critical minerals list

Earlier this week, ARPN’s Daniel McGroarty shared his views on the coming tech metal age and its policy implications at In the Zone 2019 – Critical Materials: Securing Indo-Pacific Technology Futures – a conference hosted in cooperation with the University of Western Australia to look at critical mineral resource issues through the prism of the Indo-Pacific region.

The following is a transcript of his speech, as delivered.

Are we Ready for the Tech Metals Age? Thoughts on Critical Minerals, Public Policy and the Private Sector

By Daniel McGroarty

Thank you, Gordon [Flake, Chief Executive Officer, Perth USAsia Centre, University of Western Australia], for this opportunity to be In the Zone with so many of the key thought-leaders and decision-makers in the critical materials space.

As I start, a quick comment on where I’m coming from: I’ve served in the U.S. Government, at the White House and the Pentagon, and I now serve on the advisory boards of companies developing U.S. sources of a dozen of the metals and minerals on the US Critical List – one of those being Rio Tinto/U.S.

…so the points I want to share today come from my efforts to bring a public policy perspective / to private sector projects.

Think of it this way: Is there a way to align a private project to key public policy goals – in a way that advanced the interests of both?

If it sounds simple, as many of you know — it’s anything but.

Try as it might, the private sector has a very hard time meshing to the pace of government policymaking – I’m being diplomatic here — and policymakers have nothing in their mandate that requires them to appreciate — to really feel — the pressures of private sector competition.

Same planet, different worlds.

But as we’re seeing here today, the Critical Minerals Challenge is a huge challenge – and if we are collectively going to meet it, private sector leaders and public policy makers are going to have to perform a thought-experiment – a shift in mindset — to see the challenge from both sides, to find the common ground to move us forward.

Critical Minerals is a huge challenge. It’s so often said – we don’t step back to see the context.

Much of human progress was built with – literally – a handful of metals and minerals. It goes back to the early markers of human progress:

We had the Bronze Age – copper and tin – and the Iron Age to follow.

Geologically, the rest of the Periodic Table was ready and waiting, but we – as human-makers – we had no use for it.

It’s different now.

Take the U.S. Critical Minerals List: 35 minerals and metals – but really, as elements, it’s more than that. The rare earths count as 2 – Scandium gets its own mention – not 17, and the PGMs count as one, not 6.

Add them all in — and the U.S. List grows to 55.

But wait: there’s more.

If we overlay on top the U.S. List the Australian and Japanese and EU critical lists, and add the unique elements, we get 10 more:

A total of 65 in all.

We’re sneaking up on two-thirds of the naturally-occurringelements on the Periodic Table.

>>> You look at what’s not on the Lists – all I can say is that Hydrogen and Oxygen must feel a little left out. <<<

Welcome to the Tech Metals Age – where we need a lot of different elements, and a lot of each of them.

I said the challenge was huge – that’s one part of it. The sheer number of metals and minerals.

With that in mind, think of the average U.S. Senator or Congressperson navigating this issue: You’re asking them – along with all their other issues – to know how to incentivize, essentially, domestic production of bulk of the Periodic Table. //

The second part – is what I call the co-product challenge. Our language has to change here – we used to talk about certain deposits having by-products – we used to talk about “minor metals.”

Those terms just don’t fit anymore.

Example: You have a Rare Earths project in Texas – Round Top, with considerable Australian investment I should add – and it has the full range of rare earths – but also lithium for EV batteries, uranium, beryllium, and gallium – for supercomputing chips.

What’s minor? What’s a by-product? Different application, different answers. And technology – materials science — will drive demand over time.

So: we’ve got to think of co-products – and how we can extract all of the useful metals and minerals from each deposit.

Take copper, for instance, which isn’t even on the U.S. or Australian lists. It’s the gateway to tellurium, rhenium and sometimes cobalt and perhaps even the rare earths. If you need those, then copper too is critical.

Then – the third challenge:

As we’ve heard today, each metal and mineral requires its own supply chain. Scores of them – not only to bring them out of the ground, but to process them into the advanced materials needed for all manner of tech apps.

So in the Rare Earths, certainly, but elsewhere as well — we’re seeing private sector players reaching out to partners — building out their own supply chains. It’s much more challenging than simply developing a mine.

And finally – the fourth challenge: While all that digging is going on – what’s going on above ground?

Geopolitics.

The tech metal age is going to redefine geopolitics. We’ll see the emergence of a new group of countries, tech metal “haves” and “have-nots.” The good news is that Australia and the U.S. are among the “haves” – because being among the “have-nots” is not a happy place to be.

My flight from Washington connected through Qatar. An amazing place – literally, castles in the sand. Built by energy resources. And all since 1940 – the date oil was first discovered there. I did a little Googling to see what the main economic driver was in Qatar before oil.

Pearl diving.

From pearls to oil – and in one generation Qatar was transformed.

Geopolitically, the tech metals will be transformative, too.

Are we ready for the emergence of new regions, new countries that will be defined by their tech metals status?

