China

 Semiconductors have become indispensable components for a broad range of electronic devices.

They are not only “the material basis for integrated circuits that are essential to modern day life” – the “‘DNA’ of technology” which has “transformed essentially all segments of the economy,” they are also essential to national security, where they enable the “development and fielding of advanced weapons systems and control toe operation of the nation’s critical infrastructure,” as the Department of Commerce-led chapter in the Biden Administration’s 100 Day Supply Chain Review report outlines.

As such, they sit at the heart of U.S.-Chinese tech competition, and have been dubbed “the next frontier in the tech battle between the U.S. and China” for good reason.

In his State of the Union address last month, U.S. President Joe Biden touted last fall’s passage of the CHIPS and Science Act allocating new funding for research, development and production of semiconductors, which has spurred private investment in the sector. Following on the heels of the new law, the Commerce Department in October applied new export controls to China’s access to advanced computing chips, its ability to develop and maintain super computers and manufacture semiconductors.

As Shubham Dwivedi and Gregory D. Wischer wrote last month for RealClearEnergy, “[t]he subsequent chip measures were clinically targeted at critical chokepoints in the global chip supply chain, and have since been backed by important partners, including Japan and the Netherlands, two key players in the advanced semiconductor ecosystem.” 

But the semiconductor space is just the tip of the proverbial iceberg.

Write Dwivedi and Wischer:

“Semiconductors require various minerals such as silicon, gallium, arsenic, cobalt, and more. Silicon is the most common foundational material for chips today, while gallium arsenide is the second most common. Cobalt is increasingly important for advanced chips too.”

As long as China controls critical mineral supply chains – and a look at the latest USGS Mineral Commodity Summaries leaves no doubt about that, semiconductor supply chains – and as such national security will still be jeopardized.

In their quest to alleviate “undue geopolitical leverage,” U.S. allies like Canada, and more recently Australia, have taken steps to reduce Chinese influence in their critical mineral industries.

A proposal to bolster the Investment Canada Act (ICA) to empower government ministers to block or unwind critical mineral investments if these are considered as a threat to national security, considered a defensive measure against China which has invested $7 billion in Canada’s base metals sector in the past two decades, is expected to be finalized this spring. Prior to the unveiling of the proposal, Canadian officials had ordered Chinese companies to sell their stakes in three Toronto Stock Exchange-listed companies last fall.

Australia’s Treasurer Jim Chalmers recently blocked a request by a Chinese company to boost its investment in Australian REE company Northern Minerals via a prevention order, the first move of this kind since the Treasurer had expressed concerns over the “concentrated nature of the China-dominated critical minerals supply chain” elevated by the Russia-Ukraine war.

When Dwivedi and Wischer published their piece in February, they lamented that the CHIPS and Science Act represents a missed opportunity to strengthen the U.S. domestic critical mineral industry, and urged Congress to take up legislation to not only provide funding for domestic critical mineral projects, but rather also reform the cumbersome permitting system.

Since then, House Republicans have put forth the  Transparency, Accountability, Permitting and Production of (TAPP) American Resources Act, H.R. 1 which seeks to bolster U.S. critical mineral supply chains by reducing red tape, entry barriers and redundancies, and reforming the National Environmental Policy Act (NEPA) to provide industry with clearer timelines and more certainty, and would emulate, to an extent Canada’s and Australia’s approach to curbing Chinese influence by seeking to limit Chinese and other “bad actors’”involvement in the U.S. critical minerals industry.

H.R. 1 will only be an opening salvo in the discourse over securing the supply chains underpinning 21^stCentury technology, but it is becoming increasingly clear that the West has woken up to the seriousness of its over-reliance on Beijing, and the tech arms race is heating up.

In a guest editorial for the Pennsylvania-based Patriot News, Gen. John Adams, a retired U.S. Army brigadier general, president of Guardian Six Consulting and a former deputy U.S. military representative to NATO’s Military Committee, writes that the war in Ukraine, following on the heels of a pandemic that unearthed massive supply chain challenges across many industries, has led to stakeholders finally re-embracing the need for a “robust industrial policy and strategic expansion of the nation’s manufacturing base” after years of neglect.

He writes:

“From our warfighting capabilities to overlooked supply chains—including the personal protective equipment and essential medicines that were in short supply during the height of the pandemic—we’ve come to recognize that an unbalanced focus on efficiency has hollowed out key pieces of American manufacturing.

