While for “battery criticals” the most recent notable step was the passage of the Inflation Reduction Act (IRA) with its sourcing requirements for lithium, cobalt, graphite, nickel and manganese, measures addressing rare earth element supply chains included the invocation of Title III of the Defense Production Act for Rare Earth Elements and a DoD allocation of $35 million for a heavy rare earth separation and processing project in California.

While these are important steps, real-life examples show just how deep our nation’s over-reliance really is:

Earlier this fall, the Pentagon, as part of its “efforts to decouple U.S. defense companies’ sprawling global supply chains from China,” as the Wall Street Journal phrases it, said it had begun using artificial intelligence to analyze whether U.S. military contractors source aircraft parts, electronics and raw materials used in U.S. military equipment from China and/or other potential adversaries.

Learning that engine parts for new F-35 combat jets made by Lockheed Martin Corp. contained magnets sourced from Honeywell International, Inc. with a cobalt samarium metal alloy produced in China — which constituted a violation of U.S. procurement laws — the Defense Department last month halted accepting new jets from the company.

The company has since  been granted a waiver, and with it, the Pentagon will accept all aircraft under the contract.

The waiver was granted because the “magnet does not transmit information or harm aircraft, and […] there are no security risks involved,” but Honeywell will have to work to find an alternative source for the metal alloy used in the F-35 engine parts.

Meanwhile, analysts say that with the waiver allowing an alloy of Chinese origins to continue to be used in the manufacture of F-35 combat jets, “the US military has exposed its dependence on Chinese rare-earth products, and China can opt to limit the export of such strategic resources to safeguard its national security.”

China, not surprisingly, is an interested observer in the U.S. supply chain travails.  As the Global Times reports, citing a manager of a Chinese state-owned rare earth enterprise in Ganzhou, East China’s Jiangxi province, with China having a leading edge in the middle-to downstream rare earth magnet production, the “U.S. attempt to remove China-origin alloy imports from military equipment is almost ‘a mission impossible.’ from both a short-term and long-term perspective.” According to unnamed manager, “China is the only country in the world that has developed the ability to extract samarium and cobalt rare-earth metals, which means the middle product samarium oxide is almost 100 percent made in Chinese factories. We also account for over 70 percent of the final product samarium-cobalt rare-earth magnet. How can Washington take out Chinese rare-earth products from its jets in such a scenario?“

A similar dependency applies to China-made neodymium magnets.

A Beijing-based military expert, Wei Dongxu, contacted by the Global Times argued that with the U.S. using the materials for military purposes, which could “harm China’s sovereignty, territorial integrity and development interests,” “China should consider applying more strict export controls on rare earth products.”

The waiver referenced above is only the latest in a series of waivers granted by Pentagon officials under similar circumstances — all of which goes to show how difficult it is to untangle critical mineral supply chains.

However, with geopolitical and trade tensions rising — both between the United States and China and generally on the global stage — and with China’s known penchant for using its advantage as leverage, there is no alternative to turbo-charging the effort to secure U.S. domestic supply chains for critical minerals across the board.

The post Pentagon Waiver for REE Magnets Used in F-35 Combat Jet Engines Underscores Critical Mineral Dependency Conundrum appeared first on American Resources Policy Network.

Lithium Americas, a Vancouver, Canada-based company is, according to its website, “focused on advancing lithium projects in Argentina and the United States to production,” and the company is looking to advance its Thacker Pass projection in Humboldt County, Nevada.   In order to finance it, the company has applied for a loan under the DOE’s Advanced Technology Vehicles Manufacturing Loan Program, which is part of the recently enacted Inflation Reduction Act (IRA).

Writes Sen. Cotton:

“Worryingly, media reports indicate that Lithium Americas’ largest shareholder is Ganfeng, a Chinese company with direct ties to the CCP. Ganfeng is currently acquiring lithium mines around the world, which, according to former Secretary Mike Pompeo, is part of a ‘clear intention by the Chinese Communist Party to control the entire supply chain for green energy.’ The United States should be reducing its dependence on China for these critical inputs, not opening the door for China to ‘gain a foothold in America on lithium mining,’ as reported.”

