As the planet burns, a new Cold War over critical minerals

The recent deadly heat wave in the Pacific Northwest only underscored the dire consequences of continued inaction in the face of climate change. As the second largest contributor to climate change emissions, the increasing incidence and severity of heat waves, droughts, and forest fires should be a clear wake-up call to the United States. Unfortunately, the U.S. has been neglecting low-carbon technologies for decades, and now the raw materials and chemicals needed to build them are almost exclusively controlled by China. If the U.S. wants to get out from under China’s thumb while avoiding conflict, then it must create effective mineral policy by rebuilding innovation capabilities, partnering with industry, and leveraging the government’s role as a market actor.

A report published by the International Energy Agency just last month shows that demand for lithium can be expected to grow as much as 4000 percent by 2040. With nearly complete control of the critical minerals that are essential for low-carbon technologies, China has significant geopolitical power and leverage over multiple U.S. industries.

The Biden-Harris administration is also acutely aware of America’s supply chain problems and has ordered more direct action to address short-term disruptions. This is undoubtedly one important step, but it will also mean directly confronting China — potentially positioning the U.S. for a new type of cold war. 

Producing minerals and metals domestically is a viable option for the U.S. to combat China’s stranglehold, but the U.S. isn’t well equipped to fight on that front. Mines in the U.S. can take up to 20 years to open, while China’s extractive industries have been streamlined since the 1990s. For more common materials like steel, they already produce more than the rest of the world combined. For certain technologies like batteries, they control 80% of the world’s raw material refining, 77 percent of the world’s cell capacity, and 60 percent of the world’s component manufacturing.    

A materials cold war isn’t inevitable, but the weaponization of capital markets has become relatively common-place, and the United States is going to have to take swift and decisive action to avoid conflict. 

First, for U.S. industry partners to move away from safer investments and into critical minerals, there need to be guarantees and procurement agreements. The U.S. government should use the Defense Production Act to provide capital, interest-free loans, or forward contracts for commodities that have unstable prices. This would be similar to government-led efforts during the Cold War to grow the U.S. aluminum and titanium industries by reducing risk to investors. The act was also famously used to combat shortages during the coronavirus pandemic. 

Second, companies also need to know that the U.S. supports the mining industry, not only in developing a domestic market, but also in promoting sustainable development of the industry. The mining and metals industry is currently considered to be worse than oil and gas in terms of environmental and social risk, and it has struggled with investments as a result. Creating new environmental and social standards as part of its loan or permitting programs, or as a regulatory requirement, could ensure that the mining industry also gets support from outside sources (social or otherwise). 

Finally, government support for education cannot be considered partisan anymore. It is easy to talk about mining and critical minerals in general terms, but China controls many critical minerals because the U.S. just doesn’t have the technical expertise to compete. Young, technical experts are needed to revitalize the mining industry, but enrollment into relevant college programs has been plummeting. If the U.S. government can offer better student loans, or student-loan forgiveness, and make it clear that students will be graduating into a well-funded, climate-fighting industry, then they would be more willing to enroll in mining engineering programs.

As a nation we have spent so much time preparing for a better tomorrow that we may have neglected to get the materials we will need to actually build it. If the U.S. wants to take direct action to fight climate change and save the lives of its people, then it will need the mining and metals industry. 

Morgan Bazilian is the Director of the Payne Institute and a Professor of public policy at the Colorado School of Mines. Jordy Lee is a Program Manager at the Payne Institute for Public Policy at the Colorado School of Mines.