Russia

On the heels of the coronavirus pandemic having exposed the West’s overreliance on Chinese supplies of mineral resource supplies, Russia’s war on Ukraine has set off a potential realignment of critical mineral resource supply chains that warrants attention.

Moscow’s invasion of Ukraine has largely isolated it on the global front both diplomatically and economically, and, with sweeping sanctions taking hold, the Western world has turned elsewhere to meet certain critical mineral needs previously supplied by Russian companies and halted shipments of materials to the Russian Federation.

Unsurprisingly for followers of ARPN, Russian buyers have begun turning to China to plug shortfalls.

A case in point:

With Ukraine and Australia, two of Russia’s key suppliers of alumina before the war, halting shipments to Russia, China’s alumina exports to Moscow have skyrocketed in recent months. In March, Russia had bought 9,950 metric tons of alumina from China, amounting to almost 10 times more than purchases for the same period in 2021. In May, according to Bloomberg News, Russia received a whopping 190,000 metric tons from China, bringing the year-to-date figure to 380,000 – almost 1,000% higher than the numbers for the same period in 2021.

While to date, Beijing has walked a carefully calculated line on Russia’s war on Ukraine emphasizing its concern with violence while maintaining the need to respect territorial integrity and security interests of all parties, China stands to gain major strategic opportunities from filling the void left by a Western business pullout from the Russian market, both in terms of imports and exports. China will also be able to further its grip on global critical minerals via access to Russia’s vast mineral riches.

In a telephone conversation earlier this month, according to a Chinese Foreign Ministry readout cited by Newsweek, Chinese President Xi Jinping and Russian President Vladimir Putin stressed support for “each other’s core interests,” with Xi telling Putin that “China stands ready to promote the stable and long-term development of pragmatic bilateral cooperation with Russia,” and is “ready to continue mutual support with Russia on issues concerning core interests and major concerns, such as sovereignty and security, and to deepen strategic coordination between the two countries.”

With China and Russia the number one and number two global producers and processors for many of the metals and minerals underpinning 21st Century technologies, the stakes cannot be underestimated. For years, ARPN sounded the alarm with regards to the lack of awareness of the geopolitics of mineral resource security, but it took the confluence of a global pandemic, subsequent supply chain challenges amidst growing demand, rising resource nationalism in the Southern hemisphere and Russia’s war on Ukraine to get stakeholders’ full attention to the issue. Promising efforts to reduce our nation’s overreliance on metals and minerals from our adversaries are currently underway.

However, as we have previously pointed out:

“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.”

Ultimately though, 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 U.S. Secretary of State Anthony Blinken’s recent words, “bet on ourselves and win the competition for the future.”

Underscoring the growing awareness that our nation’s overreliance on foreign supplies of critical minerals underpinning 21st century technology stretches beyond the much-discussed Rare Earths and battery criticals lithium, cobalt, nickel, graphite, and manganese, the U.S. House Committee on Armed Services has released draft legislation to address China’s stranglehold on the supply chain for antimony.

Used in munitions for national defense as well as civilian applications ranging from flame retardants over wind and hydro turbines and solar panels to large storage batteries, spaceships and semiconductors, to name but a few of its uses, antimony has not only made the United States’ Critical Minerals List, but has also been designated “critical” by Canada, Australia, and the European Union.

While there is potential to re-establish domestic antimony production, currently, there is no current mining of antimony in the United States. China is the lead global antimony producer accounting for 55% of global mine production, followed by Russia at 23%, according to USGS figures.  Already, as USGS notes, “[t]he supply of antimony raw materials and downstream production of antimony products was constrained in 2021 as a result of environmental audits in China and various temporary mine shutdowns to mitigate the spread of the global COVID-19 pandemic.”  The Russian invasion of Ukraine and resulting geopolitical tension has further sparked concerns among members of the Armed Services Committee that recent developments could “accelerate supply chain disruptions.” 

Therefore, a report accompanying the draft legislation would require the National Defense Stockpile Manager “to provide a briefing to the House Committee on Armed Services not later than September 30, 2022, on the stockpile status of antimony. The briefing shall include not only the status of the current stockpile, but also a 5-year outlook of these minerals and current and future supply chain vulnerabilities.”

It is encouraging to see policy stakeholders are beginning to see our nation’s critical minerals challenge in a broader context stretching beyond the rare earths and battery criticals.  However, as followers of ARPN well know, draft legislation is just the very first stop in a long journey.

Even if legislation is enacted, it unfortunately is not always effectively implemented, as recent correspondence by U.S. Senators Joe Manchin (D-WV), Chairman of the Senate Energy and Natural Resources Committee, and Lisa Murkowski (R-AK), a senior member of the committee, in a series of joint letters to key members of the Biden Administration lamenting the delayed implementation of several critical minerals provisions enacted in 2020 and 2021, shows.

In 2019, ARPN’s Daniel McGroarty told U.S. Senators in a hearing on critical mineral supply chain issues, that we “can’t admire the problem anymore. We don’t have the luxury of time.”

That was almost three years ago, and before a global pandemic sent supply chains into turmoil and before Russia decided to invade Ukraine.   The stakes are too high to not act swiftly and comprehensively, in the context of an “all-of-the-above” approach across the entire value chain, from mine to manufacturing.

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