He adds:

“The U.S. government should apply strict oversight regarding potential federal funding of CCP-owned or -controlled entities. DOE’s loan for the Thacker Pass mine would be substantial and reportedly cover the majority of the project’s capital costs. As the government continues to invest in battery supply chain programs, it is critical that DOE ensure taxpayer funding does not go to corporations with CCP ties and does not increase U.S. mineral dependence on China.”

Specifically, the Senator demands that the department use its leverage to “incentivize Lithium Americas to part ways with Ganfeng. Ganfeng and any other Chinese entities with CCP ties should divest their stakes in Lithium Americas before the company is offered this loan.” He further urges the department to reject Lithium Americas’ application for the ATVM if the company refuses to end its Ganfeng relationship.

Senator Cotton seeks clarification from Secretary Granholm on the following questions:

1. Is DOE aware of Lithium Americas’ application for the Advanced Technologies Vehicles Manufacturing (ATVM) Loan Program and the company’s partial ownership by entities closely tied the CCP?
2. What safeguards or requirements are in place to ensure the ATVM program is not funding other companies owned or controlled by the CCP or other adversaries?
3. Does DOE agree that the United States must reduce its dependence on China for critical minerals like lithium and should invest in domestic production of such minerals? If so, does DOE believe that funding deeper CCP control of the U.S. critical mineral supply chain is counterproductive to this goal? If not, why not?
4. Has DOE raised with Lithium Americas the possibility that its loan application for the Thacker Pass project may be harmed by the company’s partial ownership by Ganfeng or that its application may be improved if Ganfeng divested in the company?

Senator Cotton closes:

“The United States urgently needs domestic critical mineral production to supply its technology sector and reduce its dependence on China; the United States does not need and should not fund possible attempts by the CCP to deepen its control over the U.S. critical mineral supply chain.”

It will be interesting to see how the Department of Energy responds, as it was precisely the realization that our nation (and the Western world) is overly-reliant on adversary nations for its critical mineral needs across the entire value chain that led the United States to finally focus on securing its supply chains.

Whether Chinese influence over this project proves to be definitive or not depends on the facts of the matter, but Senator Cotton’s point that questions of foreign control deserve to be fully investigated before the U.S. Government confers funding seems unarguable. Government programs intended to alleviate worrisome foreign resource dependencies should not unwittingly strengthen those dependencies at the expense of the American taxpayer – and American national security.

The post U.S. Senator Demands Information From Department of Energy over Potential Chinese Ties Relating to Nevada Mining Project appeared first on American Resources Policy Network.

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.”

The post Critical Mineral Uranium: No Import Quotas, But “Significant Concerns” Prompt Fuller Analysis of Nuclear Fuel Supply Chain appeared first on American Resources Policy Network.

Followers of ARPN are well aware that, as Mamula and Moore argue,

“Mineral imports have steadily increased for at least the past two decades because draconian permitting requirements and environmental opposition have made it hard to supply those needs from sources within the U.S. Now there is not enough domestic mining to meet robust manufacturing demand.

However, the real problem is that more and more mineral imports are coming from China, Russia, and third-world dictatorships.”

Against this backdrop, the recent executive order “to ensure secure and reliable supplies of critical minerals for the nation” and the subsequent release of a draft list of 35 metals and minerals critical to U.S. national security is a welcome development.

The piece includes an interesting chart that combines the draft list with one of ARPN’s favorite charts – the 2018 iteration of USGS’s page six of its annual Mineral Commodity Summaries report.

Mamula and Moore place much of the blame for our ever-increasing import dependency on misguided environmental overreach. They write:

“The problem is definitely not a shortage of domestic mineral sources. In fact, the U.S. is well endowed with mineral resources, according to numerous reports by the USGS. The nation was much more mineral self-sufficient in the 1990s, when it led the world in mining output. Since then, however, the U.S. has lost much of its capacity to mine, refine, smelt, or process critical minerals and metals because of a broad anti-mining agenda among many of the more militant environmental groups.  

Ironically and unfortunately, ‘greens’ oppose many mineral-resource policies that would actually facilitate environmentally beneficial outcomes, such as renewable energy.” 

