American Resources Policy Network
Promoting the development of American mineral resources.
  • A New Chapter in the Tech Wars? Weaponization of Trade Back on the Menu as U.S.-Chinese Tensions Soar

    The world breathed a collective sigh of relief when Chinese drills in the seas and skies surrounding Taiwan wrapped up without further incident this Monday.

    Nevertheless, tension between the U.S. and China over the island, which some analysts consider “the most dangerous standoff between global superpowers, even as the war in Ukraine rages,” remain high, and a recent development in the trade arena may add further fuel to the fire.

    The territorial dispute over Taiwan may make for the flashiest headlines, but, as followers of ARPN well know, the trade dimension of the geopolitics of critical mineral supply chains have emerged as a new frontier in the tech wars between Beijing and Washington, D.C., and conflict has been smoldering over the past few years, particularly over Rare Earth Elements (REEs).

    When reports of Chinese threats to “play the Rare Earths card” – to escalate its trade dispute with the then-Trump administration to include rare earths minerals — surfaced in 2019, ARPN’s Daniel McGroarty argued the move could galvanize support for legislation or further executive actions to reduce U.S. overreliance on foreign supply and processing of critical metals and minerals.  By July 2019, then-President Trump issued a Presidential Determination under the Defense Production Act of 1950 designating all links in the rare earth permanent magnet supply chain as “essential for the national defense,” and eligible for U.S. Government funding and support.

    But the wheels of government grind slowly.  A pandemic, a new war, and several supply chain shocks later, the United States and its allies have indeed taken a number of steps to decouple from China and shore up its own critical mineral supply chains.  As a result, China’s share of global REE production, which stood at roughly 90% a decade ago, has dropped to 70% last year, according to the USGS, though most processing is still under Chinese control.

    Western nations have also secured a number of trade deals to decouple from China marking a “huge realignment in trade – one that goes by names like ‘friendshoring’ and ‘nearshoring’ – and having occurred “so rapidly that they’ve wrongfooted Beijing,” as Mary Hui writes in a three-part series for Quartz.

    Hui cites a two-year old deal between U.S. and European rare earth firms which involves processing monazite sands in Utah to produce rare earth carbonates, then ship them to Estonia for processing, as well as another project in which REE ores from Canada will undergo preliminary processing there to then be shipped to Norway for further processing.  Meanwhile, Japan has strengthened its REE cooperation with Australia.

    Those efforts notwithstanding, China still has substantial leverage, especially in the processing segment, and has in recent months kicked its efforts to consolidate its REE sector into high gear [see our post here] while doubling down on an aggressive investment spree overseas to re-establish an “abundant supply of rare earth, so [as] to have the world’s cheapest feed for China’s downstream industries.”

    As tensions between China and the West, and specifically China and the United States have soured, the specter of export controls began rearing its head again.

    In October 2022, in a move that observers have deemed a paradigm shift in U.S. export control policy toward explicit containment of China’s technological advancement, Washington, D.C. imposed a set of sweeping controls on advanced semiconductors and semiconductor manufacturing equipment to China, and has been able to secure Japanese and Dutch agreement to a deal restricting China’s access to advanced semiconductor manufacturing equipment.

    While China until recently had yet to “substantively respond” to the semiconductor export controls, industry sources suspected “they’re likely going to use rare earths as a bargaining chip since rare earths are a weak point for Japan and the U.S.” – and these experts were proven right when Nikkei reported last week that Beijing was considering prohibiting exports of certain rare earth magnet technology through updates to a technology export restrictions list last updated in 2020.

    According to Nikkei, “[t]he revisions would either ban or restrict exports of technology to process and refine rare-earth elements. There are also proposed provisions that would prohibit or limit exports of alloy tech for making high-performance magnets derived from rare earths. In all, there are 43 amendments or additions in the draft list first announced in December by the commerce and technology ministries. Officials have finished taking public comments from experts, and the changes are expected to go into force this year.”

    As followers of ARPN well know, China is no stranger to playing the Rare Earths card, and they may recall the 2010 standoff between China and Japan in which Beijing blocked REE sales to Japanese users over a heated flare up in the context of the long-standing dispute over control of the Senkaku Islands in the East China Sea.

    It’s not 2010 anymore. Dependencies have shifted, and a new global realignment has begun. It remains to be seen how this new chapter plays out, but it is clear that as the export restrictions ratchet is being tightened, the weaponization of trade in the tech wars is back on the menu.

