A renaissance to reverse US strategic minerals imports: Dig, Baby, Dig

The “energy dominance” strategy pursed by the Trump administration has focused on keeping the national economy free from coercion by nations that use resources as economic weapons. In a joint op-ed in June, Interior Secretary Ryan Zinke, Energy Secretary Rick Perry and Environmental Protection Agency Administrator Scott Pruitt alluded to this strategy, extolling the American energy renaissance and pledging that energy discussions would “no longer (be) about peak resources or being beholden to foreign powers.”

Given this heightened attention to energy security, it’s too bad leaders are not paying the same attention to a national security risk at least as large as oil-import dependency was a decade ago — the domestic supply of critical and strategic minerals. As trade tensions with China grow, a decision by that nation to cut off exports of key minerals could threaten the $2.8 trillion U.S. manufacturing economy, while critical components of the U.S. military’s present and future arsenal also are put at risk.

But just as the emergence of hydraulic-fracturing techniques quelled fears about “peak oil,” the United States also could do much more to exploit its minerals wealth. The same geological processes that created huge hydrocarbon-rich shale fields throughout the continent also created a 1,000-mile wide mineral belt between Colorado and the Pacific Ocean — one of the largest repositories of critical and strategic minerals in the world.

{mosads}This area — much of which is administered by the federal government — contains world-class deposits of chromium, cobalt, graphite, indium, lithium, manganese, rare earth elements, iron, gold, silver, zinc, tin and more. In all, these minerals are worth more than $6 trillion at current prices, according to the National Mining Association.

Indeed, there are striking similarities between the decline in mining of U.S. strategic minerals and the nation’s 40-year period of oil dependency. Much like with oil and gas, the United States was largely self-sufficient in minerals up to the early 1970s. In response to demands from the growing environmental movement, the country enacted restrictions on many of the federal lands where mineralization is most prevalent. As a result, the United States quadrupled its minerals trade deficit between 1973 and 1980.

Of the 88 mineral commodities tracked by the U.S. Geological Survey, the United States is now at least 25 percent import dependent on 62 of them. Of the top 50 key minerals imported to the country, 28 come from China and 11 are from Russia.

Back in the 1980s, China discovered vast supplies of “rare earths” in large clay deposits in the country’s south and west that are particularly valuable when used in superconductors and microchips. Today, those minerals are essential components of information-technology equipment, including digital tablets, flat-screen televisions and monitors, generators, pollution-control devices and the magnets used in 5 billion smartphones around the world. Similar magnets also are essential to our most sophisticated military technology.

Deng Xiaoping telegraphed China’s strategy in the early 1990s when he noted the “Middle East has oil; we have rare earths.” Because these elements are found dispersed in low concentrations and are costly to extract, Beijing managed its production in a way reminiscent of how Saudi Arabia flooded world oil markets in the late 1980s to re-establish control of the OPEC cartel.

But China also has shown a willingness to curtail its rare earth exports for political reasons, including after a 2010 dispute with Japan, which also depends heavily on the imports for its electronics industry. As a result, prices quickly spiked by 600 percent and Japan was forced to back down.

By periodically flooding and then restraining the market with rare earths, the Chinese over a 25-year period put most other mines in the world out of business, including the largest U.S. rare earth mine — Mountain Pass, located in California’s Mohave Desert south of Las Vegas. This bankrupt mine was sold to a Chinese-led business consortium in June 2017 for $20 million.

For the U.S. military, the reliance on China is downright scary. From the F-35 Joint Strike Fighter to the next generation B-21 deep strike bomber, modern military avionics and guidance systems depend completely on rare earth minerals that hold their strong magnetic qualities at high temperatures. When Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff, told Congress the defense industrial base had grown “increasingly brittle,” he was in part alluding to the domestic shortage of critical minerals.

While there is no single fix to revive American critical and strategic minerals production, several of the options are surprisingly simple. Both the House and Senate defense authorization bills include funds to develop domestic rate earth capacity, but the appropriations committees have not targeted the same investments.

A 1980 rule from the Nuclear Regulatory Commission on transporting materials with low-level thorium has prompted phosphate miners in Florida to rebury thousands of tons of waste rock that contain not just thorium, but enormous quantities of the full suite of rare earth elements. A re-evaluation of that NRC regulation, written just after the Three Mile Island disaster in 1979, should be a top priority for the Trump administration.

U.S. manufacturers that require these “technology metals” also could set up rare earth cooperatives, similar to the co-ops currently used by the agriculture, ethanol, lumber and hardware industries. This would help to insulate companies from price volatility.

Finally, we need reforms to the environmental permitting process to allow new U.S. mines to be approved in two to three years, rather than the current seven to 10 years. Reforms also are needed to end federal land withdrawals and thus open more acres with mineral deposits to leasing.

Decades of ill-advised resource policies have contributed to our current addiction to imported minerals. If the successful turnaround in U.S. energy security has taught us anything, it’s that dependence on imports can be solved with a combination of political will and private-sector initiative. It’s time to start digging, America.

William Murray is federal energy policy manager and Ned Mamula is an associate fellow for the R Street Institute, a nonprofit group aimed at supporting limited government.