In spite of the vastness of mineral riches beneath U.S. soil, they argue, “poor federal stewardship policies that restrict exploration in areas of known mineral deposits” have led to “dangerous” mineral resource dependencies.

Mamula and Moore see the executive order and resulting policies as an opportunity for a “huge turnaround for reducing dangerous mineral imports through responsible mining:”

“This EO commits the country to reducing its vulnerability from mineral-import overreliance while paving the way for a cleaner and safer planet through existing and new technologies used by America’s mining industry. Increased domestic mining of abundant mineral resources is absolutely necessary for the economic health of our nation and is a long overdue America First strategy.”

Click here for the full piece.

Also, read Daniel McGroarty’s public comments on the DOI draft list here.

The post Mamula & Moore: Current Federal Policy Efforts Opportunity for “Huge Turnaround for Reducing Dangerous Mineral Imports Through Responsible Mining” appeared first on American Resources Policy Network.

Citing FBI Director Christopher Wray, who recently told Congress that China is seeking to undermine the United States’ military, economic, cultural and information power across the globe, Green argues that

“[a] major contributor to China’s rising power, and one of its primary trade weapons, is its near-monopoly over several minerals and materials that the United States military relies on to maintain its technological edge.”

As Green points out, our mineral resource dependencies have grown significantly over the last few decades, and the risk of supply chain disruptions looms large:

“Given the nation’s increased foreign dependence, adversarial nations that provide these minerals, such as China and Russia, have gained geopolitical leverage at exactly the wrong time. Russia now poses a national security threat across multiple domains, and China has demonstrated an “impressive military buildup…across almost every domain,” according to the head of U.S. Pacific Command, Admiral Harry Harris.

And yet, as of 2017 China was still a major supplier of 26 commodities to the United States that are essential for aerospace and defense applications. Given that the United States possesses mineral reserves worth $6.2 trillion, according to the United States Geological Survey (USGS), continuing to rely on imports is fiscally foolish and politically dangerous.”

Green commends the administration for taking steps that begin to address the issue, and cites various executive orders and Secretary of the Interior Ryan Zinke’s draft list of 35 minerals that are considered essential to U.S. National Security.

Meanwhile, he argues, the U.S. Congress has so far missed opportunities to enact legislation that would address one of the key obstacles to domestic mineral resource development – an outdated and convoluted permitting structure.  Rep. Mark Amodei’s (R, Nev.) “National Strategic and Critical Minerals Production Act,” and Sen. Dean Heller’s (R, Nev.) identical Senate bill would “remove a significant barrier to entry, and expedite the mining permit process to no more than 30 months,” but so far, Congress has failed to take steps to pass these bills.  Writes Green:

“The White House, through its executive orders, has shown that it understands the risks of the current, laborious mine permitting system in the United States, and recognizes the potential rewards for encouraging new sources of critical materials. Whether through Amodei’s bill or another mechanism, Congress should also act to mitigate these risks and encourage new efforts.” 

To read the full piece, click here.

The post Green: Over-reliance on Foreign Mineral Imports “Fiscally Foolish and Politically Dangerous” appeared first on American Resources Policy Network.

According to the report, the total value U.S. non-fuel mineral resource production increased by six percent over 2016 in 2017 and now stands at an estimated $75.3 billion.

On the resource dependency front, the findings of the report do not differ much from last year’s.  The number of non-fuel minerals for which the United States is 100% import dependent went from 20 to 21, but that increase is due to the inclusion of a new material, Nepheline Syenite, into the scope of the USGS survey.  And just like in 2016, the U.S. was more than 50% import-dependent for 50 metals.

What has changed over last year, however, is the overall policy environment.

With the issuing of last December’s executive order to promote domestic mineral resource production, which also calls on the Secretary of the Interior to devise a comprehensive mineral resource strategy, we have taken an important step towards alleviating our long-standing – and in many cases unnecessary over-reliance on foreign sources of supply.

For good reason. Resource dependency figures may not have increased since last year, but from a historical perspective – as USGS pointed out in its landmark Professional Paper 1802 released in December of last year –  the number of 100 percent import-reliant minerals has increased from just 11 commodities in 1984.