Countless supply chains are overstretched, and we’ve lost critical slack needed to ramp up production of essential goods and materials when needed. The withering of our industrial base has also created alarming reliance on supply chains controlled by our rivals or—worse yet—our adversaries.

Our extraordinarily dangerous over-reliance on mineral and metal imports—particularly from China—is a case in point.”

While there has been a “groundswell of bipartisan energy to address the minerals problem” – Gen. Adams cites the Bipartisan Infrastructure Law, the Inflation Reduction Act and the recent invocations of the Defense Production Act – some key issues that would help address said over-reliance on China, such as permitting reform, have yet to be addressed.

The just-introduced Transparency, Accountability, Permitting and Production of (TAPP) American Resources Act, H.R. 1 seeks to bolster U.S. critical mineral supply chains by reducing red tape, entry barriers and redundancies, and reforming the National Environmental Policy Act (NEPA) to provide industry with clearer timelines and more certainty, among other things.

As Adams argues, “[a]s the war in Ukraine underscores, productive capacity is the foundation from which we can project strength and deterrence. It’s also how we can insulate our economy from those who seek to use supply chain dominance to exert undue geopolitical leverage.”

Reforming the U.S. permitting process to meet the national security exigencies of the 21st Century Technology Age is just one side of the coin — insuring that potential adversaries, “bad actors” in the parlance of the newly-unveiled TAPP Act don’t have undue access to domestic resources, is the other.

A provision in TAPP would limit Chinese and other “bad actors’” involvement in the U.S. critical minerals industry:

Sec. 20309 would bar “a mining claimant from the right to use, occupy and conduct operations on Federal land if the Secretary of Interior finds that the claimant has a foreign parent company that has a known record of human rights violations and knowingly operated an illegal mine in another country.”

According to the Daily Caller, “it was not immediately clear if the proposed legislation would impact firms like Lithium Americas, which is only owned in part by Chinese mining giant Gangfeng Lithium through subsidiary GFL International,” and which won federal court approval in 2021 to establish a major lithium mining project in Nevada.

With partisan politics dominating the halls on Capitol Hill, H.R. 1 and its provisions will likely face an uphill battle, but the the focus on permitting reform in general, and the inclusion of Sec. 20309 specifically highlights the fact that stakeholders are beginning to realize that harnessing and protecting domestic assets will be key as the global resource wars enter into the next round.

Sometimes hailed the “fuel of the green revolution,” lithium has been the posterchild of the “battery criticals.”  Start with the fact that the leading battery technology underpinning the shift towards net zero carbon emissions is called “lithium-ion.” With its high electrochemical potential and light weight, the commercialization of the lithium-ion battery has transformed and accelerated the renewables shift.  Lithium is [...]

It is essential to the production of iron and steel. It is a key component of certain widely used aluminum alloys.  It’s considered a Critical Mineral by the U.S. Government, “essential to the national defense,” under the terms of the long-standing Defense Production Act.  And, perhaps most importantly today, it is one of the five battery criticals, with the [...]

If we needed any more reminders about the high-stakes nature of our ongoing (see ARPN’s post on the latest USGS Mineral Commodity Summaries report here) deep over-reliance on Chinese-sourced (and/or processed) critical minerals, the shooting down of a Chinese spy balloon in U.S. airspace and the subsequent downing of three other unidentified flying objects over Alaska [...]

Earlier this week, 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. It’s fitting that ARPN reviews the report on Groundhog Day, February 2nd, because just like in the Bill Murray classic movie, in which the clock jumps [...]

We’re sticking with the visuals this week. In our last post, we featured a Visual Capitalist depiction of the lithium supply chain which underscored the urgency for the U.S. to build out our domestic lithium development capabilities. Our second featured graphic comes once more via Visual Capitalist, but this one takes a broader look at the [...]

Two weeks into the new year, it appears that 2023 will continue the fast-paced tempo we got used to in 2022 when it comes to developments on the critical minerals front. With Congressional leadership elections – finally – behind us, policy makers in Washington are gearing up to delve into the issues, and, if the [...]

Earlier this week, the Biden Administration unveiled a road map for reducing the transportation sector’s carbon emissions to net-zero by 2050. Two weeks into the new year, the green energy transition continues to gain steam.  However, as Morgan D. Bazilian of the Colorado School of Mines and Gregory Brew from the Jackson School of Global Affairs at Yale [...]

Happy New Year! For most of us, the first week of January means it’s time to go back to the grind after an extended period of family time, food coma, rest and – hypothetically, at least — reflection.  It also means trying shake the brain fog and mental rust that has settled in order to dive [...]