It’s that time of the year again. We’re gearing up to celebrate the men and women who have fought for, and continue to safeguard our freedoms. It may not feel like it when the cost for the average July 4th cookout has drastically increased, but we have much to be thankful for, particularly at a time when geopolitical tensions are mounting and the impact of Russia’s war on Ukraine is being felt around the globe.
From a critical mineral resource perspective, we at ARPN have always used the occasion of Independence Day to remind ourselves that “while we cherish the freedom we are blessed with in so many ways, we must not become complacent, as there are areas where we’re increasingly becoming less independent” — with our reliance on foreign mineral resources being a case in point.
The good news is that on the back of the coronavirus pandemic, Russia’s war on Ukraine and growing resource nationalism in the Southern hemisphere, stakeholders have begun to realize the extent of our mineral resource supply chain vulnerabilities, which significantly increased over the course of the past 65 years.
A case in point: the U.S. Congress is taking aim strengthening critical mineral supply chains via the National Defense Authorization Act (NDAA).
A provision in the Senate’s annual defense authorization bill, advanced by the Armed Services Committee earlier this month, contains a provision which would authorize $1 billion in funding for the National Defense Stockpile Transaction Fund for “the acquisition of materials determined to be strategic and critical materials required to meet the defense, industrial, and essential civilian needs of the United States.”
The fund includes many of the metals and minerals considered essential to national defense supply chains, including rare earth elements, titanium, tungsten, cobalt and antimony, a metal we recently discussed as it has its own provisions incorporated in this year’s senate and house bills, which will need to be reconciled and voted on later this year.
According to Defense News, the S1 billion senate-sought allocation would cover not only the $253.5 million requested by the Department of Defense (DoD)for FY 2023, but would also allow for the backfilling of multiple funding requests by the Defense Logistics Agency (DLA), a combat-support agency of the DoD, which manages the fund.
At its peak in 1952, the fund was valued at $42 billion in today’s dollars, but has subsequently been depleted to dip to its current level of $888 million, with lawmakers fearing the National Defense Stockpile becoming insolvent by FY2025 absent congressional action.
With the end of the Cold War in 1989, Congress authorized the sale of excess stockpile materials with proceeds transferred to DoD or other federal programs. However, as Maya Clark points out in a Heritage Foundation report from earlier this year, “the threat environment today is more similar to the Cold War than to the 1990s.”
Clark cites the National Defense Strategy Commission which stated in a 2018 report that “[t]he United States confronts more numerous – and more severe – threats than at any time in decades.” Fast-forward to Russia’s invasion of Ukraine in 2022 and other geopolitical challenges we’ve discussed over the past few months, and the threat environment is even more severe than it was a mere four years ago.
The push to boost the United States’ National Defense Stockpile Transaction Fund ties into the overall realization that our nation’s critical mineral woes can no longer be ignored. Additional promising initiatives tying into an overall comprehensive “all-of-the-above” approach are currently being pursued by members of Congress as well as the Administration, and range from increasing cooperation with allies to secure critical mineral resources over leveraging “closed-loop” solutions to boosting domestic production and processing.
However, as we have previously argued:
“Those familiar with the inner-workings of Washington, D.C. know all too well that particularly in an election year policy efforts can quickly lose steam or fizzle over attempts to placate certain constituencies. Against all affirmations to strengthen domestic supply chains, the not-in-my-backyard (NIMBY) sentiment is still strong.”
As followers of ARPN well know, the stakes are too high to let the momentum for comprehensive reform fizzle.
At the beginning of this year, we posited the question of whether 2022 could be the year that strengthening tech metal supply chains can move from rhetoric to reality. As we mark Independence Day 2022, with efforts galvanized by heightened national and economic security concerns, it certainly appears that we are getting closer to that goal.