So while this year’s Mineral Commodity Summaries may not hold too many news – but the report serves as a critical reminder of how important it is to keep the momentum generated at the end of the last year going. Stakeholders must ensure that we get the development of a “comprehensive federal action plan to encourage domestic resource production, through mining, recycling and reclamation” right.

If we do, we will be better off as a nation – both in terms of national security and economic well-being.

The post New USGS Mineral Resource Commodity Summaries Report – An Important Reminder to Keep Momentum Going for Policy Overhaul appeared first on American Resources Policy Network.

Doing just that at the Annual Air and Space Conference in Washington, DC, earlier this week, Air Force Secretary Heather A. Wilson outlined recent accomplishments, while “detailing changes designed to drive the Air Force forward and priorities that include restoring readiness and cost-effectively modernizing the force.” 

Stressing the importance of personnel and training, Wilson emphasized that cost-effectively modernizing to increase the “lethality of the force” was a key priority:

“The average age of our aircraft is 28 years old. We have to be able to evolve faster, to respond faster than our potential adversaries. We’ve got a bow wave of modernization coming across the board for the Air Force over the next 10 years — it’s bombers, it’s fighters, it’s tankers, it’s satellites, it’s helicopters and it’s our nuclear deterrent.”

She further added that to modernize, it was incumbent on the force to get “acquisition right – being a good buyer for what warfighters need,” and stressed the importance of research and development. 

Against the backdrop of growing external threats – Russia, China, Iran and North Korea are just the most recent examples of flash points – Wilson’s remarks tie into the overall context of increasing the U.S. military’s defensive readiness.  

However, as Dan McGroarty recently stressed in a commentary for Investor’s Business Daily, the issue runs deeper than making sound acquisition decisions or focusing on “scenarios in which ‘there is only one U.S. company that can repair’ certain equipment. – Our metals and minerals dependency on foreign sources of supply is great and growing.” 

A recent Presidential Executive Order requiring cabinet department heads to report to the President policy recommendations for strengthening the U.S. industrial base is a welcome development in this area, particularly as it acknowledges “all the interconnections between a strong manufacturing base, a strong industrial base, a strong workforce … that strengthen our tax base which … allows us to buy the material and weapons.”

As McGroarty points out, this is “[a] fine and expansive statement, to which we should make a one-word amendment: Instead of buying the strategic materials used in U.S. weapons platforms, whenever we can, we should be mining that material here at home. And that requires reversing the slide that has seen the U.S.’s share of global mining exploration investment in steady decline the past two decades, even as the length of the federal permitting process has doubled.”

Devising a comprehensive mineral resource strategy, components of which McGroarty outlines in his commentary, will be a critical step to increase not just the Air Force’s, but all other branches’ readiness to – in the words of Wilson – “lead and support the Joint Force in defending our Homeland, owning the high ground and projecting power with our allies.”

The post Happy Birthday, Air Force – Ready For The Next Seventy Years? appeared first on American Resources Policy Network.

“Our cells should be called Nickel-Graphite, because primarily the cathode is nickel and the anode side is graphite with silicon oxide… [there’s] a little bit of lithium in there, but it’s like the salt on the salad.”

The bottom line – Graphite is one of the most indispensable mineral resources.

Graphite’s rise to stardom prompted Washington Post reporter Peter Whoriskey to write a feature story about the Graphite supply chain and the problems associated with Graphite mining.  According to Whoriskey, most of the Graphite contained in Lithium-Ion batteries used by Samsung, LG, GM, Toyota and other consumer companies can ultimately traced back to China, the world’s biggest Graphite producer. Writes Whoriskey:

“The companies making those products promote the bright futuristic possibilities of the “clean” technology. But virtually all such batteries use graphite, and its cheap production in China, often under lax environmental controls, produces old-fashioned industrial pollution.”

