It is no secret that the United States has a critical minerals problem. As the Pentagon’s top acquisition official Ellen Lord said recently, “We have an amazing amount of dependency on China.” Lord called the findings of a forthcoming report on the defense industrial base “quite alarming,” and noted that China is America’s “sole source for rare earth minerals.”
According to the United States Geological Survey, the United States relies on Chinese imports for at least 20 minerals and has little or no capacity to mine, refine, and process its own minerals from start to finish. As a recent executive order on critical minerals makes clear, this “strategic vulnerability” poses a significant national security risk.
Although President Trump has taken great strides to address this national security threat—through executive orders and trade investigations—it’s time for Congress and the administration to take a whole-of-market approach to critical minerals and to enact policies that will spur innovation at every step in the minerals supply chain. This should start with mine permitting reform and investment in promising materials technologies and processes.
Critical minerals are the building blocks for military equipment. From minerals that are ubiquitous in the supply chain, such as copper and steel, to those that are very specialized—like rare earth elements and beryllium—America’s technological superiority hinges on maintaining reliable access to key materials. Without access to such minerals, our precision-guided missiles will not hit their targets, our aircraft and submarines will sit unfinished in depots, and our war-fighters will be left without the equipment they need to complete their missions.
Unfortunately, America’s critical minerals problem has gone from bad to worse. The nation’s only domestic rare earth producer was forced into bankruptcy in 2015 after China suddenly restricted exports and subsequently flooded the market with rare earth elements. Adding insult to injury, the mine was then sold last summer for $20.5 million to MP Mine Operations LLC, a Chinese-backed consortium that includes Shenghe Resources Holding Co. Now, according to MINE Magazine, this same mine is exporting critical minerals to a processing plant in China—because the United States cannot process or refine these materials at commercial scale. Without a dramatic change in minerals policies, the United States will not be able to minimize the economic damage that will come when China decides to leverage its minerals monopolies against us.
In a picture taken on September 5, 2010 a man driving a front loader shifts soil containing rare earth minerals to be loaded at a port in Lianyungang, east China’s Jiangsu province, for export (STR/AFP/Getty Images)
The first step to a whole-of-market approach to spur innovation in minerals production is removing regulatory hurdles that dissuade would-be investors. Most notably, the United States must accelerate its mine permitting process. The current seven to 10 year timeline is simply untenable. Australia and Canada adhere to similarly stringent environmental guidelines, yet maintain permitting processes that average just two years. The United States’ mine permitting process should not take five times as long. This easily fixed regulatory problem will go a long way toward attracting new entrants into the minerals supply chain.
The Pentagon must also focus on existing Department of Defense programs designed to support the U.S. defense industrial base. Each branch of service has a ManTech program intended to improve the productivity and responsiveness of the industrial base and to enable manufacturing technologies. In the president’s fiscal 2019 budget request, the Army, Navy, and Air Force are only requesting approximately $60 million each for ManTech. Furthermore, the Pentagon only requested $38 million for Defense Production Act (DPA) purchases—a defense-wide program focused on expanding and restoring domestic production capacity. This is down from the $63 million requested for DPA in FY2018. With a $700 billion defense budget, dedicating just 0.025 percent of the budget to the next generation of manufacturing technologies is nowhere near enough to catch up to China and shore up domestic capabilities.
Congress should not only make funding ManTech and DPA projects a priority, but should also ensure that these funds will fill vulnerabilities in the defense industrial base. Building resiliency and operational capacity throughout the supply chain requires investing in more than just the finished product to include the many tools, technologies, and processes that get us there. With a calculated and strategic focus on filling these gaps in the supply chain, American companies can rise to the task.
Lastly, the administration must continue to fight against unfair trade practices that have bankrupted American mining companies and left us dependent on China for minerals essential to the defense industrial base. The United States must make clear it will not tolerate these practices, and will take a strong stance against continued, aggressive trade actions.
Jeffery A. Green is president and founder of J.A. Green & Company, a bipartisan government relations firm based in Washington DC.