas behind wind and solar and so much else – but where will the materials that make these new energy sources real – where will they come from?

How we answer that question will determine to a large extent whether the U.S. can regain its manufacturing might…  Whether America will lead the alternative energy revolution…  And whether the U.S. will have the metals and minerals we need to provide the modern military technology we depend on.”  

As children in Washington, DC, are finally returning to school after the historic snowfall, and Congress is back to business, one would hope that our policy makers have used their snow days to carefully review the challenges outlined by the latest USGS reports.

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