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New Law Underscores Real-Life Challenges of Untangling Complex Supply Chains

As U.S. policy makers and other stakeholders scramble to secure supply chains to meet rising demand for battery criticals against the backdrop of a pandemic, geopolitical tensions and war, as well as rising resource nationalism in the Southern hemisphere, a newly enacted law threatens to make President Biden’s already ambitious push to require that 50 percent of all vehicles sold be electric by 2030 even more difficult to see through.

The Uyghur Forced Labor Prevention Act signed into law by President Biden on December 23, 2021 establishes “a rebuttable presumption that the importation of any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China, or produced by certain entities, is prohibited by Section 307 of the Tariff Act of 1930 and that such goods, wares, articles, and merchandise are not entitled to entry to the United States.”

In short, this means that companies importing goods from China’s Xinjiang region to must provide “clear and convincing evidence” that no component was produced with slave labor.  According to Cullen Hendrix, a non-resident senior fellow at the Peterson Institute for International Economics, the measure will in all likelihood“amount to an effective ban on imports from Xinjiang and products that have Xinjiang-produced elements in their supply chains,” sending businesses scrambling to find different sources of supply for materials and products.

While a diversification of critical mineral supply chains away from China and other adversaries is long overdue, the enforcement of the new law underscores the real-life practical challenges associated with detangling complex supply chains, after having too many eggs in one basket for too long — particularly as demand for the metals and minerals underpinning the sought-after green energy shift has soared exponentially.

Having underestimated the seriousness of our nation’s critical mineral supply chain challenges for too long, the United States must now play catch up – fast – and harness a  comprehensive “all of-the-above” approach across the entire value chain — from mine to manufacturing.  Fortunately, as the National Mining Association’s Rich Nolan pointed out earlier this year, “our challenge is one of policy, not geology. We have the resources to supply significant domestic production for many of the metals most essential to advanced energy technologies.” 

Now is the time to kick our efforts to leverage them into high gear.

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