Do-Nothing Attitude in the Face of China's Abhorrent Policy on Minerals Is Unacceptable
By Jaak Daemen February 04, 2024
Just how tight U.S. supplies of critically-important rare earth minerals become in the wake of China's latest export restrictions will depend in some measure on what U.S. government agencies do to encourage domestic mining. If the Biden Administration is serious about taking proper precautions against China's bellicose behavior, it needs to zero in on the growing threat to our mineral supply chains.
Start with rare earths -- a group of 17 metals -- which are essential for manufacturing. They are used in the production of multiple defense technologies, including missiles, lasers, advanced aircraft, tanks, military communications, and even nighttime goggles. They are key components of computers, televisions, and smartphones. And they are needed for clean energy technologies, especially batteries for electric vehicles and solar and wind power.
China produces 60% of the world's supply of rare earths but processes 90%, which means that it imports rare earths from other countries, giving it a virtual monopoly. By contrast, the U.S. has one rare earth mine, in Mountain Pass, California. Almost all of our needs are met by imports, mainly from China.
Government support for domestic mining -- not only rare earths but other critically important minerals such as lithium, copper and cobalt -- has taken on new urgency following China's preemptive action late last year to ban exports of rare earth extraction and processing technology. This wasn't China's only hostile action. Earlier it placed major restrictions on the export of graphite, a key battery metal needed for EV production, and two minerals used in defense technologies, gallium and germanium.
The Biden Administration's initiative to form a global alliance called the Mineral Security Partnership is an important first step in reducing our mineral dependence on China and building supply chains for production in the U.S. and friendly countries. This is prudent, given China's goal of global economic dominance and its threats against Taiwan.
But a significant hurdle to making our mineral supply more secure is the U.S. mine permitting process. Before companies can move forward in opening new domestic mines and processing facilities, they must obtain approval from multiple federal and state agencies often with overlapping requirements and opportunities for lengthy delays. The permitting process takes on average eight years. In fact, it can take 20 years from the idea for a new mine until first production.
Although permitting reforms were adopted in the climate measure that Congress passed in 2022, the Administration has yet to implement the changes. Instead it has allowed taxpayer-funded tax credits to flow to China and other geopolitical rivals who control mineral supply chains. It has delayed by two years a provision to remove China from the supply chain. And it has watered-down a requirement that eligibility for a $3,750 tax credit in the purchase of an EV is good only for vehicles with batteries using domestic minerals or minerals imported from Canada, Australia or other friendly countries.
Ironically, our current mineral policy, or lack thereof, promotes importing more minerals from around the world, while doing nothing to lift domestic production. It is past time to launch construction of new mines and processing facilities in the U.S. -- the best option for large-scale production of critically-important minerals like rare earths. Failure to recognize U.S. vulnerability to China's grip on mineral supply is nonsensical.
Dr. Jaak Daemen is Professor Emeritus of Mining Engineering, University of Nevada, Reno.
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