Should someone buy Greenland – should Greenland be For Sale? Or will Greenland become the tech metal Qatar of our 21st Century?

Do our public policies incentivize the private sector to spend the billions in Exploration and Development to find them, mine them, and bring them to market?

Which brings us to public policy. The final challenge I want to treat.

Remember that critical mineral “list of lists?”

It’s one thing to identify the metals and minerals we need. But what if – for some of them — those markets are so small as to be commercially uninteresting?

You can’t order the private sector to pursue and produce them.

At least the U.S. and Australia – and our democratic allies — can’t.

Governments have to incentivize – collaborate to seek creative ways to bring online new production where private companies may see only risk and little reward.

And it’s happening. Rio Tinto is working under a grant from the U.S. defense department to optimize rhenium recovery at its Kennecott copper smelter – and it’s collaborated with the U.S. Department of Energy on new ways to recover critical minerals from waste streams and historic tailings.

But the effort on the part of the U.S. Government has been episodic – not systematic, certainly not strategic.

I think now, though, that’s changing – we are entering a period of action. After a decade of inaction – we’re seeing a policy shift.

I can’t overstate the impact on the U.S. scene of the Presidential Defense Production Act Title III determinationin regard to encouraging rare earth production – not just mining but all along the supply chain, from mining to magnets.

It was wrongly reported by some of the early news storiesas a Presidential Executive Order – an exercise of American government authority that can be enacted by one president and undone by the next, lacking the permanence of a duly passed law. But Title III is law – it dates back to the Korean War, and confers on the president the authority to determine strategic need for a given material.

What are the tools of Title III? It gives the Secretary of Defense power to make direct investments – to support development of the material in question with loan guarantees – purchases for the Defense Stockpile, and even “commitments to purchase” – what we’d call offtakes.

In other words, Title III brings a warfighter focus – and a warfighter urgency. A broad “get it done” authority, after so many years of simply studying critical materials issues.

And I would hope that the dozen more metals and minerals for which the U.S. is 100% import dependent would be the focus of expanded Title III action.

And then there are the collaborative efforts between the U.S., Australia and Canada – under the umbrella of the NTIB, the National Technology Industrial Base – collaboration that is happening in real-time. Our three nations are remarkably resource-rich – and amount to nearly 30% of total global GDP. Our governments may be starting late, but no one should underestimate our abilities, once mobilized.

To the extent this scramble for tech metals takes on the form of a Tech War – metaphorically, one hopes — we need to recognize, borrowing from the language of military doctrine, that the Tech War is an Asymmetric War.

Rising powers like China are command economies. Even Russia, to the extent it plays a part in the Tech War, is what its leader likes to call a “managed democracy.” Delightful phrase.

The State backs enterprises, directly, or indirectly. Strategic goals around specific minerals can warrant a long-game in which the State covers losses on the way to driving out competitors and gaining market dominance.

In the nations based on free-markets, there’s no loss-making long game. There’s no “US 2025.” There’s only bankruptcy. No government props you up – far from it, just look at the tiny amounts of government aid on offer, certainly in the U.S.

So you might say — sounds like we’re destined to lose.

Not at all. State-controlled economies have their own downsides. They pick one path, and close the door on all the others.

Choosing control, they sacrifice creativity.

Over in the free market, we’re undisciplined, undirected, unpredictable – and because of that, we’re unconstrained and energetic and innovative.

…Just the attributes we need to prevail in an asymmetrical conflict. //

Which brings me to my final thought today.

…And Gordon: it goes straight to your comment about the “the ideological purity of the market”…

It’s a little reassurance from the author of an old book called The Wealth of Nations.

Even the father of the free market, Adam Smith – foresaw back in 1776 the challenge we face in our Tech Metals Age.

As much as he believed in free trade – he had what we would call a national security exception:

In the midst of his powerful defense of free markets, he said, when it comes to gunpowder and sailcloth – that is, the means of protecting British interests around the globe and projecting British power when needed….

…It’s best not to depend on others for your source of supply.

The need for gunpowder and sailcloth haven’t gone away:

Our gunpowder is the hypersonic missile—and our sailcloth is a wind turbine

…they’re just updated for the 21st Century.

If we get this right – and we must, for the sake of our economies and our security, we must get this right – creative collaboration between the U.S. and Australia will be a big part of it.

And I’m pleased to be a small part of that here today.

###

Primarily known for its energy applications, (and thus falling under the purview of the Department of Energy) uranium may have not been much of a focal point for ARPN in the past.  

However, the policy issues surrounding uranium – many of which have a familiar ring to followers of ARPN – increasingly warrant a closer look.  Last year, the Department of Interior included uranium in its list of 35 metals and minerals deemed critical from a U.S. national security and economic perspective – for good reason.

As Congressmen Paul Gosar (R-Ariz.), Rob Bishop (R -Utah, Mark Meadows, R-N.C.) outlined in an op-ed for Fox News earlier this month, “U.S. utilities rely on foreign sources for 98 percent of the uranium they use to fuel the nuclear power plants that provide 20 percent of our country’s electricity” – a fact that not only poses a significant national security risk, but harms domestic industry.