However, the fact that much of the world’s production of tech metals is concentrated in China has implications beyond the environment.  With much of China’s mining industry consolidated in state-owned industries, resource policy is increasingly becoming an instrument of geopolitical warfare.  As critical minerals expert David Abraham has pointed out elsewhere in the context of China’s ever-tightening grip on rare metals: 

 “If a goal of Beijing is to bolster its green companies by providing cheap, accessible materials to downstream manufacturing, owning a resource company provides a great way to do that. Could Beijing use its ownership stake to decide who can buy which resources and at what price? Yes.”

From a U.S. perspective, in the case of natural Graphite, this is indeed worrisome, as the United States, according to USGS, currently is 100% import-dependent for its domestic manufacturing needs, with the last U.S. Graphite producer ceasing production in 1991.

Once again, our deep Graphite dependency problem is largely home-grown.

While domestic natural Graphite reserves are considered small by international comparison, there are natural Graphite deposits under development in the U.S.. New technologies to turn natural Graphite into high-grade spherical Graphite, which is used by Electric Vehicle (EV) battery technology, are also readily available.

With stringent environmental standards in place and cleaner, new techniques that minimize the impact on the communities in which the deposit is developed at our disposal, harnessing our domestic Graphite resources would allow us significantly lessen our dependence on foreign supplies and also reduce China’s geopolitical leverage in the 21^st Century resource wars.

The post Graphite: At the Core of Your Pencil, 21st Century Technology, and Geopolitical Resource Warfare appeared first on American Resources Policy Network.

With access to these tech metals being contingent on the availability of their respective Gateway Metal(s), the geopolitical dimension of resource policy becomes all the more important.   Not too long ago, a USGS analysis painted a troubling picture, showing that across the board, our reliance on foreign non-fuel minerals has significantly increased over the examined 60-year time frame.

We decided to zero in import dependence percentages specifically for our Gateway Metals, using the last 25 years of data provided by USGS in its Mineral Commodity Summaries.  A look at the trend line for our first Gateway Metal, Copper, which provides us with access to Rhenium, Molybdenum, Selenium and Tellurium confirms that the United States’ degree of import dependence for Copper has grown drastically since the end of the Cold War:

                                                                                        Source: USGS Mineral Commodity Summaries

This needn’t be.  As we have previously pointed out, with our own reserves and at mining projects ready to come online, the U.S. would not only be able to become self-sufficient with regards to meeting Copper needs, but could even position itself to be a Copper net exporter.  In the process, the U.S. would also provide our domestic manufacturers with stable access to its co-products, which are some of the key tech metals we’ve come to rely upon to drive 21^st Century innovation.

We will review our nation’s import dependence numbers for some of the other Gateway Metals in separate posts, but a look at Copper alone makes clear that it is time for a new, more comprehensive approach to mineral resource policy.

The post A Look at Gateway Metal Import Dependence: Copper – 25 Years of Rising Dependence appeared first on American Resources Policy Network.

 Via our friend Simon Moores, managing director of Benchmark Minerals and lead expert on the supply chain for batteries, we came across a solid analysis of minerals in clean car technology.  Bloomberg’s Liam Denning discusses the role of lithium as one of the key minerals at the heart of 21^st Century battery technology fueling electric vehicles as well as portable devices and power storage.

Contrasting lithium’s story with that of two other once promising metals, palladium and uranium, Denning outlines lithium’s rise to stardom, appeal and potential staying power.  His verdict – lithium is a mineral worth watching:

“Rising demand that is largely indifferent to price, combined with lagging supply, is what commodity bulls dream of. This underpinned the boom in palladium, as well as the recent bull markets in oil and copper. It looks like lithium’s turn is coming.”

With Tesla’s new Gigafactory slated to open soon, and other battery makers expanding their plants, chances are, he is right.

Says Simon Moores:

“[New supply from all lithium sources] will have a critical role to play in sourcing lithium for the battery supply chain. As things stands, there will not be enough lithium to supply the battery megafactories coming onstream.”

With the net import reliance on foreign supplies of lithium hovering at more than 60% according to USGS estimates, this challenge will most certainly affect U.S. battery makers and downstream domestic industries.

Click here to read the full piece.

Click here to keep tabs on Simon Moore’s analysis of critical metals and minerals.

The post Is Lithium the New Black? appeared first on American Resources Policy Network.