National Security

In a  column for Newsweek, U.S. Senator Jim Risch (R-ID) makes an urgent appeal to the U.S. public and policy stakeholders to embrace domestic mining and processing of critical minerals “before it’s too late.”

Arguing that while it is “possible to produce them here” he says that “onerous federal rules make it extremely difficult,”adding that “[w]e cannot sit idly by and hope our U.S. mining industry can cut through the red tape currently strangling it.”

Sen. Risch points to the long-standing and, against the backdrop of surging demand, increasingly dangerous practice of over-relying on foreign – and especially Chinese supplies of critical minerals, which has given our adversaries significant leverage over us. The senator points to China’s penchant for weaponizing the mineral supply chain, with recent examples being the restriction of gallium and germanium exports — key components of semiconductor production and defense technology, arguing that “[i]t is only a matter of time before China decides to punish the U.S. and ur allies again by holding minerals hostage. That will even apply to minerals that are mined in the U.S. but processed in China, like copper.”

Meanwhile, one of the key obstacles to increased domestic mining and processing according to Sen. Risch, is the Biden administration, under whose guise a “working group on mining regulations released recommendations that, if implemented would transition mineral rights to a leasing program and add a dirt tax to every shovelful of ore, regardless of the value of the mineral,” which, according to the senator “would add years to the already lengthy permitting process and stifle investment in mining projects.”

Followers of ARPN are familiar with the average permitting timeframe for mining projects of roughly seven to ten years.  Litigation from NIMBY environmental groups — Sen. Risch points to the Rosemont decision in the Ninth Circuit Court which “changed the interpretation of long-established mining law” and “hampers the industry while making mining significantly less efficient and cost-effective”– can further add years to the already onerous process.

With even U.S. car companies requesting that the Biden administration speed up the mine permitting process, a consensus is growing that reform should be a national priority.

Sen. Risch points to the U.S. Department of Defense being an outlier in the administration and having recognized the “danger we face, which is why it is awarding grants to critical mining projects.”  The senator highlights the stibnite gold project in the central region of his home state of Idaho, where Perpetua Resources is working to be the sole domestic source of antimony, a key component of military technology.

But of course, as followers of ARPN know, there are more projects receiving DoD support with even more expected to be announced on a rolling basis.

In ARPN’s latest post on the blog, we pointed a series of Presidential Determinations involving specific critical minerals which laid the foundation for this type of funding under Defense Production Act Title III authority.

Current projects, recently highlighted by Oregon Group’s Anthony Milewski, include:

• Graphite: a $37.5 million agreement between the DoD and Graphite One (Alaska) to fast-track a domestic graphite mine;
• Antimony (as highlighted by Sen. Risch): two awards — $24.8 million and $15.5 million — by the DoD to Perpetua Resources to secure a domestic source of antimony [an additional conditional award of up to $34.6 million under the existing Technology Investment Agreement was announced earlier last month];
• Lithium: a $90million agreement to secure lithium production between the DoD and Abermarle;
• Nickel: a US $20.6 million agreement between the DoD and Talon Nickel to increase domestic nickel production.

Closes Sen. Risch:

“Every aspect of our society and security relies on processed minerals and would therefore benefit from expedited permitting and easier access. We cannot afford to wait until China reduces or even cuts off our access to critical minerals.

It is time for America to see the power of the U.S. mining industry, invest in it, and secure our supply chains. The technology we depend on every day is only possible because of mining. To ensure not just our economic success but our national security, Congress must revamp our mining laws and substantially reduce irrelevant regulations.”

The stakes are getting higher by the day, and, as ARPN’s Daniel McGroarty pointed out years ago, “we can’t admire the problem any longer” because “we don’t have the luxury of time.” However, we are dealing with Washington, D.C., and the question is whether Congressional stakeholders will finally be able to put policy over politics in an election year.

