Opinion: The United States should decrease its reliance on mineral imports
The United States needs significant volumes of critical minerals, especially with soaring demand for energy transition technologies like electric vehicle batteries. Given the lack of US production for many minerals, the United States relies heavily on imports to meet its mineral demand.
Even if the United States fully mined its mineral reserves, the resulting production would still fail to satisfy US mineral demand long term. Importing minerals, therefore, provides the United States with access to a wider range and a higher volume of minerals than it would by relying solely on domestic mineral reserves and production.
However, mineral imports from not only adversaries like China and Russia but also allies and partners pose three key risks to US national security and economic prosperity: (1) mineral supply disruptions, (2) disincentives to develop US mineral production, and (3) financial benefits to foreign, state-backed mineral companies that do not adhere to equivalent US environmental and labor standards. Thus, the US government should expand its efforts to increase domestic extraction and processing.
First, mineral imports are vulnerable to disruption. Supply disruptions can arise from various causes, like pandemics, mine issues, labor strikes, natural disasters, or export controls. For instance, gallium, germanium, natural graphite, and rare earth elements are used in vehicle components—such as semiconductors, lithium-ion batteries, and permanent magnets—and China is the world’s largest producer of gallium, germanium, natural graphite, and rare earth elements. Yet, the Chinese government has imposed export controls on all of these elements.
In another example, severe flooding in April 2022 hit South Africa’s Port of Durban, which is the primary port for exporting cobalt hydroxide from the Democratic Republic of the Congo, the world’s largest cobalt producer. The flooding at the port increased cobalt prices and caused shipping delays, with shipments largely stopping in April and March 2022. Therefore, mineral imports are vulnerable to disruption, and such disruptions can affect downstream industries.
Second, mineral imports disincentivize US mineral production. If foreign minerals are priced lower than US minerals, US industries will likely prefer to purchase the cheaper foreign minerals over US minerals, disincentivizing US mineral production.
Without mineral production, other downstream segments are usually absent too. For instance, mining and processing activities have cost-saving incentives to co-locate. Technological advances in extraction and metallurgy are also frequently associated with mineral production. China, the world’s leading miner and processor of rare earth elements, is also the world’s leader in rare earth refining technology. Hence, limited mineral production means limited technological development in the mineral sector. Lastly, continued import reliance disincentivizes domestic mineral production and foregoes corresponding national economic benefits, including jobs and tax revenue.
Third, US mineral imports often financially benefit foreign, state-backed mineral companies that do not adhere to high environmental and labor standards. To illustrate, the United States imports large volumes of many minerals from China, but state-owned or state-holding enterprises comprise the majority of mining and refining production in China.
These enterprises, reportedly, damage the environment with impunity. Chinese state-backed mineral companies operating overseas have also been accused of violating labor rights, including children working seven days a week at cobalt deposits owned or operated by Chinese companies in the Democratic Republic of the Congo. This mined cobalt often enters the global supply chain for electric vehicle batteries. Non-Chinese companies extracting minerals in other countries—such as lithium in Chile—have been accused of various abuses too, like excessive water extraction.
These import risks can undermine key US industries, stifle the growth of the US mineral industry, and benefit companies and countries opposed to US interests, posing risks to US national security and economic prosperity. To decrease reliance on mineral imports and mitigate the risks associated with mineral imports, the US government should increase mineral extraction and processing.
The US government should expand its efforts to increase US mineral extraction, including both mining and recycling. The US government—through the Department of Defense—is funding mine feasibility studies and mineral exploration, but it has not funded any mine development, which involves constructing the mine.
The Department of Energy, however, announced in late April 2024 that it can provide loan guarantees for mining projects under the Title 17 Clean Energy Financing Program. This program should predominantly target mine development given the lack of US government funding for projects in this development stage. Regarding recycling, the US government—mainly through the Department of Energy—is financially supporting recycling projects, such as a conditional loan commitment of up to $2 billion to Redwood Materials for a recycling campus. With increased mining and recycling, the United States could decrease its reliance on mineral imports.
The US government should also grow its efforts to increase US mineral processing, which involves the conversion of minerals into metals or chemicals. The Department of Defense is disbursing grants for mineral processing projects, including for separating and refining rare earth elements. As it did during the Korean War, the US government could also sign fixed-price premium contracts with US mineral producers in exchange for specific volumes of processed minerals.
The Department of Energy is disbursing loans under its Advanced Technology Vehicle Manufacturing for commercial processing projects. However, the loans have solely targeted processing for battery materials, such as lithium carbonate and natural graphite anode active material. The United States needs processing facilities for elements with non-battery applications.
For example, the United States does not have production capacity for other types of processed minerals, such as arsenic metal, primary refined bismuth, primary refined lead, and smelted tin. Under the Title 17 Clean Energy Financing Program, the Department of Energy can potentially issue loan guarantees for projects that process these elements since the United States presently lacks processing facilities for these materials. Such processing facilities will reduce US reliance on imports of processed minerals.
By importing minerals, the United States has access to a wider range and a higher volume of minerals than it would by depending only on domestic mineral reserves and production. Yet, importing minerals poses tradeoffs, including risks of mineral supply disruptions, disincentives to develop US mineral production, and financial benefits to foreign, state-backed mineral companies that do not adhere to equivalent US environmental and labor standards. Such risks threaten US national security and economic prosperity. Therefore, the US government should seek to decrease its reliance on mineral imports by increasing US mineral extraction and processing.
Gregory Wischer is the founder and principal of Dei Gratia Minerals, a critical minerals consulting firm.