The below has been modified by the just passed DoD-AUKUS law in the United States. The DoD has been authorized to spend 1 Billion more dollars on this stockpile, and the DoD can now purchase directly from Australian companies- and the contracts can be multiyear in length.
An excerpt: Current Stockpile Requirements Currently, DOD selects strategic and critical materials for inclusion in the National Defense Stockpile that are expected to be in “material shortfall” in a national emergency scenario “consisting of a military conflict combined with an attack on the Homeland.”35 This “base case” scenario lasts a total of four years, the first year of which involves active combat followed by three subsequent years of post-conflict industrial recovery and replenishment. 36 Shortall materials generally include nonfuel mineral commodities like cobalt and tin, along with semi-processed or processed materials such as TNT and high-purity carbon fiber that function as common production inputs for national defense applications.37 While details of some shortfalls are classified, a 2023 unclassified NDS inventory list is provided in Appendix B. 38 DOD’s Defense Logistics Agency (DLA) reportedly monitored 283 candidate materials for its 2021 and 2023 stockpile assessments, with 148 incorporated into formal NDS planning models.39 Results of 2021 Stockpile Requirements Assessment In the 2021 stockpile requirements assessment, 53 materials were determined to be in shortfall and therefore “strategic and critical” in a congressionally mandated, classified armed conflict scenario involving China.40 Of these 53 materials, according to the assessment, 37 have supply chains controlled by a “foreign market dominator” (i.e., more than half of global production occurs in a single foreign country). Twenty-nine of 53 materials have one domestic provider qualified to meet military or essential civilian requirements (as of June 2021), according to the assessment, and an additional 18 materials “have no domestic production at all.”41 According to a review of strategic and critical materials supply chains published by The White House in June 2021, U.S. import dependence for these 53 materials extends to 84 countries: • 27 countries each produce exactly 1 shortfall material; • 20 countries each produce 2 shortfall materials; • 16 countries each produce between 3 and 5 shortfall materials; • 11 countries each produce between 6 and 10 shortfall materials; • 7 countries each produce between 11 and 20 shortfall materials; and • and 3 countries each produce more than 20 shortfall materials.42 35 DOD, Strategic and Critical Materials 2023 Biennial Report on Stockpile Requirements, April 2023, p. 12. The 2023 assessment also includes a climate change event in the base case scenario. See Ibid., p. 20. 36 50 U.S.C. §98h-5(b)-(c); P.L. 117-263 §1415; Robert J. Atwell et al., Generic Unclassified Stockpile Sizing Module (SSM) Training and Testing for the National Defense Stockpile (NDS) 2015, August 2014, p. 5 at https://www.jstor.org/stable/pdf/resrep23589.4.pdf. Note: stockpile requirements draw upon classified data, with assessments occurring on classified computer systems. Ibid., p. 6. 37 The White House, Building Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering BroadBased Growth: 100-Day Reviews under Executive Order 14017, June 2021, p. 184. 38 Ibid., p. 179; DOD, Strategic and Critical Materials 2023 Biennial Report on Stockpile Requirements, April 2023, p. 24. 39 DOD, Strategic and Critical Materials 2023 Biennial Report on Stockpile Requirements, April 2023, p. 9. 40 The White House, Building Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering BroadBased Growth: 100-Day Reviews under Executive Order 14017, June 2021, pp. 177, 184. 41 Ibid., p. 179. 42 Ibid., pp. 184-185. Emergency Access to Strategic and Critical Materials: The National Defense Stockpile Congressional Research Service 9 The People’s Republic of China (China, or PRC) is the primary global producer and/or primary U.S. supplier of 20 or more shortfall materials.43 This is potentially significant in part because the “base case” armed conflict scenario grounding current stockpile requirements involves a conventional armed conflict with China.44
Results of 2023 Stockpile Requirements Assessment The FY2023 stockpile assessment discovered net shortfalls in 88 materials valued at $14.83 billion. 45 Of this total, $12.21 billion worth of shortfalls would cover essential civilian demand for 24 materials and $2.41 billion would cover military requirements associated with 69 materials.46 Given March 2023 reported stockpile inventories of $912.3 million, the FY2023 stockpile assessment suggests current NDS inventories cover 37.9% of projected military shortfalls, 7.5% of essential civilian demand shortfalls, and 6.2% of total net shortfalls in base case national emergency scenarios. 47 As of April 2023, the gap between total NDS assets ($1.3 billion) and total net shortfalls is $13.5 billion.48
SRL Price at posting:
46.0¢ Sentiment: Buy Disclosure: Held
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