  • This Week’s Dramatic Development: The Rise of the “Defense Criticals”

    by Daniel McGroarty

    The Critical Mineral space in the U.S. experienced a dramatic development this week, largely overlooked beyond specialty reporting in the defense and energy media:  With his February 27, 2023 Presidential Determination, President Biden once more invoked Title III of the Defense Production Act (DPA) to strengthen critical mineral supply chains – and in doing so, effectively created a new category of Critical Materials.  Two days later, the President followed with another DPA Presidential Determination (2023-5), designating airbreathing engines, advanced avionics navigation and guidance systems, and hypersonic systems and their “constituent materials” as priority DPA materials.

    Tied to the Korean War-era Defense Production Act, the action carries the force of federal law, unlike Executive Orders, which carry no legislative weight — and while they can be enacted with the “stroke of the presidential pen,” can be rescinded with the same pen held by the next president.

    Here’s where things get interesting, or more accurately, complicated.  ARPN followers are well aware of the frequency with which we focus on the U.S. Government Critical Minerals List, enacted via a Trump Administration Executive Orderpromulgated in 2018, codified into federal law in 2020, and updated in 2022, to its present list of 50 minerals, metals and elements.

    Alongside the Critical List we’ve seen a series of DPA Presidential Determinations involving specific Critical Minerals, beginning with President Trump’s July 2019 designation of the Rare Earth permanent magnet supply chain being designated as “essential for the national defense,” followed by President Biden’s designation of what ARPN calls the “Battery Criticals” as DPA Title III eligible in March 2022, followed by Platinum and Palladium in a DPA Presidential Determination in June 2022.

    So, for anyone compiling a Critical Mineral Defense Production Act scorecard, at the close of 2022, the DPA list numbered 12:  5 “Magnet Rare Earths” (Neodymium, Praseodymium,  Terbium, Dysprosium and Samarium), plus 5 “Battery Criticals” (Graphite, Nickel, Cobalt, Manganese and Lithium), joined by Platinum and Palladium.  [For ARPN’s more detailed take on each of the battery criticals, see these previous posts.]

    ARPN dubbed these 12 the “Super Criticals,” to distinguish this dozen from the 50 in the Critical Minerals List.

    With this week’s new DPA Presidential Determination, the Super Critical category got a lot larger.  Just how large will take a bit of sleuthing, as President Biden’s three paragraph determination is framed around specific supply chains, implying without naming the specific minerals, metals and materials that will now be “strategic and critical materials,” instead directing Critical wonks to the White House 100 Day Supply Chain report, covered extensively by ARPN.  As for the hypersonic and airbreathing engines DPA announcement, it lacks any breadcrumbs on the metals, minerals and materials that will fall under the “constitutent materials” category.

    Which makes building out the new Criticals list a work in progress.

    What can be said so far?  To build out the new Strategic and Critical Materials list, start with the semiconductor materials referenced in Department of Commerce’s section of the 100-Day Report:  Gallium, Germanium, and Indium.

    Then look to the Department of Defense portion of that report and a table said to list the 53 “materials” – get used to the DoD nomenclature, which unlike the U.S. Critical Mineral List, includes metals, minerals, materials including alloys and composites – found to be in shortfall by DoD.  (I’ll save a post on how DoD determines shortfalls for another time.)

    But count the materials listed in the 100 Day Supply Chain Report, and you’ll end at 38, not 53.

    15 of them are mentioned only in the Report appendices — and the appendices are withheld from the public document, as Classified and/or Controlled Unclassified Information (CUI).

    What’s CUI?  You’ll be unhappy you asked: “Controlled Unclassified Information is information that requires safeguarding or dissemination controls pursuant to and consistent with applicable law, regulations and government-wide policies but is not classified.”  So it’s not classified, but without a U.S. Government security clearance, you can’t see it.

    With just a quick look over the edge of the rabbit hole, ARPN will be scratching its head for a bit on how private sector resource developers will get to work producing 15 essential DPA Title III materials whose names cannot be spoken outside a government SCIF.  More to come on that.

    As for the rest of the new 38 DPA Title III materials, what are they?

