RPT-COLUMN-United States aims to reshape the critical minerals world: Andy Home

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(Repeats JUNE 19 story with no change to text (The opinions expressed here are those of the author, a columnist for Reuters.))

* Imports of select critical minerals: tmsnrt.rs/2Iqmo36

By Andy Home

LONDON, June 19 (Reuters) – The United States has laid out its strategy to rebuild collapsed domestic supply chains for metals and minerals deemed “critical” to its defence and manufacturing sectors.

“A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals”, released earlier this month by the Department of Commerce, includes 61 recommendations, ranging from revamping mine permitting rules to stimulating recycling activities to forging alliances with “friendly” suppliers such as Canada and Australia.

This is very much work in progress. It’s only last year that the United States decided on what exactly constitutes a “critical” mineral.

But added urgency has come from China’s veiled threats to use its dominance of rare earths production as a weapon in the broader trade stand-off with the Trump Administration.

China’s growing control of metals at the heart of the electric transport revolution such as lithium and cobalt represents a second front in the looming raw materials war.

In essence, the United States is looking to reshape global supply chains currently dependent on countries such as China or Russia towards what is starting to look like a metallic version of the NATO military alliance.

BEYOND MINING

Proposals to overhaul domestic planning regulations to speed up mine development have grabbed many of the headlines, not entirely surprisingly since they exacerbate existing tensions between environmental groups and the Trump Administration.

However, some of the specific recommendations are simple common sense, such as determining whether the United States actually has any domestic resources in the first place.

Less than 18% of the U.S. land mass has been geologically mapped and even then “data accessibility is a challenge” given some of the information exists in old paper-format files.

“In contrast, both Australia and Canada (…) have developed geological and geophysical surveys and made these available to the private sector,” according to the report.

Moreover, the report’s authors make the important point that just building new mines is only a small part of the answer to reducing import dependency.

Take rare earths as an example.

The United States does have a rare earths mine in the form of Mountain Pass in California. However, right now the mine is shipping ore to China for processing because its own plant remains mothballed.

Even if the processing plant were revived, Mountain Pass would still have to ship the refined product overseas because there is no domestic capacity to produce rare earth magnets.

“Increasing mining without increasing processing and manufacturing capabilities simply moves the source of economic and national security risk down the supply chain,” the report notes.

The key takeaway is that this is not just about mining but rather the entire supply chain from mine to processing plant to end-use product.

Indeed, boosting recycling strategies and developing substitute technologies are likely going to pay a faster dividend than digging new mines.

The research arm of the Defense Logistics Agency (DLA), for example, has already “worked with industry to reclaim nickel-based super alloys from turbine engines and germanium from infrared and night vision equipment, which has offset the requirement to purchase virgin germanium for the stockpile”.

The Critical Materials Institute and the Defense Advanced Research Projects Agency have generated new permanent magnet designs containing zero rare earths and iron-nickel alloys to replace key rare earths such as dysprosium respectively.

BUILDING A MINERALS ALLIANCE

The report also draws a clear distinction between “friendly” and non-friendly suppliers of critical minerals.

No prizes for guessing who falls into the latter camp.

“If China or Russia were to stop exports to the United States and its allies for a prolonged period – similar to China’s rare earths embargo in 2010 – an extended supply disruption could cause significant shocks throughout U.S. and foreign critical mineral supply chains,” the report notes.

Canada and Mexico, on the other hand, “supply all or part of U.S. consumption for many critical minerals”. “Working with them to develop their critical mineral deposits can help improve the security of U.S. supply,” it adds.

Australia is also a key potential partner, particularly in the rare earths sector, where Lynas Corp. has signed a memorandum of understanding to build a rare earth processing facility in Texas with privately-held Blue Line Corp.

Australia has just released its own Critical Minerals Strategy, touting the fact that “we have existing projects and significant geological reserves of minerals deemed critical by other nations”.

Other potential alliance members are the European Union and Japan, both of which share U.S. concerns about critical mineral dependency, particularly in the wake of China’s 2010 embargo.

CLOCK TICKING

The United States is redrawing the minerals map of the world.

We might be heading for the metallic equivalent of the Cold War with the world divided into competing producer blocs.

It’s a process that dovetails with what has been happening with other metal supply chains, even those for non-critical components of the alchemical table.

U.S. tariffs on aluminium imports, for example, are aimed first and foremost at China, even if that target has at times been obscured by the Trump Administration’s somewhat scatter-gun approach. It has only just rolled back tariffs on Canada, even though it is a major allied supplier to the U.S. market.

The big problem for the United States, however, is one of timing.

“Some Federal Government actions outlined in this strategy can be taken in the short-term, such as stockpiling and improving reliable trade options,” according to the report.

However, “other actions, such as catalyzing exploration, designing and constructing new mines, and re-establishing domestic downstream manufacturing supply chains take longer to implement.”

Many of the report’s recommendations come with time-line goals of up four years or are simply designated as “ongoing”.

That’s not going to be of much use if China makes good on its threat, made via the Communist Party-controlled Global Times, to restrict rare earth supplies to U.S. defence contractors.

Indeed, the U.S. strategy of decoupling mineral supplies from China may persuade Beijing that its rare earths trade gun is better used sooner rather than later, if it is going to be fired at all.

Editing by Louise Heavens

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