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It may be its most well-known use, but Graphite today is at the core of more than just your pencil – it is at the core of 21^st Century consumer technology.  Just ask Elon Musk. The Tesla Motors CEO and futurist recently insinuated that the label “Lithium-Ion battery” may actually be a misnomer for the batteries that power our favorite gadgets and, increasingly, also electric vehicles:

“Our cells should be called Nickel-Graphite, because primarily the cathode is nickel and the anode side is graphite with silicon oxide… [there’s] a little bit of lithium in there, but it’s like the salt on the salad.”

The bottom line – Graphite is one of the most indispensable mineral resources.

Graphite’s rise to stardom prompted Washington Post reporter Peter Whoriskey to write a feature story about the Graphite supply chain and the problems associated with Graphite mining.  According to Whoriskey, most of the Graphite contained in Lithium-Ion batteries used by Samsung, LG, GM, Toyota and other consumer companies can ultimately traced back to China, the world’s biggest Graphite producer. Writes Whoriskey:

“The companies making those products promote the bright futuristic possibilities of the “clean” technology. But virtually all such batteries use graphite, and its cheap production in China, often under lax environmental controls, produces old-fashioned industrial pollution.”

However, the fact that much of the world’s production of tech metals is concentrated in China has implications beyond the environment.  With much of China’s mining industry consolidated in state-owned industries, resource policy is increasingly becoming an instrument of geopolitical warfare.  As critical minerals expert David Abraham has pointed out elsewhere in the context of China’s ever-tightening grip on rare metals: 

 “If a goal of Beijing is to bolster its green companies by providing cheap, accessible materials to downstream manufacturing, owning a resource company provides a great way to do that. Could Beijing use its ownership stake to decide who can buy which resources and at what price? Yes.”

From a U.S. perspective, in the case of natural Graphite, this is indeed worrisome, as the United States, according to USGS, currently is 100% import-dependent for its domestic manufacturing needs, with the last U.S. Graphite producer ceasing production in 1991.

Once again, our deep Graphite dependency problem is largely home-grown.

While domestic natural Graphite reserves are considered small by international comparison, there are natural Graphite deposits under development in the U.S.. New technologies to turn natural Graphite into high-grade spherical Graphite, which is used by Electric Vehicle (EV) battery technology, are also readily available.

With stringent environmental standards in place and cleaner, new techniques that minimize the impact on the communities in which the deposit is developed at our disposal, harnessing our domestic Graphite resources would allow us significantly lessen our dependence on foreign supplies and also reduce China’s geopolitical leverage in the 21^st Century resource wars.

In an effort to secure ongoing access to Rare Earths (REEs) for its domestic industries, Japan, which in geological terms does not have much of a resource profile, has entered into a series of cooperative agreements with Kazakhstan, a nation quickly ascending into the league of top REE suppliers in the world.

The latest one of these deals, struck by the Nipponese Oil, Gas and Metals National Corporation’s (JOGMEC) in late October with local Kazakh authorities to jointly explore for rare earths in the Karaganda and Kostanay regions, solidifies Japan’s foothold in the resource-rich Central Asian nation.

Policy makers in the U.S. – which is no stranger to import dependencies for critical mineral resources – should take note.  Commodity prices may have cooled in recent years, and manufacturers are increasingly looking to substitution and recycling, but these are no silver bullets to alleviate supply shortages, particularly as demand for tech minerals will likely continue to soar.

Meanwhile, the global resource wars are continuing to heat up before our very own eyes.   Japan may have learned its lesson the hard way, when China cut off its REE exports to Japan in 2010. It is now approaching its mineral supply issues strategically, with a long-term vision in mind, and is not only looking to Kazakhstan, but has also signed a partnership agreement with India to explore stakes in deep-sea mining.

Whether or not we may one day see OPEC-style coordination between China, Russia and Kazakhstan on global REE supply, as some fear, the United States, would be well-advised to join Japan in formulating a long-term critical mineral resource strategy – the stakes are too high, and the nature of mining and challenges associated with it are just not conducive to improvising policies on the fly.

An article in the latest issue of the Journal of Turkish Weekly indicates that when it comes to metals and minerals exports, Iran is becoming a force to be reckoned with. According to the piece, Iran has acquired the technology necessary to produce Antimony ingots – an indispensible component for many sectors, including the electronics, [...]

The results are in, and unfortunately – though not surprisingly – the hot-off-the-press “2013 Ranking of Countries for Mining Investment: Where Not to Invest,” once again gives the United States the dubious honor of being tied for last place with Papua New Guinea when it comes to permitting delays. Among various indicators, the instructive study [...]

The global race for resources has countries look for new ways to meet their mineral resource needs. We’re now used to seeing headlines about mineral riches in the Arctic, beneath the ocean seabed, and even asteroid mining. The latest region in the cross-hairs is Antarctica, with – you guessed it – China aggressively pursuing its [...]

Two years after China’s Rare Earths embargo on Japan and subsequent supply shortages put the until-then largely obscure group of critical minerals on the map, tensions between the two countries are reaching new heights, with the specter of war looming. At the heart of the current tensions lies a territorial “tug-of-war” over five tiny – [...]

Take a few minutes to read Congressman Mike Coffman’s piece today in the Washington Times. The Colorado Congressman, co-chair of the House Rare Earths Caucus and lead sponsor of the RESTART rare earths bill, notes that the popular Call of Duty video game’s newest version – Black Ops II – incorporates a geo-political tug of [...]

Beginning today, official Washington hosts a visit from China’s Vice-President Xi Jinping, widely seen as the successor to current President Hu Jintao, who steps down later this year as head of China’s Communist Party, and cedes the presidency in 2013. The visit highlights a number of issues that make the current U.S-China relationship contentious. For [...]

Arguing that China’s near-total rare earths monopoly is only the tip of the iceberg and an indicator of what’s to come, Michael A. Barry’s most recent edition of Morning Notes (a free subscription bulletin from DiscoveryInvesting), discusses “The Coming Resource Wars.” Barry quotes our very own Daniel McGroarty, who has said: But the Rare Earths [...]

In Rare Earth Woes Could Mean Trouble for U.S. Stealth Fleet, Christine Parthemore takes a look behind the headlines at the materials that give the U.S. Military its high-tech edge: “Ever since Osama bin Laden’s demise, aviation sleuths have been trying to figure out what was the mystery copter that Delivered Seal Team Six.  I’ve [...]