In his latest piece for Real Clear World, American Resources principal Dan McGroarty reviews the Department of Defense’s just-released National Defense Stockpile Report to Congress against the backdrop of our mineral dependencies. According to McGroarty, the report reflects a re-thinking on the part of the Pentagon, where, less than a year ago, researchers downplayed the United States’ dependence particularly on Rare Earths – a widely-criticized assessment that was labeled “naïve” and “ill-informed” by experts at the time.

Says McGroarty:

(…) after two decades of this post-Cold War experience, a new realization is dawning: Shifts in global metal production have produced a situation in which the U.S. is extraordinarily dependent on foreign-sourced metals and minerals. For the Pentagon, increasingly dependent on the metal-intensive weapons systems of a modern military, this foreign dependence is a dangerous exposure — a weakness that can be exploited in time of conflict.

The new report finds “shortfalls – insufficient supply to meet demand – for approximately a third of these [the 72 metals and minerals studied in the report] materials,” and goes on to recommend nine metals for stockpiling in the near term.

Invoking the challenges associated with China controlling much of the global output of many critical minerals and metals, McGroarty points out that contrary to other mining nations like Australia, the United States’ rigid permitting process would prevent mining operation for any of the 23 key resources identified by the Pentagon in the new report from completing the permitting process – a scary scenario from a national defense perspective.

Concludes McGroarty:

“The question now, in a Washington where the government is funded from month-to-month, and strategic thinkers are savants who see an hour into the next news cycle, is whether the U.S. Government can muster a sustained policy to reverse our metals dependency — before the shortfalls posited in the Pentagon’s hypothetical scenarios become all too real.”

The post New DoD stockpile report finds mineral shortfalls appeared first on American Resources Policy Network.

In his latest column for Real Clear World, American Resources Principal Daniel McGroarty zeros in on China’s dominance of the Rare Earths market. Invoking lopsided production numbers – in spite of international efforts to develop Rare Earths outside of China, China’s supply monopoly still hovers at 95 percent – McGroarty likens China’s REE control to the Organization of Petroleum Exporting Countries’ (OPEC) powerful position in the oil market.

As for the national security implications of the United States’ (unnecessary) reliance on foreign – and in many cases Chinese – mineral imports, McGroarty points out that according to the Congressional Research Service, REEs are “critical to five functional areas that collectively encompass every major war-fighting capability used to project power via ground, sea, air and space,” adding that they are just “one example of several dozen rare metals U.S. weapons designers use to create the “killer apps” of the modern military.”

Says McGroarty:

“In a different century and a different conflict, Lenin quipped that capitalists would sell his Bolsheviks ‘the rope to hang them with.’ Is it our strategy in the 21st Century to expect the world’s rising power to sell us the resources we may confront them with on the battlefields of tomorrow?”

In the post-fiscal cliff world, this would be a good question for U.S. policymakers to ponder.

The post The OPEC of Rare Earths – China’s Resource Stranglehold and its National Security Implications appeared first on American Resources Policy Network.

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 – and uninhabited – islands known to Japan as the Senkaku Islands, and Diaoyu to China. Whoever controls the islands, has possessive rights to 40,000 square kilometers of the East China Sea, including the seabed beneath under the Exclusive Economic Zone (EEZ) rules of the Law of the Sea Treaty.

Our very own Daniel McGroarty has examined what is at stake in the current dispute in his latest piece for Real Clear World. Here are the key points from his column entitled “Tiny Isles at Frontline of Resource Wars:”

• “[The current dispute is] a scenario the world will need to get used to, as the East China Sea is simply one front in the larger Resource Wars that look likely to emerge as the defining global conflict of the 21st Century.”
• China is driven by “resource imperatives” – and may be “the first economic power in the world to see resource access as a strategic necessity” in its efforts “to bring hundreds of millions of Chinese from subsistence-level living onto the bottom rung of the middle class ladder.”
• The increasing recognition of “resource imperatives” by other nations is fueling a two-phased competition:

- Phase 1: Pursuit of seabed deposits of oil and natural gas to extend current petroleum-based energy regime.
- Phase 2: Attempt to secure seabed rights to broad range of metals and minerals.

• Beyond the current East China Sea dispute, the “maritime theater of Resource Wars” is unfolding elsewhere, too, such as over territories in the South China Sea, the Arctic, and even islands as tiny as Hans Island, between Canada and Denmark.

