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In a piece that may not be hot-of-the press but is certainly as relevant today as it was in November of last year when it was penned – and ties into the context of ARPN’s latest post on NATO facing the critical minerals challenge –the Oregon Group’s Anthony Milewski warns that the U.S. defense industrial base is ill-prepared to support the current global rearmament trend, particularly with regards to critical minerals underpinning military technology and munitions.

Milewski points to Russia having fired an estimated 11 million artillery shells in 2022, the majority of which can contain – depending on shell and manufacturing process – at least an estimate 0.5kg of copper. This, he says would amount to 5,500 tons of copper, or the equivalent of copper used in 1,170 wind turbines.

Copper demand is already forecast to increase by more than 100% by 2035 with many analysts warning there may not be enough copper to meet decarbonization goals in the next few decades after years of underinvestment in the mining industry and falling ore grades.  And those projections, according to Milewski, do not account for surging military demand against the backdrop of increasing geopolitical volatility around the globe.

Of course, copper is just the proverbial tip of the iceberg. According to the National Mining Association, the U.S. Department of Defense uses nearly 750,000 tons of minerals on an annual basis – a number that was calculated around 2016/2017 at a time when the U.S. was not facing any major conflicts.

Fast-forward to 2024 and the U.S. is supporting allies in the Ukraine and Israel while the situation in the Taiwan Strait looks increasing vulnerable.  Meanwhile, particularly ammunition stockpiles are running so low that NATO officials have warned that Western militaries are scraping “the bottom of the barrel” forcing NATO to provide Ukraine with supplies not from full warehouses, but rather “half-full or lower warehouses in Europe.”

The issue is compounded by the fact that production time to rebuild weaponry stocks can take anywhere between three and 18 years, depending on equipment according to the Centre for Strategic and International Studies – however that analysis focuses only on manufacturing and production times.

As followers of ARPN well know, supply chains for the metals and minerals underpinning U.S. military technology and munitions are “extremely vulnerable” due to a perennial over-reliance on supplies from adversary nations, i.e. China.

For all the talk about decoupling supply chains in recent years, the needle has not moved much, and the latest USGS Mineral Commodity Summaries still has the U.S. 100% import reliant for 12 metals and minerals, while an additional 29 critical mineral commodities had a net import reliance greater than 50% of apparent consumption — a small drop by two over last year’s report.

However, some important steps have been taken in recent years, and are beginning to bear fruit. Milewski lists several military budget ramp-ups to “try and resolve the massive shortfall.”

As ARPN previously outlined, a notable example of such efforts is the series of (Defense Production Act) DPA Presidential Determinations involving specific Critical Minerals, beginning with President Trump’s July 2019 designation of the Rare Earth permanent magnet supply chain as being “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.  Earlier this spring, two further Presidential Determinations (February 27, 2023 Presidential Determination, and DPA Presidential Determination (2023-5)), effectively created an entirely new category of critical minerals – “Defense Criticals” as ARPN calls them – by way of designating airbreathing engines, advanced avionics navigation and guidance systems, and hypersonic systems and their “constituent materials” as priority DPA materials.

Those DPA actions, funded by Congressional appropriations, are now producing Department of Defense funded projects to encourage domestic development of these “defense criticals” and their supply chains.

Milewski highlights the following:

• Graphite: a $37.5 million agreement between the DoD and Graphite One (Alaska) to fast-track a domestic graphite mine;
• Antimony: two awards — $24.8 million and $15.5 million — by the DoD to Perpetua Resources to secure a domestic source of antimony [an additional conditional award of up to $34.6 million under the existing Technology Investment Agreement was announced earlier this week];
•  Lithium: a $90million agreement to secure lithium production between the DoD and Abermarle;
• Nickel: a US $20.6 million agreement between the DoD and Talon Nickel to increase domestic nickel production.

He closes:

“We see the U.S. military shifting its position and capacity to secure its critical mineral supply gaining more momentum than it has for arguably the past 30 years. However, the U.S. military is America’s largest government agency, and it will take time.”

However, with conflict brewing in many parts of the world, time is a luxury we do not have, and strengthening critical mineral supply chains should be a key priority for policy stakeholders in 2024.

2024 marks the 75^th anniversary of the NATO alliance, a transatlantic partnership and security alliance that has played a key role in the global security landscape over the last seven decades.

Against the backdrop of Russia’s invasion of Ukraine and an increasingly volatile geopolitical environment, experts argue that the alliance appears to have found a “new lease of life,” with a broadened agenda that “now even includes critical infrastructure protection and climate security.”  However, there are a number of structural challenges that will need to be addressed for NATO to operate efficiently in the current context and successfully navigate crises as tensions around the globe continue to flare.

Writing for the Carnegie Endowment for International Peace, Gregory Wischer zeroes in on the importance of critical mineral supply chains to sustain the alliance’s (and member states’) defense industrial bases and thus military power.

Wischer outlines minerals have always played an important role in this context.

While supply chain challenges are not new – Wischer points to increased manufacturing of bullets and artillery shells causing supply issues for copper and overall increased defense production triggering shortages of manganese, nickel tin and zinc during World War II– the U.S. (and in the post-WWII context the U.S. and NATO) used to navigate these waters from an overall position of strength with strong domestic or intra-alliance production and significant stockpiling of key materials. Fast-forward to today, stockpiles are depleted, and the U.S. and its allies rely on defense industrial bases with severe vulnerabilities, largely in light of an over-reliance on imports to critical minerals from adversary nations like China, key supplier of graphite, REEs and other battery materials, and Russia, from where much of the world’s aluminum, nickel and titanium are sourced. (see Figure 1 in the piece for a great visual historical perspective)

Writes Wischer:

“Mineral supply chain risks are rising as the adoption of renewable energy technology increases mineral demand and as the rearmament efforts of the U.S. and allied militaries in support of Ukraine use more minerals. Coupled with limited production and stockpiles, the U.S. and other NATO militaries face three serious risks that could lead to mineral shortages: foreign export controls [see ARPN’s coverage on export controls here]; rising military demand amid great power competition, including the possibility of a U.S.-China conflict; and disrupted sea-lanes. The United States and other NATO countries must act now to address these supply chain risks.”

Wischer suggests that to successfully address the challenges ahead, the U.S. and other NATO members should:

-       increase their mineral stockpiles, prioritizing minerals used by their militaries,

-       expand their efforts to increase domestic mining and recycling of minerals,

-       prioritize  friendshoring production for minerals with limited domestic reserves,

-       consider mineral substitution and rationing to alleviate the pressure on the production of certain minerals.

There are other key structural challenges NATO faces at 75 that are worth discussing, but with the U.S. and NATO allies supporting Ukraine and Israel as tensions over the Taiwan Strait continue to flare, the time to take assertive steps to strengthen the supply chains for the metals and minerals underpinning the security of transatlantic alliance is now.

ARPN will be taking a closer look at several key minerals, steps taken to bolster critical mineral resource security particularly for the military and associated challenges in a forthcoming post later this week. 

 

 

Earlier this week, the U.S. Geological Survey (USGS) released its latest iteration of the annual Mineral Commodity Summaries, a much-cited report that every year gives us a data-driven glimpse into our nation’s mineral resource dependencies. ARPN has been reviewing the report on an annual basis. Last year, we noted that our coverage of the report coincided with [...]

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