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Another Look at Geopolitical Pressures on Mineral Resource Policy: China’s and Russia’s “No Limits” Partnership Spells More Trouble

Earlier this month, during a meeting in Beijing hours before the kickoff of the Winter Olympics and against the backdrop of Russia amassing troops at its border with Ukraine, Russian President Vladimir Putin and China’s Xi Jinping issued a joint statement calling out what they see as “interference in the internal affairs” of other states by “some forces representing a minority on the world stage” which “continue to advocate unilateral approaches to resolving international problems and resort to military policy.”

Using this what Ken Moritsugu writing for Military.com called “thinly veiled reference to the U.S. and its allies,” both leaders declared that relations between China and Russia “are developing in a progressive way with a spirit of friendship and strategic partnership,”  and “have indeed become unprecedented,” setting “an example of dignified relations that support mutual development,” as Mr. Putin phrased it.

According to the official Chinese Xinhua News Agency, Mr. Xi was quoted as saying that China and Russia are committed to “deepening back-to-back strategic cooperation,” representing a “strategic decision that has far reaching influence on China, Russia and the world” as the two nations confronted what Mr. Xi called “regional security threats” and “international strategic stability.”

While ties between the two countries are not new and Russia has long been a key supplier of oil, gas and coal for China, this very public declaration of a strategic deepening of relations between Moscow and Beijing should give pause to U.S. stakeholders, particularly from a critical minerals perspective.

Only a few days ago, the USGS released its latest Mineral Commodity Summaries report, once more underscoring U.S. overreliance on foreign, and especially Chinese critical minerals.   As we pointed out,

“ (…) against all pledges in recent years for the United States to reduce import reliance on supplies from China, the 2022 Mineral Commodity Summaries lists China 25 times as one of the major import sources of metals and minerals for which our net import reliance is 50% or greater, which is up by one.

Of course, the sourcing of critical minerals is only one segment of the supply chain, and, as a recent look at the complete clean energy supply chain by Visual Capitalist has revealed, China has not only established itself as a global lead supplier of critical minerals. The country has also established dominance in the processing segment.” (Take a look at our latest post on the issue here.)

While Russia may not appear quite as often on USGS’s chart depicting U.S. net import reliance, it is an import source for some key materials underpinning 21st century technology, including Scandium, for which the U.S. is 100% import dependent.

The declaration of the “no limits” partnership between China and Russia comes at a time when geopolitical pressures on mineral resource policy, are on the rise.

[See our latest on the rise of resource nationalism in Central and South America here.]

Against the backdrop of the accelerating global green energy transition, the urgency of securing critical mineral resource supply chains should take center stage for U.S. policy makers, and for some time it seemed like it would.

This summer’s 100 Day Supply Chain report and subsequent policy statements pointed towards the adoption of an “all of the above” approach to mineral resource policy on the part of the Biden Administration.   However, as we previously pointed out,

“since then, the overall approach to date has appeared more geared towards “rely[ing] on ally countries to supply the bulk of the metals needed to build electric vehicles and focus[ing] on processing them domestically into battery parts, [as] part of a strategy designed to placate environmentalists.”

The Administration’s recent cancellation of a promising mining project in Minnesota, seems to all but confirm fears by observers that the Biden-Harris White House would turn to embrace an “activist-driven U.S. anti-mining policy,” as Duggan Flanakin, director of policy research at the Committee for a Constructive Tomorrow, phrased it in a recent piece that does not mince words for RealClearEnergy.

Efforts to “friend-shore” and deepen critical minerals cooperation with allies like Canada and Australia are welcome, but they are not sufficient to meet our massively increased (and ever-growing critical mineral needs).

The challenge only gets more pressing, as we previously outlined“when we realize that “NIMBYism Is Global” – as was the headline for a recent piece by Forbes senior contributor David Blackmon zeroing in on what he called the ‘grand ironies in the whole energy transition narrative: The same class of left-leaning activists who promote wind and solar and electric vehicles (EVs) as the solution also oppose the mining of the lithium and other critical minerals necessary to make them work.’”

A look to our friends in Europe, where the Serbian government canceled Rio Tinto’s $2.4 billion lithium mining project in January over sustained NIMBY protests, suffices to confirm this.

The stakes are too high, and with geopolitical tensions rising, the time to embrace a comprehensive “all of the above” here in the U.S. – from “soup to nuts” or from mine to manufacturing is now.