China’s minerals strategy leveraging America’s weakness

OPINION:

Speaking this past spring in Washington, President Biden’s national security adviser, Jake Sullivan, warned that “clean-energy supply chains are at risk of being weaponized in the same way as oil in the 1970s, or natural gas in Europe in 2022.” Fast forward a few weeks, and it’s already happening.

Mr. Sullivan specifically addressed critical minerals, calling them “the backbone of the clean-energy future.” And now, China, with its unrivaled control of many of the world’s mineral supplies, is saber rattling with its supply chain.

Beijing has decided to limit exports of two rare earth elements essential to semiconductors, missile systems, even solar cells. The Wall Street Journal called the move “a show of force” ahead of economic talks between the U.S. and China.

With the U.S. and its allies imposing trade limits on key technologies such as semiconductors, China is cutting access to the very materials that underpin our technology and energy future. Although this is not the first time China has used the minerals lever to exert geopolitical pressure, it does mark a notable escalation after more than a decade of relative calm.

In 2010, China temporarily cut off the supply of rare earths to Japan during a territorial dispute. Then-Secretary of State Hillary Clinton called the episode a “wake-up call” for being so dependent on one source of supply.

While there has been some progress in diversifying the world’s supply of rare earth elements, China’s position at the center of the minerals’ universe has arguably only strengthened in the ensuing 13 years.

The clean-energy revolution is driving soaring demand for an increasingly wide variety of minerals and metals essential to advanced energy technologies.

For example, reliance on lithium-ion batteries — the linchpin of electric vehicles — is driving explosive demand for lithium, nickel, cobalt, graphite and other metals. Lithium demand is projected to jump fortyfold and nickel, cobalt and graphite demand 25 times by 2040.

Whether through production or processing, China dominates the market for these essential materials.

Even under normal trade relations, global energy experts forecast alarming shortfalls for many of the metals that underpin clean-energy deployment. In short, demand is moving far faster than new supplies arrive to market.

With tight mineral supplies already placing inflationary pressure on the cost of batteries, solar panels and wind turbines, the situation is poised to get worse — and China’s leverage is growing.

Alarmingly, China’s mineral strength is matched only by our weakness. U.S. mineral import reliance has been building for decades and has hit an all-time high.

We’re import-reliant for more than 50 minerals essential to our energy and economic future as well as our national security. China is the leading supplier of a stunning 26.

As rivalry with China edges toward animosity, America’s mineral import-reliance is an outrageous Achilles’ heel.

The Biden administration and Congress recognize the minerals challenge. They want to decrease our dependence on imports and China.

But they have not moved with the urgency required to plug this gaping vulnerability.

Despite some important steps in the right direction — targeted permitting reform in the debt ceiling deal, energetic industrial policy in the bipartisan infrastructure law, and invoking the Defense Production Act — the minerals Manhattan Project we need hasn’t materialized.

In fact, the Biden administration — despite recognizing the stakes — has yet to clearly articulate its minerals strategy as well as the role domestic mining and our vast mineral resources should play in it.

Importantly, we don’t trail China in the minerals race for lack of resources. The U.S. is rich in minerals.

But we’ve fallen far behind because of policy missteps and an adversarial approach to an industry that is the very cornerstone of our industrial base.

While the Biden administration can and should look to allies to bolster our mineral supply chains, the centerpiece of our minerals strategy must be to ramp up domestic production and processing, provide support to de-risk projects, and work feverishly to reduce self-imposed bureaucratic barriers standing in the way of new mining investment.

As China has just reminded us, now is the time to build the secure, world-class mineral supply chains our energy future, economic competitiveness, and national security demand.

• John Adams, a retired Army brigadier general, is president of Guardian Six Consulting and a former deputy U.S. military representative to NATO’s Military Committee.