2021.04.28
[co-author: Nicole Hager]
Key minerals are raw materials that constitute all the basic elements of today's economy and national security, including steel, semiconductors, supercomputers, batteries, emerging technologies, F-35 jets and missile systems. Although these resources are important, over the past few decades, the United States has allowed itself to become an importer dependent on these key resources. This is why on April 13, 2021, the U.S. Department of Defense (DoD) called on the public to comment on identifying risks in the supply chain of strategic and key materials such as lithium, copper and cobalt. It is seeking policy recommendations to address these risks and will submit them to the Ministry of defense on April 28, 2021.
The DoD's request follows President Biden's executive order (EO) issued in February 2021, which aims to develop a flexible and sustainable U.S. supply chain《 The Ordinance requires the government to conduct a comprehensive review of local production, research and development capabilities, as well as strategies to strengthen major sectors. In addition, EO accelerated the 100 day review period for the four most important industries: key minerals and rare earth elements, high-capacity batteries, active pharmaceutical ingredients (API) and semiconductors.
In particular, with regard to key mineral supply chains, the Ministry of defense has expressed interest in hearing on the following topics:
Diversify the sources of supply of strategic and key minerals, including domestic sources and sources from allies and trading partners;
Diversifying production resources, such as primary mining, joint production, and including recovery from mines, industry and end-of-life products;
Promote a level playing field in the environment, health and safety, labour, fair trade and global markets;
Methods to reduce the risk of price fluctuation and supply shock;
Whether there are substitutes for materials and manufacturing processes; Skilled labor and personnel, including domestic education and labor manufacturing skills; And manufacturing capability, such as single point of failure capability or single / dual supplier;
The risk scope of supply interruption, considering the duration, geographical scope, intensity, ability to meet the expected needs of specific supply chain nodes, and the probability of interruption events;
Risks to the development and maintenance of sustainable supply chains, such as human rights violations and forced labour;
Give priority to research, development and demonstration to support production and / or advanced manufacturing base;
Policy recommendations or recommended administrative, legislative or regulatory actions to foster a more flexible supply chain while promoting the management of affected communities and the environment; and
Recommendations for long-term research, development and demonstration investments to re envision a more sustainable and secure supply chain of key minerals in the United States.
Although the United States was a major producer of key minerals in the late 1980s, the people's Republic of China began to produce these materials at a lower cost, driving many producers in the United States and around the world out of the market. As a result, China now controls 80% of the world's supply of key minerals, including rare earth elements.
Policymakers have been warning of the dangers of America's dependence on imports. In 2018, the U.S. Department of the interior identified 35 key minerals vital to U.S. national security. In 2019, the U.S. Department of Commerce (DOC) released a report on the degree of U.S. dependence on foreign and, in many cases, unsafe sources of each of these 35 minerals. Subsequently, the defense authorization act for fiscal year 2021 (NDAA) ordered the Department of defense to obtain certain strategic and key minerals from domestic and allied countries. The legislation also directs the Department of defense to develop an incentive structure to encourage the defense industrial base to develop processing and manufacturing capabilities in the event of supply chain disruption. In addition, last year, then president trump declared a national state of emergency on the United States' dependence on 35 key minerals.
To date, the Ministry of defense has issued a large amount of funds under Chapter III of the national defense production law to increase the production of key minerals in the country. In addition, members of Congress continue to be interested in legislative efforts to ensure the supply chain of key minerals, as members of the house natural resources committee recently introduced legislation aimed at accelerating the licensing of key minerals. Due to the efforts of the Ministry of defense, these efforts will certainly be supported, and the industry should consider participating to ensure that their production line will not suddenly stop due to the shortage of key mineral raw materials.
