The U.S. Strategic Minerals Situation Is Critical

Washington’s focus on plugging strategic vulnerabilities amid worsening U.S.-China relations has also reignited U.S. efforts to control crucial, yet often overlooked, materials: critical minerals. 

It’s not just rare earths, with all their applications for clean energy and fast jets: Entire forests have been felled with legislation meant to jump-start the U.S. foray into rare earths, to little avail so far. The critical minerals race is about simpler things such as cobalt, nickel, copper, and, according to the U.S. Defense Department, about two dozen other key ingredients for everything needed to make the country safer, cleaner, and more prosperous. The problem is where to get them all.

After a decades-long push, China has already carved out a commanding lead in mining, refining, and processing many of these inputs—placing it in a dominant position that has rattled the United States and stoked fears of supply chain bottlenecks. 

“Quite frankly, we’re in a vulnerable position,” John Podesta, a top White House advisor on clean energy, warned last month. China “has the potential to use its lock on supply chains to hold politically hostage decisions by governments.”

Desperate to diversify away from Beijing, U.S. lawmakers are ramping up efforts to jump-start a domestic sector that has long faced environmental and social concerns, lengthy permitting processes, and shrinking research efforts. Beyond tackling these challenges, Washington will also need to join forces with a broader group of countries to ensure the success of this push, according to an Aspen Institute report released this month.

“The consequences of failing to do something about this are really quite severe,” Jason Bordoff, the founding director of Columbia University’s Center on Global Energy Policy and a co-chair of the task force behind the report, said at its launch. “If we don’t have the mineral inputs that we need for key technologies, our transition to clean energy is going to stumble, and it would hamstring our ability to manufacture technologies crucial to our national defense.” 

Over the coming decades, demand for these minerals and materials is expected to explode: By 2050, billions of tons of minerals such as lithium could be needed to power the clean energy revolution, according to the World Bank. That surge in demand, compounded by rising U.S.-China tensions, has triggered a spate of measures and partnerships designed to stimulate the U.S. domestic industry and forge new global supply chains outside China. 

Without lithium, for instance, the world wouldn’t have the batteries needed for electric vehicles and smartphones. Cobalt powers jet engines; nickel and titanium make powerful alloys. While these critical minerals can be sourced from rich deposits all around the world, they are largely refined and processed in China. 

In the latest effort to catalyze the U.S. industry, U.S. Sens. Mitt Romney, Dan Sullivan, and Gary Peters introduced legislation this month to create a critical minerals strategy that would minimize Washington’s dependence on China. The bill builds on a string of Biden administration efforts to map out a concerted industry approach, including a spate of investments to stimulate production and using the Defense Production Act to expand domestic supplies. 

Before U.S. President Joe Biden took office, former President Donald Trump issued an executive order targeting Washington’s reliance on China’s critical minerals supply chains, which he called a “national emergency,” and outlined a new strategy to build up resilience in the sector. Congress and the White House have since competed to put out more pie-in-the-sky plans.

“The entire political system is very taken with the fact that China dominates the overall space, and it’s become one of the only areas of roughly bipartisan agreement,” said Morgan Bazilian, the director of the Payne Institute at the Colorado School of Mines. 

Perhaps one of the domestic biggest pushes came under Biden’s big climate bill, the Inflation Reduction Act (IRA), which offers sizable tax incentives if a certain amount of the EV batteries’ inputs come from North America or free trade partners—thereby excluding European governments, Japan, and a number of other major critical minerals producers. To circumvent the restrictions, Washington signed a new trade agreement with Japan and is reportedly weighing new partnerships with the European Union and the United Kingdom; separately, it has also inked agreements within the Quadrilateral Security Dialogue.

Still, a lot of the metals and minerals the United States needs are found in places where there’s no welcome mat. “Over 60 percent of global cobalt, manganese, and nickel production, for example, comes from middle group suppliers,” or countries that are not free trade partners with Washington or rivals, the Aspen report said. “In many cases, these suppliers are not included in U.S. initiatives, leaving them with little option but to turn to China for investment.”

The Democratic Republic of the Congo is a key example. Although Congo accounted for some 68 percent of the world’s cobalt in 2022, it still lacks a free trade agreement with the United States and was not included in the Minerals Security Partnership, a key U.S. initiative. Chinese companies have financed partially or wholly the vast majority of mines in Congo, according to the report. The furthest Washington has gone is signing a memorandum of understanding with Kinshasa on battery value chains. 

For near on a decade, the United States has been obsessed with energy security, minerals security, and everything short of autarky. But when it comes to the critical bits, a union label won’t cut it.

“Even under the best circumstances, the United States will not be able to meet all of its needs by itself,” Meghan O’Sullivan, the incoming director of the Harvard Kennedy School’s Belfer Center and a co-chair of the task force behind the Aspen report, said at the launch. “We urge Congress not to become too enamored with the Buy American provisions.”

Just as the recent U.S.-Japan critical minerals trade deal now allows Tokyo to circumvent the IRA’s restrictions, more countries—including nickel-rich Indonesia—are now jockeying for similar agreements. This week, Washington also held a critical minerals dialogue with Mongolia and South Korea. 

As the United States scrambles to craft its critical minerals approach, Bazilian, the Payne Institute expert, warned that Beijing is still moving full speed ahead. “It’s not like China is standing still,” he said. It’s “also making massive investments all over the globe in minerals and companies and mining and processing and also all the way down to advanced manufacturing.” 

Enacting real change, Bazilian added, will take time—and will require sustained attention. “It’s not going to happen overnight,” he said. “It’s going to take a long time, if it happens at all.”