    Aluminum (high purity)
    Al-Li Alloy
    Arsenic (molecular beam grade)
    Beryllium ore
    Beryllium Metal
    Boron (Boron 10 isotope – and other unnamed classified isotopes)
    Carbon-Carbon (and classified variants)
    Energetics (classified variants)
    Graphite (ISO-molded, civilian applications)
    Graphite (ISO-molded, defense applications)
    Lithium metal
    Manganese (Electrolytic Manganese Metal)
    REE NdFeB magnets
    REE SmCo magnets
    Steel (1080 grade ultra-high strength cable tire cord)
    Steel (grain oriented electrical, silicon-based)
    Titanium (sponge)

    …Plus 11 Rare Earths:

    Yttrium (multiple types, classified)

    (Notice that 3 of these Rare Earths were already DPA Title III materials via the Trump Presidential Determination)

    All together, counting the unique minerals/metals/elements in the new DPA announcement compared to the previously-designated Super Criticals, that’s 7 new Rare Earths plus 13 new elements, for a total of 20.

    Back to the scorecard:

    • 12 prior “Super Criticals”
    • 3 semiconductor materials (Department of Commerce section, Supply Chain Report)
    • 20 newly-designated metals/minerals/elements (DoD section, Supply Chain Report)

    …For a total of 35.  For now, anyway:  as we’ve yet to dig in on the hypersonics, airbreathing engines and navigation and guidance system materials:

    Cobalt (2022)
    Dysprosium (2019)
    Graphite (2022)
    Lithium (2022)
    Manganese (2022)
    Nickel (2022)
    Neodymium (2019)
    Palladium (2022)
    Platinum (2022)
    Praseodymium (2019)
    Samarium (2019)
    Terbium (2019)

    Meet the “Defense Criticals:”  

    A strong signal that the quest to create domestic supply chains just got serious.

  • ARPN’s Daniel McGroarty Submits Public Comment on Draft Updated Critical Minerals List

    On November 9, 2021, the U.S. Geological Survey announced it is seeking public comment on a draft revised List of Critical Minerals. The revised  list is an update to the United States’ first whole-of-government Critical Minerals List released in 2018 and developed in consultation with other cabinet agencies pursuant to Executive Order 13817. Later codified into law, the [...]
  • Free Markets Alone Will Not Solve REE Crisis

    In a new piece for Defense News, Jeffery A. Green, president of J. A. Green & Company and a member of the ARPN panel of experts, takes exception to a recent opinion piece by the Wall Street Journal’s editorial board on the current rare earth crisis. The opinion piece had argued that the situation wasn’t [...]
  • China’s Saber-Rattling over Rare Earths Card Getting Louder

    After months of rumblings, it appears that China is gearing up to play its “rare earths card” again. Citing people involved in a government consultation, the Financial Times reports that Beijing is gauging exactly how badly companies in the United States and Europe, including U.S. defense contractors, would be affected by plans to restrict exports [...]
  • Time for Well-Thought-Out Yet Decisive Action to Diversify Our Critical Mineral Supply Chains

    Against the backdrop of the ongoing coronavirus pandemic, which has served as an eye-opener to many Americans with regards to our critical mineral resource dependencies, U.S. Secretary of Energy Dan Brouillette calls for strong U.S. action to secure our “most critical supply chains” in a new piece for The Hill. Arguing that “predominantly through research and development, [...]
  • A Mineral Resource Policy for 2020 – New Year’s Resolutions for Resource Policy Stakeholders

    We realize that New Year’s resolutions are somewhat controversial.  Some say, they‘re not worth the paper they’re written on – but we feel that whether or not we implement all of them, they offer a good opportunity to both step back to reflect and set goals as we look at the big picture ahead. And that [...]
  • 2019 in Review – Towards an “All-Of-The-Above” Approach in Mineral Resource Policy?

    We blinked, and 2020 is knocking on our doors. It’s been a busy year on many levels, and mineral resource policy is no exception. So without further ado, here’s our ARPN Year in Review. Where we began: In last year’s annual recap, we had labeled 2018 as a year of incremental progress, which had set [...]
  • China’s Grand Strategy to Exploit United States’ “Soft Underbelly” Goes Beyond Rare Earths

    Much is being made of China’s recent threats to cut off Rare Earth exports to the United States, and the issue has – finally – helped bring the issue of mineral resource policy reform to the forefront.  However, as Ian Easton, research fellow at the Project 2049 Institute and author of The Chinese Invasion Threat, [...]
  • Podcast: ARPN’s Dan McGroarty Discusses U.S.-Chinese Trade Tensions Over REEs

    As the world looks towards Osaka, Japan, where world leaders will gather for the 2019 G20 Summit and Ministerial meetings later this week, former Missouri Speaker of the House Tim Jones discusses the current trade conflict between the United States and China and the implications of the looming supply disruptions for U.S. domestic industries as [...]