They argued: 

“Uranium [fuels] our nuclear Navy. But instead of buying from the domestic uranium mining companies that once thrived in the West, utilities are enriching adversarial countries like Russia and China.

Following their carefully orchestrated geopolitical plan, Russia and its allies flood the global market with uranium from state-owned companies, making it impossible for America and other free-market economies to compete.

Meanwhile, quietly and gradually, China has been buying up previously free-market uranium mines to control global supply.

Rather than keep good jobs here at home and depend on our own resources to power the electric grid, the U.S. jeopardizes national security by relying on nations that have demonstrated their will to undermine our defense infrastructure and our economy, and to do us harm.

As a result, America’s uranium mining industry is dying. U.S. uranium mining companies produced 721,000 pounds of uranium last year – only enough to fuel one nuclear reactor.”

The Congressmen, writing on behalf of the bipartisan Western Congressional Caucus, called on U.S. President Trump heed a recommendation to impose an import “quota that reserves a relatively small 25 percent of the U.S. market for the domestic uranium mining industry.”

The recommendation was initially put forth by two domestic uranium mining companies that in January 2018 had requested a Commerce Department investigation under Section 232 of the Trade Expansion Act, with a presidential decision on the findings of the DoC investigation expected by July 15 of this year. 

Taking many by surprise, however, while agreeing with the Commerce Department that the United States’ reliance on foreign uranium “raise significant concerns,” President Trump last week announced that he will not impose quotas on uranium imports. This comes a  somewhat unusual move for a President who has invoked national security concerns when calling for restricting foreign metal imports elsewhere.

The President instead announced the formation of a “U.S. Nuclear Fuel Working Group” to conduct a “fuller analysis of national security considerations with respect to the entire nuclear fuel supply chain.”

In his memorandum announcing his decision on July 12, the President states:

“I agree with the Secretary that the United States uranium industry faces significant challenges in producing uranium domestically and that this is an issue of national security.  The United States requires domestically produced uranium to satisfy Department of Defense (DOD) requirements for maintaining effective military capabilities — including nuclear fuel for the United States Navy’s fleet of nuclear-powered aircraft carriers and nuclear-powered submarines, source material for nuclear weapons, and other functions.  Domestic mining, milling, and conversion of uranium, however, while significant, are only a part of the nuclear supply chain necessary for national security, including DOD needs.”

Over the next 90 days, the The Working Group “shall examine the current state of domestic nuclear fuel production to reinvigorate the entire nuclear fuel supply chain, consistent with United States national security and nonproliferation goals.”

Against the backdrop of the current U.S.-Chinese tensions over Rare Earth Elements and the “global battery arms race,” Morgan D. Bazilian, Professor of Public Policy and Executive Director of the Payne Institute at the Colorado School of Mines, argues that the United States must “widen its consideration of critical materials past a limited understanding of security in [...]

On Tuesday, June 4, the U.S. Department of Commerce released the “interagency report that was submitted to the President pursuant to Executive Order 13817, A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals.”  The report, which, according to the agency’s official announcement, “contains a government-wide action plan, including recommendations to advance research and development [...]

Last week, the Australian Federal Government released its “Critical Minerals Strategy 2019” – a blueprint aimed at positioning “Australia as a leading global supplier of the minerals that will underpin the industries of the future” – which according to the Department of Industry, Innovation and Sciences’s press release, includes the agritech, aerospace, defence, renewable energy and telecommunications industries. [...]

The partial shutdown of the federal government at the beginning of this year had delayed its release, but last week, USGS published its 2019 Mineral Commodity Summaries. Followers of ARPN will know that we await the publication’s release with somewhat bated breath every year, as especially “Page 6” – the chart depicting U.S. Net Import [...]

In the twelfth and final installment of his “Critical Minerals Alaska” series for North of 60 Mining News, Shane Lasley takes a look at Germanium – a lesser known yet vital ingredient in fiber optic cables and high-efficiency solar cells.  Followers of ARPN may remember Germanium as one of the key co-products for the gateway [...]

While specialty and tech metals like the Rare Earths and Lithium continue to dominate the news cycles, there is a mainstay metal that has – for good reason – been making headlines as well: Aluminum.  Bloomberg recently even argued that “Aluminum Is the Market to Watch Closely in 2019.”  Included in the 2018 list of 35 [...]

While we’re still waiting for policy makers and other stakeholders to take further action, in 2018 an important step was taken to set the stage for mineral resource policy reform with the release of the Department of Interior’s List of 35 Minerals Deemed Critical to U.S. National Security and the Economy. Throughout the drafting stage [...]

In case you hadn’t noticed amidst holiday preparations, travel arrangements and the usual chaos of everyday life – 2019 is just around the corner, and with that, the time to reflect on the past twelve months has arrived. So here is ARPN’s recap of 2018: Where we began. Unlike previous years, we started 2018 with [...]