The critical control that China has over rare minerals poses a significant survival issue for the 21st century, according to experts.
In the global race to secure critical minerals, China currently holds a significant advantage, controlling 92% of the processing of rare earth materials and 92% of the globe's processing of these essential elements [1]. This dominance has raised concerns in the U.S., with Senator Joe Manchin, a former Democrat from West Virginia, urging swift action to counter China's grip on the market [2].
To address this issue, experts suggest a multi-faceted approach that includes diversifying supply chains, technological innovation, policy and legislation, strategic alliances, and development finance [3].
## Diversifying Supply Chains
The U.S. could invest in developing and expanding domestic mining, refining, and processing capabilities for critical minerals such as rare earths, lithium, and cobalt [1]. Additionally, forging partnerships with trusted international allies like Canada, Australia, South Korea, and Japan could help reduce dependency on China [4].
## Technological Innovation
Encouraging research and development of alternative technologies that use less critical minerals or substitute them with more abundant materials is another key strategy [1]. Implementing innovations that enhance the efficiency of mineral use in manufacturing processes is also crucial [1].
## Policy and Legislation
Utilizing the Defense Production Act (DPA) to fund and support domestic industries involved in critical mineral supply chains, such as rare earths processing, is a potential solution [2]. Offering subsidies, tax breaks, or other financial incentives to encourage private sector investment in critical mineral production and processing is another option [3].
## Strategic Alliances and Diplomacy
Offering security guarantees to foreign countries to invest in their mineral sectors and negotiating favorable terms with countries that possess significant mineral deposits are important steps [5]. Engaging in diplomatic efforts to address geopolitical tensions and ensure fair trade practices is also essential [5].
## Development Finance
Enhancing the capabilities of the International Development Finance Corporation (DFC) to support strategic investments in mineral-rich countries is a key component of this strategy [3].
However, implementing these strategies presents challenges. Building new mines, processing facilities, and manufacturing infrastructure requires substantial time and financial investment [1]. The strained U.S.-China relationship complicates negotiations and may lead to retaliatory measures [3]. Ensuring that new mining and processing operations meet environmental and social standards while maintaining economic viability is also crucial [1].
One example of a successful U.S. effort to secure critical minerals is the Mountain Pass Mine, which helped the U.S. remain largely self-sufficient from the mid-1960s to the 1980s [6]. Today, MP Materials operates the mine in California's Mojave Desert.
Jose Fernandez, former U.S. Under Secretary of Commerce for International Trade, supports the use of tariffs but cautions against their overuse [7]. He emphasizes the need for a balanced approach that considers the potential economic and geopolitical implications.
Senator Manchin, echoing Fernandez's sentiments, compares the current situation to World War II, stating that a short-sighted focus on the bottom line could have dire consequences [2]. He emphasizes the need for the U.S. to act quickly to counter China's dominance in the critical minerals market.
In conclusion, countering China's dominance in critical minerals requires a comprehensive and strategic approach that addresses supply chain diversification, technological innovation, policy and legislation, strategic alliances, and development finance. With the right strategies and partnerships, the U.S. has the potential to quickly enter the market for rare earth materials and other critical minerals, ensuring its economic and technological security for years to come.
[1] Experts warn that the U.S. needs to make major changes in its approach to mining, trade, and investments to counter China's dominance in the critical minerals market. [2] Manchin emphasizes the need for the U.S. to act quickly to counter China's dominance in the critical minerals market. [3] Experts view the U.S.'s current focus on return on investment as detrimental. [4] Manchin argues that the U.S. should rely on allies like Canada, Australia, South Korea, and Japan for rare earth materials. [5] The experts view the U.S.'s current focus on return on investment as detrimental. [6] The Mountain Pass Mine helped the U.S. remain largely self-sufficient from the mid-1960s to the 1980s. [7] Jose Fernandez states that if the U.S. has minerals, tariffs can be a useful tool.
Investing in technological innovation could involve funding research for alternative technologies that require less critical minerals or substitute them with more abundant materials, thereby reshaping the U.S. economy's reliance on these essential elements. A significant approach in the realm of policy and legislation would be employing the Defense Production Act (DPA) to support domestic industries involved in critical mineral supply chains, fostering growth in this sector.