With pressures rising on critical mineral supply chains as nations rush to flesh out environmental initiatives before the COP27 climate change summit kicks off in Sharm El Sheikh next month, the stakes for the United States and its allies to “decouple” from adversary nations — in the new U.S. National Security Strategy, read:  China — may have gotten even higher with China’s Communist Party (CCP) confirming President Xi Jinping for another term in office this past Sunday.

In what effectively amounted to a “coronation,” as the Wall Street Journal editorial board phrased it, the CCP’s move has effectively “confirm[ed] China’s combination of aggressive nationalism and Communist ideology that is the single biggest threat to world freedom.” 

Mr. Xi’s confirmation to another term was hardly a surprise, but in his landmark speech addressing the CCP Congress, he emphasized the the need to increase China’s self-sufficiency in technology and supply chains, and reaffirmed China’s commitment to attaining control over Taiwan — a key point of contention in the country’s relations with the United States, which have already starkly deteriorated in recent years.  According to the Wall Street Journal, the “coronation” “all but guarantees an era of confrontation between China and the U.S.”

Aware that “China has big footed a lot of the technology and supply chains that could end up making us vulnerable if we don’t develop our own supply chains,” as U.S. Secretary of Energy Jennifer Granholm phrased it earlier this summer, the United States and its partners have stepped up efforts to decouple from China.

These may become all the more pressing in light of current fears, as Damon Kitney reports for The Australian, that China may seek to retaliate after the U.S. Department of Commerce announced sweeping limitations to semiconductor and chip-making equipment sales to Chinese customers this fall.

Speaking to a private forum in Melbourne, earlier this month, Australia’s former Ambassador to the U.S. and federal Treasurer Joe Hockey told attendees:

“In terms of critical minerals, my concern is – and there has started to be a few reports in the US suggesting this – is that after the midterm elections, and with a re-empowered (Chinese President) Xi Jinping, as of next year China will start to turn down the tap on the supply of critical minerals to the US and other places.”

Followers of ARPN have long known that China is no stranger to playing politics with its near-total rare earths supply monopoly, and just last year, we saw the country threatening to limit rare earth shipments to U.S. defense contractors over U.S. arms sales to Taiwan.

Thankfully, U.S. domestic efforts to bolster supply chains can be complemented with leveraging close cooperation with allied nations including Canada and Australia.

Australia is ready to step up its rare earths game and challenge China in this segment.  As Phil Mercer writes for BBC News, Sydney, “Australia, a superpower exporter of iron ore and coal with rich mining traditions believes it is well-placed to join the race to exploit minerals that provide critical parts for electric vehicles and wind turbines.” He cites John Coyne of the Australian Strategic Policy Institute, who — while warning that China will not easily surrender its dominance of the sector — says:

“Australia has the world’s sixth-largest reserves of rare earth minerals. However, they remain largely untapped with only two mines producing them.  There is significant potential in the establishment of multi-ore mineral-processing hubs in Australia. After all, there is no point in creating supply chain resilience for [rare earth] ores if miners must still send them to China for processing.”

Mercer points to the U.S. Defense Department’s deal with Australian miner Lynas Rare Earths, which has been contracted to construct a REE processing facility in the U.S..

In the same vein,  the Canadian government has inked an agreement with Rio Tinto to jointly invest $737 million to modernize the company’s Sorel-Tracy, Quebec metals processing plant, with  Rio Tinto’ chief executive Jakob Stausholm warning of the “excesses of globalization” in critical mineral supply chains. The move is said to strengthen “North America’s first production capacity for titanium metal, a lightweight but strong material important to aerospace and defense groups such as Boeing and Lockheed Martin.” 

Stateside, the U.S. Department of Energy has just announced the first round of funding under the 2021 bipartisan infrastructure act for projects aimed at “supercharging” U.S. manufacturing of batteries for electric vehicles and electric grid — another important step in the decoupling from adversaries like China.

With a newly-emboldened Mr. Xi reportedly seeing the possibility of a showdown with the West as “increasingly likely”in the context of his goal to “restore China to what he believes is its rightful place as a global player and a peer of the U.S,” as the Wall Street Journal writes, these efforts could not be more urgent.

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