McGroarty’s bottom line:

“[A]s technology brings within our reach more and more of the seabed in the 70 percent of our planet that’s covered by water. It’s there we’ll find the metals and minerals that will literally fuel 21st Century economies (…).
And it’s the battle to determine who controls a scattering of barren rocks that will determine who holds the rights to the seabed, and what lies beneath.”

The post ARPN Expert View: “East China Sea one front in larger resource wars” appeared first on American Resources Policy Network.

In his latest column for Real Clear World, American Resources principal Daniel McGroarty zeroes in on the newly-released Chinese government white paper entitled ‘Situation and Policies of China’s Rare Earths Industry’ and notes the insight it provides into China’s broader mineral strategy.

McGroarty’s key points are as follows:

· The white paper essentially sets the stage for a “pre-emptive defense of Chinese Rare Earths policy.”

· China’s claimed correction of the amount of its Rare Earths reserve – a reduction from 36 percent (as per USGS estimates) to 23 percent of total global reserves will allow Beijing to “argue in the WTO that its sovereign right to manage its own non-renewable resources blunts any demand by other nations that China serve as the world’s Rare Earths super-store.”

· A less-noticed report that China is placing a bounty on those involved in the country’s burgeoning Rare Earths black market indicates that “as the world races to bring more Rare Earths to the market, China is working to ratchet back supply – and ensure the remainder is tightly under Politburo control.”

· Possibly providing a glimpse into the grand scheme of things, the Hong Kong Exchange’s (HKEx) offer of $2 billion for the London Metals Exchange (LME), which has been called the “most expensive bid ever” for LME begs the question of whether it might “involve the chance, unavailable until now, to locate physical metals warehouses on Chinese soil.”

· Meanwhile, the West’s mineral policies seem to hinge to a large extent on the word “maybe” – as in maybe China will comply with WTO rules, and maybe researchers will develop Rare Earths alternatives, for example.

McGroarty’s bottom line:

“[W]hile the ‘West’ has hopes, China has a plan. And whatever it is, it’s not the one translated into English and published last week on the front page of the People’s Daily.”

The post Recent developments provide glimpse into China’s resource strategy appeared first on American Resources Policy Network.

A recent announcement concerning plans to mine asteroids has sent the media into a frenzy, but is it possible? Consider the challenges: asteroids have no gravity, meaning miners and equipment will have to anchor themselves to the ground. Add to this the minerals that will fly off into space once excavated and the staggering temperatures the spacecraft will endure (+300 to -200 Fahrenheit) and interstellar mining becomes that much further away.

America’s best hope for critical and strategic minerals lies not on a distant rock, but in the deposits in its own backyard. Check out American Resources Principal Dan McGroarty’s take on the situation on Real Clear World.

The post American Resources’ Principal: “Must America go to Mars for Minerals?” appeared first on American Resources Policy Network.

Citing a lack of technological and economic feasibility, experts, including American Resources expert Gareth Hatch, recently dispelled a myth created by some journalists that the solution to China’s stranglehold on rare earths lies in a REE discovery below the surface of the Pacific Ocean.  However, technical issues are just part of the story.

Our very own Daniel McGroarty explains in his latest column for Real Clear World that because the United Nations’ Law of the Sea Treaty (LoST) would govern any deep-sea mining projects, the technical challenge is “bean-bag compared to the bureaucratic gauntlet of obtaining permission to drill in the world’s open oceans.”

McGroarty questions the nature of the LoST:

All of which raises the question: Is Law of the Sea Treaty, as critics contend, a nefarious global socialist experiment conferring on the UN the power to control and redistribute a vast swath of the world’s resource wealth, or an impenetrable bureaucratic shield to ensure no one ever extracts so much as an ounce of kilogram of that wealth?

Curious about McGroarty’s answer?  Read it here, and find out “Why the World’s Mineral Wealth is LoST at Sea.”

The post American Resources Expert Column: Mineral riches ‘LoST’ at sea appeared first on American Resources Policy Network.

Take a read, and then please share your comments below. What impact do you think bills like the RARE Act could have on the U.S. Rare Earths mining industry?

The post Dear Congress: Metals and minerals matter now appeared first on American Resources Policy Network.