critical minerals

In yet another indication that increasing demand and supply chain challenges in the wake of the coronavirus pandemic and war in Ukraine have raised the geopolitical stakes, U.S. Secretary of State Anthony Blinken explicitly referenced critical minerals and the United over-reliance on China both in terms of mining and processing in a speech outlining U.S. policy principles towards Beijing at George Washington University at the end of May.

Calling China “the most serious long-term challenge to the international order,” Blinken said: “China is the only country with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military and technological power to do it,” adding that “Beijing’s vision would move us away from the universal values that have sustained so much of the world’s progress over the past 75 years.” 

While stressing that the United States is “not looking for conflict or a new Cold War,” Blinken summed up the Biden Administration’s strategy as “invest, align, compete,” and said:

 “We will invest in the foundations of our strength here at home – our competitiveness, our innovation, our democracy. 

We will align our efforts with our network of allies and partners, acting with common purpose and in common cause.

And harnessing these two key assets, we’ll compete with China to defend our interests and build our vision for the future.” 

One key area of competition, as followers of ARPN well know, lies in China’s supply chain advantage, which it has assumed via a long-term strategy and “economic manipulations,” in key sectors of the economy like the steel, solar and electric vehicle battery segments.

Stressing that these are “key sectors of the 21st century economy that we cannot allow to become completely dependent on China,” Blinken said:

“Economic manipulations like these have cost American workers millions of jobs.  And they’ve harmed the workers and firms of countries around the world.  We will push back on market-distorting policies and practices, like subsidies and market access barriers, which China’s government has used for years to gain competitive advantage.  

We’ll boost supply chain security and resilience by reshoring production or sourcing materials from other countries in sensitive sectors like pharmaceuticals and critical minerals, so that we’re not dependent on any one supplier.”

Blinken’s statement and direct reference of our nation’s critical mineral woes are encouraging, and there are indications that the Administration is willing to work with Congress to take steps towards achieving greater critical mineral resource independence.

But ultimately, we know that this is not a sprint, it’s a marathon.

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.

However, in the long run, and with the stakes as high as they are today, a comprehensive “all-of-the-above” approach to mineral resource security, from mine to manufacturing and across all segments of the value chain, is the only way to, in Blinken’s words, “bet on ourselves and win the competition for the future.”

Your mind may not immediately jump to semiconductors when you think about national security, but “a steady source of uninterrupted, trusted chips is necessary for the security of the nation – supporting the readiness of the U.S. military and protecting critical infrastructure like the electric grid,” writes Zachary A. Collier, Ph.D., an assistant professor of management at Radford University and a visiting scholar at the Center for Hardware and Embedded Systems Security and Trust (CHEST) in a new commentary for RealClearPolitics.

Pointing out that “[t]hese tiny chips are the ‘brains’ enabling all the computational capabilities and data storage that we take for granted today,” and are powering “virtually every sector of the economy,” Collier argues that the geopolitics of the chip manufacturing supply chain “leaves the U.S. in a precarious position, dependent upon foreign sources of supply such as South Korea and Taiwan,” and provides “compelling reasons to consider strengthening the supply of semiconductor production at home.”

Indeed, as followers of ARPN well-know, and as the U.S. Commerce Department pointed out last year, there are many access points for supply chain vulnerabilities along the way because the typical semiconductor production process spans a multitude of countries and products, crossing international borders up to 70 times, which is why the Biden Administration dedicated an entire chapter to the supply chains of semiconductors in its 100 Day Supply Chain Report.

Recent news of tech firms ripping apart new washing machines to harvest their computer parts in a bid to beat the global microchip shortage underscore the urgency of the situation, and Collier rightly argues that “onshoring semiconductor fabrication capabilities and providing market incentives” in this field could go far in “strengthening national security and promoting economic prosperity.”

However, the issue is much bigger than semiconductor fabrication, because, as ARPN has long pointed out, the term “supply chain” begins with “supply.”  The supply of the “secret sauce” for semiconductors is where the issue starts.

As ARPN’s Daniel McGroarty outlined for The Economic Standard in 2020 for the next-gen 5-nanometer (5 nm) semiconductor chips:

“What gives 5nm its secret sauce?  Like gastronomes blending obscure spices, 5nm’s designers looking to push the limits of Moore’s Law have turned to a broader swath of the Periodic Table of Elements to expand their computing palate.  Starting with the familiar silicon substrate ‘wafer,’ 5nm layers in exotic elements like silicon germanium for its super-lattice, adding dielectric hafnium-dioxide and gallium arsenide laced with indium – with a side-look at gallium antimonide as a potential substitute.

 And that’s where things get difficult, at least if we’re rooting for the U.S. to become the world’s epicenter of 5-nanometer chip production:  The U.S. produces precisely zero of three of these elements — indium and gallium and arsenic – leaving us 100% import-dependent, while we’re 84% import-dependent for antimony, and more than 50% for germanium.  Data for hafnium, among the rarest of the elements, is notoriously harder to come by, with production guesstimated at a scant 70 tons per year.”

As McGroarty points out, China is the lead global supplier for all six materials, but “it doesn’t have to be that way:  The U.S. has ‘known resources’ of all six, and already includes them on the U.S. Government Critical Minerals List.”

That is not to say that focusing on expanding manufacturing capabilities for semiconductors is not important — it absolutely is — but any effort to truly secure their supply chain must begin at the beginning: with the responsible sourcing of the metals and minerals underpinning this crucial 21^st Century technology.

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